A share certificate refers to a document which is issued by a company evidencing that a person named in such certificate is the owner of the shares of the Company as stated in the share certificate. The Indian Companies Act mandates companies for issuing share certificates post their incorporation.
After the incorporation of the company, the company needs to issue the share certificates within two months from the incorporation date. Where additional shares are allotted to the new or existing shareholders, the share certificates should be issued within two months from the allotment date. In a case related to the share transfers, the share certificates should be issued to transferees within a period of one month of receipt of the instrument of transfer by such Company.
(I) Procedure for Issue and delivery of share certificates after allotment
1. Board resolution for approval and authorisation to issue share certificate
2. Prepare share certificate in FormSH-1
3. Every unlisted public Company shall issue its securities in dematerialized form. (For compliances of dematerialisation please refer Quick Referencer under Section 42)
4. Share Certificates shall be signed by-
(a) two directors or;
(b) by a director & the company secretary, wherever there is a company secretary
5. In case the company has a common seal it shall be affixed in the presence of per sons required to sign the certificate.
6. In case of One Person Company, Share Certificate shall be signed by a director and the company secretary or any other person authorised by the Board
7. Entry in register of members in Form MGT-1 within 7 days of allotment
8. Authentication of entries in register by CS or authorised person as per provisions & rates of Stamp Act of that State in
9. Stamp Duty adjudication which registered office of the Company is situated.
10. Company to deliver the certificates of securities, allotted, transferred or transmitted:
(a) In case of subscribers to the memorandum- within 2 months from incorporation
(b) In case of any allotment of any of its share- Within 2 months from the date of allotment
(c) In case of transfer or transmission of securities Within 1 month from the receipt of share transfer form by the Company
(d) In case of any allotment of debenture- Within 6 months from the date of allotment
Note:- Specified IFSC public company shall deliver the certificates of all securities to subscribers after incorporation, allotment, transfer or transmission within a period of sixty days
(II) Procedure for Issue of renewed or duplicate share certificates
1. Surrender of original certificate to the company
2. Board resolution for approval and authorisation of renewal or for issue of dupli cate share certificates
3. Duplicate share Certificates to be issued in Form SH-1 and signing on the share certificates shall be done as mentioned in Procedure I above.
4. Entry in register of renewed & duplicate share certificates in Form SH-2
5. Authentication of entries in register by CS or authorised person
(III) Procedure for Cancellation of Share Certificates
1. Surrender of original certificate to the company
2. Stamping or printing the word “CANCELLED” on face of share certificate
3. Entry in register of members in Form MGT-1
4. Board resolution for destroying after expiry of minimum 3 years from the date on which they are surrendered.
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 [email protected].
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