Allotment and Transfer of Securities in Telangana: A Guide for Hyderabad Companies

Hyderabad has become one of India's busiest startup and technology hubs, and that means a lot of companies in Telangana are issuing shares to founders, angels and venture investors, or restructuring who owns what.

The rules on allotment and transfer of securities are national, under the Companies Act, 2013. But if your company is registered in Telangana, there are local points worth knowing.

The framework applies across India, the filings go through your local ROC

A company's registered office determines which Registrar of Companies (ROC) has jurisdiction. Companies with a registered office in Telangana are under the ROC at Hyderabad. Your forms are filed online on the MCA portal, but the jurisdiction matters for notices, adjudication and any regularisation of defaults.

If your registered office moves between states, that changes the jurisdiction, so keep it in mind when planning a relocation.

Allotment for Telangana companies

The core steps are the same as anywhere in India:

• Confirm authorised capital and the Articles permit the issue.
• Board resolution, and where needed a special resolution filed in Form MGT-14.
• Valuation report by a registered valuer for preferential allotment or private placement.
• Funds received through banking channels from the allottee.
• Board resolution of allotment, then Form PAS-3 within 30 days.
• Share certificates or demat credit, and updated statutory registers.

Startups raising angel or venture funding in Hyderabad should also check their term sheet and investment agreement, since investors often require specific rights that must be reflected in the Articles.

Transfer of shares for Telangana companies

For transfers, follow the Articles first, then:

• Execute Form SH-4 and pay the applicable stamp duty.
• Obtain board approval as the Articles require.
• Update the register of members and issue new certificates or credit the demat account.

Stamp duty on securities transfers is levied under the central Indian Stamp Act, so the rate is generally not something that varies by going to a different state. Even so, confirm the current rate and collection process before you complete a transaction.

Foreign investors in Hyderabad companies

Hyderabad attracts a lot of overseas investment, and foreign shareholders bring additional compliance:

• Allotment to a non-resident must meet the FEMA pricing guidelines and sector rules, and be reported to the RBI in Form FC-GPR within the prescribed period.
• Transfer between a resident and a non-resident is reported in Form FC-TRS.
• Payments must be routed through an authorised dealer bank, so it's worth choosing a bank in Hyderabad that handles foreign remittances routinely.

A practical checklist for Telangana founders

• Keep your cap table and statutory registers current after every event.
• Check the Articles before promising an investor or employee anything.
• Get a valuation before pricing an issue or transfer.
• Diarise the 30-day PAS-3 deadline and the FEMA deadlines.
• Make sure the registered office details on the MCA portal are up to date.
• Use a bank account in the company's name for all subscription money.

Common mistakes we see

• Promising equity to advisers or early employees without a proper allotment
• Late PAS-3 or FEMA filings
• Informal share transfers between founders without SH-4 or board approval
• Inconsistent records between the MCA portal, the registers and the cap table

How we help

We support Hyderabad and Telangana companies with the whole cycle: drafting resolutions and agreements, arranging valuation, filing MGT-14, PAS-3 and FEMA forms, preparing SH-4 documentation, and keeping registers and the cap table accurate. Doing this properly early saves real time and cost when a due-diligence request arrives.

Based in Hyderabad and planning a fundraise or a founder exit? Contact us to get your paperwork in order.

This article is for general information and isn't legal advice. Rules, rates and timelines change, so please confirm current provisions with a qualified professional.