Transfer and Transmission of Shares

Before arguing the difference between transfer and transmission of shares, let us first understand the terms individually. In share markets, the private limited companies can allocate their shares at a predetermined rate to the investors. This can happen in two forms – firstly, by accepting capital investments and the other option is the acquisition of equity through liquid investments. The latter one is preferable for the general market audience. In this regard, the transfer of shares occurs when a member decides to execute a transaction as per the norms depicted in the contract, i.e., through voluntary action. On the other hand, the transmission of shares takes place as a result of legal enforcement. This is the fundamental difference between the transfer and transmission of shares. The latter scenario takes place in any unavoidable situation like the sudden mishap of an owner or his death. There must be a medium for transactions in the transfer of shares. To understand more clearly we have discussed the main areas of difference between transfer and transmission of shares. 

Public corporate bodies allocate readily transferable shares. The only exception is cited if there is any hindrance posed by some associated legal documents. Based on business performance, a company may decide not to sell shares. For that, they need to provide valid proof. The private corporate sector can deny the allocation of shares a bit easier as they are offered more relaxation in this regard. 

Transmission of shares takes place when a business is about to wind up. It also happens when an individual legal entity meets death or becomes mentally unstable. It is a legal procedure. The transferee has to prove his relation with the original owner to claim his ownership. 

Various components of difference between transfer and transmission of shares 

Voluntary conveyance of shares or handing over of title from one owner to another is termed a transfer of shares. It is not the same phenomenon in the case of transmission. In transmission, the jurisdiction gives up the owned assets to the legal nominees of the owner after his demise or if he becomes mentally ill. Thus in the second case, there is no deliberate act of nomination. Thus the concepts of transferee and transferor do not arise in the transmission of corporate shares. Transfer charges are applicable as per the regulations of SEBI in the voluntary transfer of shares. Also, the seller has to pay stamp duty in the transfer of shares. The legal heir who received the shares from the original owner has to take care of the liabilities. In voluntary transfer, the original owner sells his assets well, informing the buyer about it. Thus if there exists any liability, it shifts to the new shareholder. This is a major difference between transfer and transmission of shares. 

Purpose of Chandrasekhar Committee 

Chandrasekhar Committee formulated a report that would provide a favorable environment for increased foreign capital investment in India. The foreign investors should represent a diverse portfolio of asset lenders such as QFI, FII, NRI, and FDI. Their participation was crucial to encouraging the start-ups and venture capital industrialists in India. The purpose of Chandrasekhar Committee was executed by two panels of constituent members. The objectives were:

• To increase the upper threshold amount for long-term FII investments. This was necessary as more FIIs gradually wanted to enter the Indian share market. 
• The second panel fortified the client databases and the KYC procedures. The procedures were designed as per the guidelines set by the SEBI. 

Venture capital financing in India

The foreign investors were delighted to invest in a diverse range of start-ups across India at the advent of this century. This is mainly because these businesses were at a nascent stage with almost no physical assets. Thus the risk of loss was high but return values were also extremely high. They were knowledge-based firms. Their equity could be independently managed by venture capital funds. Some prevalent techniques of venture capital financing in India are equity funding, debenture, international bank-approved income notes, and conditional approval. 

Conclusion 

Transfer and transmission of shares both involve reallocation of assets but in the latter process, there is legal intervention. The original owner gets relief from all his liabilities upon transferring his finds. Chandrasekhar Committee produced a revolutionary report that argued the feasibility of foreign financial investments in the Indian market. While there were possible low returns in large-cap corporate bodies, the investors started investing in budding companies.