Company Law: Share Transfer and Director Removal under CA 2006

This study explores the rules and guidelines related to share transferring and director removal under the Companies Act 2006. It discusses the process, rights, and responsibilities of shareholders and directors in relation to share transfers and the removal of directors. The study also highlights the statutory process for stakeholder agreement and the steps involved in transferring shares.

Company Law

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Jane is considering petitioning the court under CA 2006.......................................................3
Rules of transfer of shares......................................................................................................5
4 Director’s duties as per companies act................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Company law is the body of law which governs the right, relations and conduct of person. It
describes laws relating to some matters which derives life cycle of corporation (Chambers-Jones
and Day, 2017). This present study is going to show all rules and guidelines related to Share
transferring according to companies act. This study show all rules and steps by which
shareholders can transfer their shares to others and also have rights to removal board of directors
if they get majority of votes.
MAIN BODY
Jane is considering petitioning the court under CA 2006
Companies act 2006 in regard to share transferring states and related to seeking, he relief
from the unfair prejudices by the majority by the representing one of the key remedies which is
available to the majority of shareholders where is the lacking of the voting power which is leaves
powerless to be effect decision (Bawah, 2019). There is the major level of requirement as the
sense of causing prejudice or the harm to the relevant which is interest of the shareholders as part
as whole.
Secondary, the conducts of the controlling shareholding must be proven which is
demonstrating the unfair which states that’s the person by the controlling for company which is
acting the deliberately in the bad faith with the conscious. The person controlling the company’s
which is acted as the part of deliberately in and faith with the self-aware purpose to treat them
unfairly. Jane also wants to ask that if shareholders have right to remove director. So, as per the
companies act 2006 some guidelines have been known. It provides a statutory process to allow
stakeholder agreement in order to dismiss any member of director of board.
As this is the petition by the company member which may apply as the company affairs
and also can be conducted in an ineffective and unfairly manner which prejudices to the interest
members as generally or part of its members. This have the actuals or prosed as the acts or the
omission of the company which would be so prejudicial (Aiello, 2018). Transfer of shares refers

Handling of rights as well as all duties of member regards to shares. There’s a right of
shareholder to transfer his or her share to another person if he does not want to be a part of the
company any more.
On the other hand, this has needs applying to the person of the company but the person
who current has rights of the shares in the company which have been transferred or being
transmitted by the operations of the law along with application of the company.
So as per the company act 2006, the duties of the promoting the success to the company
is most likely to have the promotion of success for the benefits which tends to be the likely the
decision in longer term and perspective. There is need to have the fostering the company
business relationship with the suppliers, customer and other. There are some effects which
business operations have on performance along for maintaining the reputation of the high
standards of the business conduct.
In their particular level of decision-making the minority shareholders remedy which
properly touched the issues of their emblematic as the fundamentals and long-running debate
among st law scholars about the nature of company which is properly characterized. As per the
companies Act, 2013 directors can make the best decision about transfer of shares as it provides
an effective process of shares transferring of shareholder on an organization by both public and
the private company. Company requires completing all formalities and filling form SH-4 (Greco,
2018). It provides a statutory process to allow stakeholder agreement in order to remove director
by only passing an ordinary resolution. Shareholders of company requires to give special notice
to the company in this regard after that board of directors can held a meeting by calling up all
stakeholders. Further, it has also shown some rights of directors as per the companies act as if
they have rights to not transfer share of shareholders to other shareholders if they have
appropriate reasons of not transferring shares.
Here, there is note for the creditor protections by looking about the statutory duties by
taking the certain level of obligations and act as the interest of creditors the person controlling
the company’s which is acted as the part of deliberately in and faith with the conscious intent to
treat them unfairly. As this is the petition by the company member which is may apply as the
company affaires to be been conducted in the manner which is unfairly prejudices to the interest
members as generally or part of its members.

