Can a company transfer property by transfer of shares without paying stamp duty?

Ask Legal Question Forums Business Law Can a company transfer property by transfer of shares without paying stamp duty?

This topic contains 1 reply, has 2 voices, and was last updated by Dr. Ashok Dhamija Dr. Ashok Dhamija 6 months ago.

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  • #845

    Anonymous
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    A private limited company has a property in its name, which is a building with land beneath it. This is the main property of the company. Is it possible for the company to transfer this property to some other person(s) by transferring its shares to that other person, without attracting stamp duty on sale of such property.

  • #846

    Yes. I think it should be possible to transfer the property that the private limited company holds, along with the private company itself, by way of transfer of its shares to another person or group of persons.

    What basically this means is that the ownership of the shares of the company is being transferred to another set of persons who will now own the shares of the company. Thus, the management of the company will change and the ownership of its shares will also change hands. The property (i.e., building along with land) that belongs to the private limited company will still continue to be under the ownership of the same company. But, the persons who control the property will change with the change in management of the company. Thus, there is no change in ownership of the property or we can say that the property itself has not been transferred. But, the ownership of the shares of the company itself has changed, i.e., the management of the company has changed. Thus, while the property is still owned by the same company, the persons who run the company have changed. Therefore, indirectly, the property is now controlled by different people, even though, in law, the ownership of property continues to be with the same company.

    Since the owner of the property continues to be the same company and there is no transfer of ownership of the property, there may be no payment of stamp duty.

    However, whatever legal formalities for transfer of ownership of the shares (and management) of the private limited company are needed, the same will have to be completed.

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