The secondary transaction or sale of shares is when an existing shareholder of the company sells their shares to another shareholder or private investor or back to the company for a negotiated consideration. Under the secondary transaction of shares, no new shares are issued by the company. Secondary transactions involve two parties-
(i) the seller who can be the employees, promoters or other shareholders; and
(ii) the buyer who can be other shareholders, investors, the company etc. Secondary transactions do not result in any change in the capital of the company. Here, only the ownership of shares changes hands while the total number of shares the company has issued remains the same. It is only the shareholders selling their shares who receive the benefit of the transaction.