Meaning
A corporate registry document acts as the primary source of truth for the ownership and transfer of a company’s shares. The share transfer ledger records the details of every transaction, including the names of the transferor and transferee, the number of shares, and the date of the transfer. This ledger is maintained by the company’s secretary and is used to determine who is entitled to vote and receive dividends.
Record Maintenance
The accuracy of the share transfer ledger is critical for the corporate governance of the company. Any errors in the ledger can lead to disputes over who owns the shares and who has the right to vote. The company must update the ledger immediately after any share transfer to ensure that the records remain accurate.
Title Verification
Purchasers of shares use the ledger to verify the seller’s title.
Legal Enforcement
The share transfer ledger is legally binding on the company and its shareholders. In many jurisdictions, a share transfer is not legally effective until it has been entered in the ledger, meaning that the buyer does not become the legal owner until that point. This rule protects the company from competing claims to share ownership and ensures that it only pays dividends to the registered owner.
