ABOUT SHARES:
‘Shares’ As per Section 2(84) of Companies Act, 2013, Share means Share in the share capital of a Company and Include stocks. Share or Debentures are movable property transferable in Manner provided in the AOA of Company. (Sec-44)
TYPES OF SHARE CAPITAL
i. Authorized Share Capital
ii. Issued Shared Capital
iii. Subscribed Share Capital
iv. Paid up share capital
KINDS OF SHARE CAPITAL
i. Equity Share Capital
a) With voting right
b) With differential right
ii. Preference Share Capital
Share Certificate:
A share Certificate is a document issued by company evidencing that the person named in the certificate is owner of number shares of Company as specified in the Certificate.
TIME PERIOD FOR ISSUE OF SHARE CERTIFICATES:
- In case of Incorporation: With in a period of 2 (Two) Month from the date of Incorporation to the subscriber of Memorandum.
- In case of Allotment: With in a period of 2 (Two) Month from the date of allotment of shares.
- In case of Transfer: With in a period of 1 (One) Month from the date of receipt of instrument of Transfer by the Company
Case:
Cardiff Chemicals V. Fortune Bio-Tech Ltd. (2004) 55
SCL 645 + 126 Comp Cas 275 (CLB),
It was held that burden to prove the share certificates have been delivered to shareholder is on the company.
FAQ’s
| S. No. | QUESTION & ANSWERS. |
| A. | Whether share certificate should be issued for partly paid up shares? |
| A Share certificate has to be issued whether the shares are partly paid up or fully paid up. | |
| B. | In case of shares issued in Demat form, whether issue of physical share certificate required or not? |
| If security is issued in Demat form, issue of share certificate is not required. | |
| C. | Who will intimate the Depository in case of issue of shares in Demat? |
| Company shall intimate details of allotment of securities to depository immediately on allotment of such securities. {Provision of Section 56(4)} | |
| D. | Who is member? |
| • Every person holding shares of the Company.• Every person whose name is entered as a beneficial owner in the record of a depository. | |
| E. | In case of dispute, who will be precedence as proof of evidence (Members’ Register of Share Certificates)? |
| In case of dispute prima facie evidence through share certificate get precedence, over the evidence of register of members, as the register of members, being under control of Company is susceptible to manipulation. | |
| F. | What will be the fine and penalty on Company, if Company issue duplicate certificate with intent to defraud. |
| If a company renews a certificate or issues duplicate certificate with intent to defraud, the company is punishable with fine which shall not be less then Five times of the face value involved in the issue of duplicate certificate but it may extend upto ten times the face value of such shares ORTen Crore, whichever is higher. |
NOMINAL VALUE OF SHARES:
- Shares not listed on any stock exchange: A share can be of any nominal value e.g. Rs. 1, Rs. 10, Rs. 100, Rs. 1000.
- Shares listed on any stock exchange: Share listed in any stock exchange but not in dematerialized form should be only of Rs. 10/- face value.
- Debenture listed on any stock exchange: Debenture listed in any stock exchange but not in dematerialized form should be only of Rs. 100/- face value
REQUIREMENT FOR ISSUE OF SHARE CERTIFICATE:
- A Company shall provide one certificate to a member for all his shares without payment of any charges.
- If a Shareholder want more than one Certificate: If a shareholder want more than one certificate for one or more of shares than company may issue several certificates, upon payment of Rs. 20/- each certificate after the first.
- If Shares hold Jointly by several person: The Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several join holders shall be sufficient delivery to all such holders.
SHARE CERTIFICATE SHALL SPECIFY FOLLOWINGS MATTER:
- Share Certificate shall issue in form SH-I or near as possible.
- Certificate should specifying Name of Member.
- Every Certificate shall be under the Common Seal of the Company.
- It shall specify the Number of Shares it relates.
- It shall specify the amount paid on those Shares.
- It shall specify the Distinctive No. of Shares.
- It shall specify the Number of Share Certificate.
- It shall specify the Folio No. of Member.
- Name of Company, CIN of Company and Registered Office Address of the Company.
REQUIREMENT FOR ISSUE OF SHARE CERTIFICATE:
- There should be an allotment or Subscription at the time of Incorporation.
