When companies issue shares in the market, shareholders who buy in are issued a share certificate. The share certificate basically acts as a receipt for the purchase and ownership of shares in the company. The document certifies registered ownership of shares from a particular date.
It is basically handing over the rights and duties of a member of the company to any other person who wishes to become a member of the company. It is a voluntary act of a member that is accompanied according to the articles mentioned in the AOA of the company.
Procedure for Issue and Delivery of share certificates after allotment
Board resolution for approval and authorisation to issue share certificate
1. Prepare share certificate in FormSH-1
2. Every unlisted public Company shall issue its securities in dematerialized form. (For compliances of dematerialisation please refer Quick Referencer under Section 42)
3. Entry in register of members in Form MGT-1 within 7 days of allotment 5. Authentication of entries in register by CS or authorised person 6. Stamp Duty adjudication as per provisions & rates of Stamp Act of the relevant State in which registered office of the Company is situated. Company to deliver the Certificates of Securities, allotted, transferred or transmitted:
4. In case of subscribers to the memorandum- Within 2 months from incorporation
5. In case of any allotment of any of its share- Within 2 months from the date of allotment 3. In case of transfer or transmission of securities- Within 1 month from the receipt of share transfer form by the company.
6. In case of any allotment of debenture- Within 6 months from the date of allotment
Note: A Specified IFSC public company and Private Company shall deliver the certificates of all securities to subscribers after incorporation, allotment, transfer or transmission within a period of sixty days
The article has been prepared considering the relevant Guidelines/ Circulars/ Notifications/ Provisions of the Companies Act, 2013, the rules made there under & The Companies Act, 2013. Readers are requested to cross-check the provisions before acting upon the same. The author will not be liable for any damages or penalties caused.
About Author:- Author Sagar Kapoor is a Practicing Company Secretary at Delhi. Founder of Sagar Kapoor & Associates, The author has core knowledge in Company Law matters specially. You can get in touch with me at CSsagarkapoor@gmail.com.