Abstract

This paper examines the regulation of share transfers in Indian private companies under Section 2(68)(ii) of the Companies Act, 2013, which allows for specific restrictions on such transfers. The study critically assesses the scope of these restrictions, ranging from partial limitations to outright bans, and their alignment with the broader regulatory framework. It focuses on the impact of these restrictions on the liquidity of shares and the rights of minority shareholders, particularly when company boards deny share registration, creating barriers to share transfer. This denial raises significant concerns about fairness in corporate governance and transparency. To provide a comprehensive analysis, the paper also explores global regulatory practices regarding share transfers in private companies, specifically comparing India’s approach with those in jurisdictions like the UK and the US. These comparisons highlight the diverse mechanisms employed internationally to regulate share transfers and shed light on alternative regulatory strategies. The study employs a doctrinal analysis complemented by a comparative approach, enabling a deeper understanding of the effectiveness of different mechanisms governing share transfers. By juxtaposing India’s regulatory framework with international practices, the paper identifies potential gaps and offers insights into the impact of these regulations on corporate governance, particularly with regard to minority shareholders. The paper concludes by proposing well-founded policy recommendations aimed at reforming the current regulatory framework in India. These recommendations focus on enhancing corporate governance, improving transparency in share transfer processes, and safeguarding the rights of minority shareholders, ensuring a more equitable and effective system for regulating share transfers in private companies.

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