Effective assessment and improvement of a company’s environmental and social performance
also demands good corporate governance (Oosthuizen and Delport, 2017). Good corporate
governance assists company directors to act with independence; and fosters the culture of
enquiry.
Rules of transfer of shares
In the case of bendy Banana Ltd, fruit import business it is stated that board of directors refused
to transfer shares of their one of the shareholder Caroline to other shareholder Jane. As per the
request of Caroline, board of directors also gave some reasons of refusing transferring of shares
to Jane on which basis it can be understood whether refuse of transferring of shares by directors
was right decision or not. It can also help Jane in understanding as if he can seek for transfer of
share or not as per the companies act and duties of director (Acheson and et.al., 2018).
Transfer of shares refers a voluntary handling over rights as well as possibly duties of member.
There s a right of shareholder to transfer his or her share to another person if he does not want to
be a part of the company any more. But they are required to give specific reasons and as per the
reasons, shares of an organization are transferable as like other movable property. But there are
some situations where this transfer of shares is completely in the hand of decision of directors.
Such types of restrictions are added to protect interest of shareholder (Transfer of Shares as Per
Companies Act, 2013 and Board Resolution, 2019).
In the context of share transferring of private organization it can be said that it is governed as per
the article of company. As per the companies Act, 2013 directors can make the best decision
about transfer of shares as it provides process of share transferring by private as well as public
companies. Company requires completing all formalities and filling form SH-4. As per the
section 44 of companies act it is stated that shares, debentures of the member of an organization
is movable or transferable as per the company’s article association. If any member or shareholder
of an organization wants to transfer his/her shares then it is important for them to sent filled SH-
4 form to their work of place or organisation for which they work within 2 months of the date
when execution of share transfer agreement made. But company cannot transfer partly paid
shares in some situations. Main 2 situations in which company cannot transfer shares include:
 When the company given a notice to shareholders or to an existing members in form no
SH-5

 Till transferee has given a NOC to the transfer within 14 days from the date when
transferee received the notice from the company.
In the case of private companies, there are some steps which need to be followed by company
and shareholders as well such as:
1. As per the companies act 2013, shareholder who does not want to posses shares of
company and willingness of transfering need to place request to company about this that
and also with the name of the person whom they want to offer shares.
2. After receiving this request and form by shareholder board of director discuss on this and
give notice to all other existing member in order to purchase of share.
3. If they found that there is no one who wants to buy shares then board of members sent a
letter to that shareholder who wants to sell or transfer his share to ask him that if he wants
then he can transfer or sell shares to non existing member.
4. After receiving this letter, shareholder who does not want to posses shares and become
shareholder of company anymore can submit the share transfer deed duly executed to the
Company.
5. When company receives share transfer deed with share certificate, company requires
passing a board resolution as well as registering entry for transfer of shares.
So, as per the above guidelines of Companies’ act it can be said that Jane can seek for his right of
receiving shares of Caroline if Caroline complete or follow all rules like filling form and
transferring shares in a legal manner (Davies, 2018).
Jane also wants to ask that if shareholders have right to remove director. So, as per the
companies act 2006 some guidelines have been known. It provides a statutory process to allow
stakeholder agreement in order to remove director by only passing an ordinary resolution.
Shareholders of company requires to give special notice to the company in this regard after that
board of directors can held a meeting by calling up all stakeholders. Director seeks for written
representations by knowing reasons of removing him. After that on the basis of majority of votes
by shareholders decision of removal to director is being taken (Removal of Directors, 2020). So,
as per this it can be said that Jane can remove current board of director and can also elect new
board of director if he gets majority of votes in his favour.

CONCLUSION
From the above study, it has been summarized that shareholders have several rights and
authorities as per the companies act and section 74. Shareholders can transfer their shares of
private organization by just following guidelines and all steps as per the companies’ act 2006.
They also have rights to remove director if all shareholders get majority of votes. Further, it has
also shown some rights of directors as per the companies act as if they have rights to not transfer
share of shareholders to other shareholders if they have appropriate reasons of not transferring
shares. It has also analysed as per the companies’ act 2013 and section 44 that shares and interest
of any member of shareholder of private company are moveable as like other property.

REFERENCES
Books and journal
Acheson, G.G. and et.al., 2018. Share trading activity and the rise of the rentier in the UK before
1920. Business History, pp.1-21.
Davies, P.L., 2018. Related party transactions: UK model. European Corporate Governance
Institute (ECGI)-Law Working Paper, (387).
Chambers-Jones, C. and Day, R., 2017. Exploring accountability in bribery and corruption
disclosures by UK listed defence companies.
Bawah, A.S., 2019. A Comparison of the Statutory Provisions of the United Kingdom (UK)
Companies Act 2006 and Ghana's Companies Act 1963 (Act 179), to the Rule in Foss v
Harbottle. Beijing L. Rev., 10, p.153.
Aiello, A., 2018. The Irish designated activity company (DAC) and the evolution of the objects
clause.
Greco, E., 2018. Shareholders' remedies: the derivative action in the UK, the USA and Italy.
Oosthuizen, J.S. and Delport, P.A., 2017. Rectification of the securities register of a company and
the oppression remedy. THRHR, 80, p.228.
Online
Transfer of Shares as Per Companies Act, 2013 and Board Resolution. 2019. [Online]. Available
through <https://taxguru.in/company-law/transfer-shares-companies-act-2013-board-
resolution.html>
Removal of Directors. 2020. [Online]. Available through < https://www.lblaw.co.uk/services-for-
business/corporate-law-services/shareholders-agreements/removal-of-directors>