- A Board resolution should be passed in the Board Meeting for issue of Certificate.
(Share Certificate can be issued only under authority of Board of Directors by a Board Resolution.)
- Share Certificate shall specify the matter mention in above.
- Share Certificate should be issue under the signature of Two Director and
(One of the Directors should be person other than Managing or Whole Time Director, if such person is available on the Board of Directors.
- Company Secretary, if any or any other person authorized by Board of Directors.
(Company Secretary of the Company shall be deemed to be authorized to sign the Share Certificates)
Note:
- Share Certificate Must be ‘Issued’ from registered office only.
- After issue of Share Certificate, Company should pay stamp duty on issue of share certificate as per Stamp Act of the State.
REGISTER OF MEMBERS
Details of share certificates issued will be maintained in Register of members maintained under Section 88 of the Companies Act, 2013. Along with Name to whom issued and date of issue. Rule 5(4) of Companies Rules, 2014.
| S. No. | QUESTION & ANSWERS. |
| A. | In case of BULK ISSUE of Share Certificate, how to get it Signed from the DIRECTORS? |
| It is, therefore, provided that signatures of directors can be put by means of any machine, equipment or other mechanical means (e.g. engraving in metal or lithography, or digitally signed, but not by rubber stamp). | |
| B. | In case of Signature on Share Certificates by means of any machine, equipment or other mechanical means then who will be responsible for affixation of signature. |
| The director shall be personally responsible for permitting affixation of his signature, and safe custody of any machine, equipment or other material used. | |
| C. | In case of BULK ISSUE of Share Certificate, how to get it Signed from the THIRD PERSON? |
| The third signature should be by actual signing. |
MAINTENANCE OF BLANK SHARE CERTIFICATE:
- All blank form to be used for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board. (Board of Directors in their Meeting will pass a resolution for printing of Blank Share Certificates).
- The blank form shall be consecutively machine- numbered and the forms and the blocks, engravings, facsimiles and hues relating to the printing
- The Company Secretary or authorized person shall be responsible for rendering an account of these forms to the Board.
- All books relating to share certificates shall be preserved in good order not less than thirty years.
- DESTROY of Surrendered Certificates: All certificates surrendered to a company shall immediately be defaced by stamping or printing the word “cancelled” in bold letters and
- May be destroyed after the expiry of three years from the date on which they are surrendered.
- Board will pass resolution for giving authority for destroys of such Certificates.
- Destroy should be done in the presence of a person duly appointed by the Board in this behalf.
| S. No. | QUESTION & ANSWERS. |
| A. | Whether company will maintain Blank Share Certificate in its Record? |
| Yes, Companies Maintain blank share certificate in its records. | |
| B. | Who will be authorized for issue of Share Certificates? |
| Board of Directors in their Meeting will pass a resolution for printing of Blank Share Certificates. | |
| C. | Who will be the custodian for the Blank Share Certificates? |
| Such Blank Share Certificates shall be kept in the custody of the Secretary or such other person as the Board may authorize for the purpose. | |
| D. | Time period for preservance of book relating to share certificate. |
| All books relating to share certificates shall be preserved in good order not less than thirty years. |
ISSUE OF RENEWED SHARE CERTIFICATE:
- Company can issue fresh certificate by splitting, consolidating or replacing old certificate.
FRESH Certificate can be issued: Fresh Certificate can be issued in following cases:
i. If the Share Certificate are sub-divided consolidated or
ii. In replacement of those which are defaced, mutilated, torn or old, decrepit, worn out or
iii. Where the pages on the reverse for recording transfer have been duly utilized.
CONDITION for issue of Fresh Certificate:
- Fresh Certificate will be issue after surrender of old Certificate.
- Company can charge upto Rs. 50/- pre certificate as decided by the Board.
CHARGES for issue of Fresh Certificate (in lieu of Consolidation, sub-division):
- Company can charge for Sub-divided or consolidated or old share Certificate.
- But Company Can’t charge where pages on reverse for recording transfer have been utilized.
- If fresh certificates issued pursuant to scheme of arrangement sanctioned by the High Court or Central Government No fee shall be payable.
