128. Registration of transfer at request of transferor by private companies

Question 1

128. Registration of transfer at request of transferor by private companies

Answer 1

General overview
[128.01] Section 128 lays down the procedure where a member of a private company wishes to transfer his shares or debenture or any other interest in the company to another.

Question 2

Transferor to initiate process

Answer 2

[128.02] Section 128(1)(a) provides that the transferor shall request in writing the transfer of shares and the company shall lodge a notice of transfer of shares with the registrar in the prescribed form. The company shall also enter in the appropriate register the name of the transferee: s 128(1)(b).

Question 3

The company’s duty

Answer 3

[128.03] The company, upon receipt of the request to transfer shares, requires the person having possession, custody or control of the share certificate or debenture and the instrument of transfer thereof to deliver or produce them within seven to 28 days of the date of the notice, to have the share certificate or debenture cancelled or rectified, and the transfer registered: s 128(3). Any breach of subsection (3) entitles the transferor to apply to a judge to issue a summons for that person to appear before the court and show cause why the documents mentioned in the notice could not be delivered or produced as required by the notice: s 128(3) and (4).

Question 4

Electronic register

Answer 4

[128.04] Section 128(2) provides that no transfer of shares shall be effected until the electronic register of members is updated by the registrar under s 196A(5). In other words, the legal title to the shares is perfected only upon the registrar’s act of updating the register with the transferee’s name. Previously, the legal title is perfected when the company enters the name of the transferee as the new owner. Now it takes a further step for the registrar to update the electronic register for the legal title to pass to the new owner. As the registration of the new owner is done electronically, the transmission of data is instantaneous and there should not be any time lapse between the act of the company in entering the transferee’s name on the register and the registrar updating the electronic register accordingly.