A transfer signed by the transferor, but with a blank for the name of the transferee is called a blank transfer. In a blank transfer neither the transferee’s name and signature nor the date of sale are filed in the transfer form. The transferee is at liberty to sell it again without filling his name and signature to a subsequent buyer. The process of purchase and sale can be repeated any number of times with the blank deed and ultimately when it reaches the hands of one who wants to retain the shares, he can fill in his name and date and get it registered in the company’s books. Until a transferee is so registered as a shareholder the transferor will continue to be the shareholder of the company and he remains liable for the unpaid amount if any.
The facility of blank transfers has often been used for illegal purposes. Sometimes it is used to avoid taxes. Besides the identity of the real owner may be concealed. Consequently section 108 has been amended which has considerably restricted the scope of blank transfers. Section 108-A imposes restriction on the period of currency of blank transfers. It provides that every instrument of transfer shall be in prescribed form bearing the date of issue stamped by the prescribed authority and the said instrument shall be delivered to the company for registration:
i) In the case of shares dealt in or quoted on a recognized stock exchange at any time before the register of members is closed for the first time after the stamped date or within two months from the date put on the form by the prescribed authority, whichever is later; and
ii) In any other case, within two months from the date of such presentation to the prescribed authority.