“Where a fresh certificate is issued as above, It shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is. #Issued in lieu of share certificate No…… sub-divided/replaced/on consolidation#. {Rule 6(1)(b) of Companies, (Share Capital and Debentures) Rules, 2014.
CHARGES for issue of Fresh Certificate (in lieu of Old and worn out Certificates): A member can apply to company for replacement of old, torn, defaced or worn out certificates.
- If the company is LISTED, it can’t charge any amount.
- If the Company is not listed, it can charge upto Rs. 20/- per share for issuing new share certificates.
- Original Share Certificate must be surrendered to the Company.
RECORD TO BE MAINTAINED
- Record of renewed and Duplicate Share Certificates shall be maintained in Form SH-2.
- The register shall be kept at registered office or where register of member is kept in proper custody.
- All entries made in register shall be authenticated by Company Secretary or authorized person.
DUPLICATE SHARE CERTIFICATE:
- Situations When duplicate Share Certificates can be issued, if original certificate is lost or destroyed.
PROCESS FOR ISSUE OF DUPLICATE SHARE CERTIFICATES:
i. Shareholder will inform the Company about lost of Share Certificate.
ii. Company can ask for followings :
- Payment of fees of Rs. 50/- per share
- Supporting Evidence
- Indemnity Bond
- Payment of out of pocket expenses incurred by the company in investigation the evidence produced.
iii. Share Certificate shall state prominently on the face of it and be recorded in the Register maintained for the purpose that it is “DUPLICATE ISSUED IN LIEU OF SHARE CERTIFICATE NO……:”
iv. The word “DUPLICATE” shall be stamped or printed prominently on the face of the Share Certificate.
TIME PERIOD FOR ISSUE OF DUPLICATE SHARE CERTIFICATES:
In case of Unlisted Companies: The duplicate share certificates shall be issued within a period of 3 (Three) month.
In case of Listed Companies: The duplicate share Certificate shall be issued 15 (fifteen) days, from the date of submission of complete documents with the Company.
RECORD TO BE MAINTAINED
- Record of renewed and duplicate shares certificates shall be maintained in form SH-2.
- The register shall be kept at registered office or where register of member is kept in proper custody.
- All entries made in register shall be authenticated by Company Secretary or authorized person.
Case:
Raj Bahadur Gujarmal Modi & Bros V. Godfrey Philips India (2008) 85
SCL 290 (Bom HC)
- Duplicate share can be issued only if original was issued, which was lost or destroyed.
- If there is no evidence of issue of original shares, duplicate cant’ be issued.
Pushpaben Kalyanbhai Vasa V. Philips India (2002) 40 SCL 766 (CLB)
It was held that CLB has no power to give directions for issue of duplicate certificate.
| S. No. | QUESTION & ANSWERS. |
| A. | Whether company can charge from the shareholder for issue of Duplicate Share Certificate? |
| Company can charge upto Rs. 50/- pre certificate as decided by the Board. | |
| B. | Whether Company Can charge where pages on reverse for recording transfer have been utilized |
| No, Company Can Not. | |
| C. | In case of Issue of Duplicate/Renew Certificate, what should SPECIAL mention on the Share Certificate. |
| In case of Subdivision/Consolidation/replaced:It shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is. #Issued in lieu of share certificate No…… sub-divided/replaced/on consolidation#. In case of issue of Duplicate Share Certificate:It shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is. it is “duplicate issued in lieu of share certificate no……:” |
|
| D. | In which form record of renewed and Duplicate Share Certificates shall be maintained |
| Form SH-2 |
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at [email protected])
Author Bio
What will be the effect of cancellation of shares on distinctive numbers of shares due to cross shareholding ?
Hi Divesh,
Thanks for Sharing the article.
My father bought some physical shares with his nick name now is it possible to transfer the shares to his original name. we don’t have any ID proof or address proof on my father nick name. what is the procedure for it .
Please revert at the earliest.
Thanks in advance.
Doubt: still not clear. If i need to know the legal proof of how many total number of shares does a company have? What legal documents can we show to determine total number of shares in a company?
Really useful one, Thank you so much sir
procedure for split share certificate of private limited company
Can a Private Limited/LLP company be legally formed under the following conditions?
1. An existing Private Limited company as a First Subscriber subscribes to 7400 shares in the new company & pays and share certificates issued, at the time of incorporation.
