Selling private-company shares: check the buyer, restrictions and records
A founder says, “I am selling 20% to an investor.” That sentence leaves two important questions unanswered: 20% of which total, and is the investor paying the founder or the company? Write out the transaction before drafting forms. A transfer of existing shares and an issue of new shares have different cash flows and ownership arithmetic.
Worked example: an existing shareholder sells
An illustrative private company has 10,000 issued ordinary shares. Ayesha holds 6,000 and Bilal holds 4,000. Ayesha proposes to sell 2,000 existing shares to an outside buyer, subject to the applicable transfer process.
| Holder | Before | After proposed transfer |
|---|---|---|
| Ayesha | 6,000 shares / 60% | 4,000 shares / 40% |
| Bilal | 4,000 shares / 40% | 4,000 shares / 40% |
| Buyer | 0 shares / 0% | 2,000 shares / 20% |
| Total | 10,000 shares / 100% | 10,000 shares / 100% |
If the agreed sale price is Rs 150 per share, the consideration is Rs 300,000 payable to the seller under the agreed completion terms. It is not a Rs 300,000 capital injection into the company. The share count stays at 10,000. The price example does not establish fair value or the tax and stamp treatment.
Check restrictions before promising an outside sale
Section 76 provides a member-offer process for private-company share sales; sections 74–75 address transfer instruments and registration. Read these with the actual articles. An informal buyer agreement should not be treated as proof that the company can immediately register the proposed transfer.
Prepare the relevant articles, any shareholder agreement, the current register and the proposed terms for review. Ask who must receive the offer, how the price is determined, what evidence records their response, and when a sale to the outside buyer is permitted. Avoid creating a universal deadline from a template that may not fit the transaction.
The transfer evidence checklist
| Record | Question it should answer |
|---|---|
| Member register and share evidence | Does the seller hold the precise number and class offered? |
| Restriction and offer records | Was the applicable member-offer process followed and evidenced? |
| Sale terms | Who pays whom, how much, when, and subject to which conditions? |
| Transfer instrument | Are parties, class, quantity, execution and applicable stamping correct? |
| Payment and completion record | Can the consideration be traced to the agreed transaction? |
| Company records and reporting | What register, certificate or depository changes and SECP filings follow? |
Use a completion checklist with an owner for each item. Do not call the transfer complete solely because the buyer sent money. Equally, do not alter ownership records merely because a draft deed exists. Agree which evidence establishes each completion step and retain the final signed version.
Use the current Form 3 route carefully
SECP's current published Form 3 title covers allotments and changes in shareholding, membership or voting rights. Its download page retains a legacy URL referring to “more than twenty-five percent”. The URL is not a safe basis for deciding whether a particular transfer is reportable. Check the current form, regulations and transaction facts before applying any reporting threshold.
Separately review beneficial-ownership information where relevant. Do not assume that a change recorded in the member register automatically resolves every regulator or bank record. Keep the actual filing outcome with the transfer pack.
When the transaction needs a different analysis
If the company needs working capital, compare a new issue using the allotment and dilution guide. If the departing shareholder is also a director, use the director-change guide for that separate office. Selling shares does not itself document a resignation.
A gift, inheritance, non-resident transaction, disputed title or partly paid shareholding can change the evidence and advice needed. For a sale, obtain a transaction-specific tax and stamp assessment rather than assuming the listed-securities rules apply unchanged to an unlisted private company. Ask for the basis and date of the assessment before agreeing a net settlement amount.
Start your enquiry with the total issued shares, the seller's holding, the proposed quantity and whether the buyer is already a member. The founders' governance checklist can also help identify agreements and decision rights that need to be reviewed before the ownership change.
I need a review of a proposed private-company share transfer, restrictions and required records. Start with a short summary. Ask for the work scope, required documents and fee before proceeding. Do not send passwords, identity scans or bank statements in the first enquiry.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Companies Act 2017 — Pakistan Code consolidation updated 7 October 2022
- SECP Form 3 — allotments and changes in shareholding, membership or voting rights (legacy URL; use current version)
- SECP Companies Regulations 2024 — consolidated through 25 July 2025; reviewed PDF April 2026
Questions people also ask
Does a transfer increase paid-up capital?
An ordinary transfer of existing shares changes the holder, not the issued share total. Any separate funding transaction should be documented separately.
Does buying 20% make the buyer a director?
Share ownership and directorship are separate. Review the required director appointment or election route if a board seat is part of the agreement.
Is every transfer below 25% exempt from filing?
Do not rely on that shortcut. Check the current Form 3 requirements, applicable regulations and facts; the page URL contains legacy wording.
Can the company receive the seller’s price instead?
The payment route must match the documented transaction. Clarify the seller, recipient and any separate company subscription before money moves.
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