Answer: The statement is correct, because shares of a public company are freely transferable movable property.
- Under Section 44 of the Companies Act, 2013, the shares of a member are movable property, transferable in the manner provided by the Articles of Association.
- Section 58(2) provides that the securities of a public company are freely transferable; the Articles of a public company cannot impose restrictions on transfer (unlike a private company).
- Shares in physical form are transferred by executing a share transfer deed (Form SH-4) and lodging it with the company with the share certificate.
- Shares in demat form are transferred through the Depository Participant by giving a Delivery Instruction Slip.
- Free transferability enables listing and trading on stock exchanges, giving liquidity to the shareholder.
- So a shareholder of a public company can transfer his shares, by sale or gift, to any person.