2. An individual as the other First Subscriber subscribes to 1 share in the new company & pays and share certificate issued, at the time of incorporation.
3. However, 2599 shares are “allotted” to the said individual at the time of incorporation, but not paid & certificates issued, until after 3 years from the date of incorporation, depending on the individual’s milestone-based performance as the CEO & Director?
I have 50 SBI share certificates of Re 10/- each allotted thru public issue. In 2013 these were converted to Re 1/- shares but I did not receive the new 500 share certificates so far. RTAs wrote to me saying shares were dispatched to me in Nov 2013 and they were not returned to them. Now they want me to file FIR with police for lost/misplaced shares. When I did not receive shares is it right for me declare that I lost it? Kindly advise as to how can I get the share certificates.
[email protected]
WHAT IS THE HARE CERTIFICATE NUMBER FOR ISSUE OF DEBENTURE
Is physical share certificates be destroyed after getting converting it into demat form
Does the Original share certificate number change with the transfer of a particular share to a new person.
Thanks for your help
Dear Sir
Please advice me on issue of share certificates to transferee if multiple shareholders have transferred their shares to a single transferee on the same date
WHAT IS THE PROCEDURE FOR CANCELLATION
THE NAME OF JOINT HOLDER ON THE SHARE CERTIFICATE
Thanks for Sharing this informative Article.
I just want to know whether to issue the share certificate for foreign companies in the name of Authorized person or in the name of Foreign companies?
Thanks for your help
Best regards
A PVT LTD Co has not issued any share certificates to its members till now. some of them transferred shares to exiting members. Recently new members were joined and they require share certificates.The Board is the view of issuing shares to all the members (exiting and new). If the boards decision is correct, what will be the dates to be shown on the face of the shares
A PVT Ltd company has not issued any share certificate to its members. Certain transfers of shares were made among the members. Recently additional members joined the Company and they request for issue of share certificates. Board is in the opinion of issuing shares to all the members (both existing and the new). Is the Board decision is correct? If so, what will be the date to be shown on the face of the certifiates
We have acc shares of face value 100 now can i know how many shares will be there
In case of consolidation of share certificates, the surrendered share certificate were destroyed after three years of surrender. Will the counter folio of the same will also be destroyed?
What if the share certificate is not issued within 2 months of incorporation? can it be issued at a later date also? The Capital amount was bought in after 2 months. What is the procedure?
My company secretary did not give me share certificate. He gave me the non-judicial estamp as proof, and said that this is all is needed. Is this something new? Should I insist on share certificate?
if their are more than 2 owner of a property then what is the procedure for share certificate
Dear Sir,
I came with a case in a listed Company where at the time of incorporation in 1990, Company has issued physical share certificate. Later on, after 2005-06, demate process started. Some of the shareholders got their shares dematerialised. Company has printed physical share certificates with signature of two directors Mr. A and Mr. B printed on it with affixation of common seal.
Now usual practice is till date, Company uses same format (same physical share certificate with signature of Mr. A and Mr. B) when any remate request received. But now Mr. B resigned from the Company.
If now Company receives any remate request, then do we require to pass board resolution to authorise any other director in place of the retiring one to sign on share certificate?
Here my question is resignation of a director( whose signature is appended on share certificate) require the Company to re-print the entire booklet of physical share certificates?
Dear sir
please advice me how i can check my shares status whether it is sale out or in hold .
Can i check the status of share by folio no or share certificate no.
Awesome work man
Hello Devesh,
This article is a good synopsis and useful too.
I wanted to know whether at the time of conversion of a Company from private to public limited, can a company issue new share certificates with new name to the old shareholders and if Yes, whether the numbering of these new share certificates with new name can start afresh, i.e. from 1 or is the numbering to be continued from the old lot (i.e. lot with old names)?
Further in case these share certificates with new name are issued is it required to mention “Issued In Lieu of share certificate no……..”.
Please revert at the earliest.
Thanks.
Hi Divesh,
Thanks for sharing this informative article.
I want to know that whether the company can use aplha-numeric combination for numbering share certificate. I want to issue preference shares and the share certificate number I am entering is PA-01. Is it ok or it should be only numbers?