A share transfer agreement is an official legal document that outlines the process of transferring ownership of shares from one party to another. In Sri Lanka, this agreement is governed by the Companies Act of 2007 and is a standard procedure for shareholders who want to sell or buy shares in companies.

The share transfer agreement in Sri Lanka comprises several vital sections, including the transferor and transferee details, the quantity and type of shares being transferred, the price for the transfer, and the responsibilities and warranties of both parties. All these sections must be duly filled out and signed by both parties involved, along with two witnesses.

One important aspect of share transfer agreements in Sri Lanka is that the transfer must be registered with the Registrar of Companies within 30 days of the agreement`s execution. Failure to comply with this requirement may result in criminal penalties and fines.

Another significant factor to consider when drafting a share transfer agreement in Sri Lanka is the tax implications of the transfer. The Sri Lankan government imposes a stamp duty on share transfers based on the value of the shares being transferred. Both the transferor and transferee must pay their share of the stamp duty, which is typically 0.75% of the shares` value.

In addition to the stamp duty, certain types of share transfers may be subject to capital gains tax. This tax is applicable when the transferor sells shares at a higher price than their original cost, and it typically ranges between 10% and 28% of the capital gain, depending on the seller`s residency and the nature of the transaction.

To avoid any legal or tax-related issues when transferring shares, it is highly recommended to seek the guidance of a qualified lawyer or a financial advisor who is well-versed in Sri Lankan share transfer laws.

In conclusion, the share transfer agreement is a crucial legal document for shareholders who wish to buy or sell shares in Sri Lanka. To ensure a smooth and hassle-free transfer process, it is essential to adhere to the Companies Act`s guidelines and seek professional advice before signing any agreement.