Transposition of Shares Meaning - Difference with Transmission

What is Transposition of Shares?

It’s a process of re-arrangement or inter-changing of the order of names of shareholders under a folio in the Register of Members of the company.

The Register of Members of a company contains the shareholding details of all the shareholders who are holding shares in physical form i.e. share certificates.

Procedure for Transposition of Shares

The joint shareholders have to request the company in writing along with copies of their PAN cards and the share certificates for the respective shares.

The application letter should be duly signed by all the joint shareholders requesting for inter-change of names.

The new order in which the name(s) will appear in the folio and in share certificate should also clearly come out in the application.

Necessary changes will accordingly be made in the share certificate of such joint shareholders and new share certificates will be mailed to them.

Format of such an application letter for transposition of shares: click here.

Example

Ms. F and Mr. M are joint shareholders holding 75 shares under folio no. 005 in VOP Limited. Wherein Mr. M is the first holder of the shares - meaning the name of Mr. M is mentioned at first place in the Register of Members and in the share certificate as well.

Now both have requested the company under a written communication asking the company to change the order of names and make Ms. F the first holder for the 75 shares under folio no. 005.

The company has done the re-arrangement and has changed the order as requested.

This whole process is called transposition of shares.

Extra Notes

There is no need to execute any share transfer deeds for this purpose.

As there is no execution of transfer deeds, no payment of stamp duty is needed.

This transposition process will also be helpful in case joint holders want to dematerialise the shares and connect to their existing demat account, but the current demat account is having a different order of names.

While some companies allow part transposition of shares, some companies do not permit this.

Difference between Transmission and Transposition of Shares

Transposition of Shares is explained hereinabove.

Transmission of Shares means transfer of shares by operation of law.

By operation of law means by legally under some law, or by any order of a Court, a Tribunal or any other authority.

Example: When a shareholder dies, his shares get transmitted to his nominee or to his heir, who is his heir as per a will or succession certificate granted by the court.