Stamping of Share Certificates (FAQ’s & List of Documents)

As we all are well aware of the fact that our government never give up a chance to earn any sort of revenue coming via. different routes or sources, having said that the Stamp Duty to be paid on the share Certificates issued by the company to it’s Share Holder comes into the picture.

This topic has an amazing Combination of the provisions of the two altogether very different Act’s:-

First: Chapter IV Share Capital & Debenture of the Companies Act, 2013.

Second: Indian Stamp Act, 1899.

So let us all understand that how this combination comes up with the Conclusion of filing of Share Certificates with the Revenue Department. So that applicable Stamp Duty shall be paid with in the Limited Time Frame. This Articles takes the shape of FAQ’s so that every type of query can be answered.

QUESTION 1: Why stamping is even required or importance of Stamping ?

ANSWER: As per Indian stamp act 1899, Stamping is a tax on the documents executed in India, share Certificates comes under the definition of Instrument, hence it is liable to be stamped as per the government specifications. Government gets huge revenues through the process of stamping.

Stamping provides the legality to the documents that are executed in India.

Rate of stamping differs from state to state.

Properly stamped documents are admissible as evidence in the court of law. ·

QUESTION 2: In how many days share certificates shall be issued?

ANSWER: As per section 56 (4) of the Companies Act, 2013:

Share certificates shall be delivered within a period of 2 months from the allotment, in case of allotment of shares.·

Within a period of 2 months from the date of incorporation.

Within a period of 1 month from the date of receipt of transfer and transmission.

Within a period of 6 months from the date of allotment in case of the allotment of debenture.

AFTER THE SHARE CERTIFICATES HAVE BEEN ISSUED TO THE HOLDERS, NOW THE TIME HAS COME TO PAY THE STAMP DUTY AS PER INDIAN STAMP ACT, 1899

QUESTION3: In how many days stamp duty shall be paid to the revenue department?

ANSWER: Within 30 days of issue of share certificates, stamp duty shall be paid.(Here payment of Stamp Duty means application to be filed to Stamping Authority i.e. Revenue department of the state, for payment of Stamp duty within 30 days of issue of Share Certificates)

QUESTION4: Where to file the application & to whom?

ANSWER: Application to be filed to the Revenue department of the state. For states other than NCT OF DELHI process shall be differed. For NCT OF DELHI an online process has been given & for that you have to register your company on Online Portal i.e. http://shcilestamp.com/  & go to the tab of  Stamp duty Payment – Issuance of New Shares for NCT of Delhi .

QUESTION 5: What are the penalties in case of non-payment of stamping?

ANSWER: The superintendent has the power to put penalty, 10 times of the amount of stamp duty.

QUESTION 6: What is the rate of stamp duty on share certificates?

ANSWER: Rate of Duty for Nct of Delhi: One rupee for every one thousand, or a part thereof, of the value of the shares, scrip or stock. (Rate of Stamp Duty differs state wise).

QUESTION 7: What will happen if we are filing the application after 30 days?

ANSWER: If the matter got delayed due to any reason and an application filed is beyond 30 days then the matter will directly be called for hearing. A hearing date will be given to the Company. An opportunity of being heared shall be given to the Company by the Superintendent. The representative of the Company have to present its case by giving a valid reason of not filing it on time. The superintendent will be charging the penalty accordingly up to the maximum of 10 times of the amount of stamp duty.

QUESTION 8: What are the documents required ?

ANSWER: Following documents are required:

In Case of Incorporation:

1. Application having details of the allotted Shares .

2. Authority Letter in the name of the person representing Company.

3. Board Resolution for Issue of Share Certificates

4. MOA/COI

5. Share Certificates (Signed by two Directors/MD/WTD & Company Secretary (if any) otherwise two Directors & one person as authorized by Board of Directors)

6. Certificate by Practicing Professional (Digitally Signed Document)/Details of the Director of the Company

#There is no need of PAS-3 & Challan of the same. (Because at the time of incorporation it is deemed allotment of the subscriber of the company, Hence there is no requirement to file PAS-3 )

In Case of Allotment:
1. Application having details of the allotted Shares.

2. Authority Letter in the name of the person representing Company.

3. Board Resolution for Issue of Share Certificates

4. MOA/COI

5. Share Certificates (Signed by two Directors/MD/WTD & Company Secretary (if any) otherwise two Directors & one person as authorized by Board of Directors)

6. PAS- 3 along with Challan

7. List of Allotees.

8. Certificate by Practicing Professional (Digitally Signed Document)/Details of the Director of the Company

In case of allotment to foreign directors:

Extra documents to be attached:

Foreign Inward Remittance Certificate(FIRC) (photocopy to be attached)( It is an attachment of PAS-3 )§

#copy of every attachment of PAS-3 shall be the part of documents for stamping.

* Note:- Certified Copies of all the documents.

The article has been prepared considering the relevant Guidelines/ Circulars/ Notifications/ Provisions of the Companies Act, 2013, the rules made there under & Indian STAMP ACT, 1899. 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 and Partner at Corpcons Services ( Legal Consultancy firm). The author has core knowledge in Company Law matters specially. You can get in touch with me at [email protected].

Feed backs/ Queries/ Suggestions are invited.