Provisions on Share Certificate in the Indian Corporation Act

Share certificate provisions in Indian Corporate Act

The provisions of the share certificate in the Indian Corporation Act

According to section 2(84) of the 2013 Company Law, shares refer to shares in a company’s share capital, including stocks, shares or bonds, that is, transferable movable property specified in the company’s sections of association.

 

I. Type of equity

 

1. Authorized Share Capital

 

2.Issued Shared Capital issued share capital

 

3.Subscribed Share Capital

 

4.Paid up share capital

 

 

II. Type of equity

 

1. Equity Share Capital equity/common equity

  •    With voting right
  •    With differential right

 

2. Preference Share Capital

 

Q. What is a share certificate?

 

A share certificate is a document issued by a company to prove that the person stated in it holds a corresponding number of shares in the company.

 

Time limit for issuing shares

 

1. Establishment of a company: prepare a subscription memorandum within 2 months from the date of incorporation

 

2. Allotment: within 2 months from the date of allotment

 

3. Transfer: within 1 month from the date the company issues the transfer receipt

 

What are the Requirements for issuing equity certificates?

1. The company shall provide a certificate for the shares held by each shareholder without paying any fees.

 

2. If a shareholder needs multiple certificates: If a shareholder needs multiple certificates or exceeds the company’s certificate issued by the company, each certificate except the first certificate needs to pay at least 20 rupees.

 

3. If the shares are jointly held by multiple people: the company does not need to issue multiple certificates. When the certificates are delivered to one of the co-holders, it should be determined that they are sufficient for each holder.

 

What should be specified in the share certificate?

1. Share certificate should be issued in SH-I form or similar form

 

2. The share certificate should indicate the name of the member

 

3. Each share certificate should be stamped with the company seal

 

4. The number of relevant shares should be clarified

 

5. The amount corresponding to the number of shares should be clearly paid

 

6. The special code of the shares should be clear

 

7. The code of the share certificate should be clear

 

8. The number corresponding to the shareholder should be clear

 

9. Company name, company CIN, company registered address

 

What are the Requirements for issuing equity certificates?

1. There should be allotment or subscription when setting up a company

 

2. The certificate can be issued only after the resolution of the board of directors is passed at the board meeting (the share certificate can only be issued by the board of directors through the resolution of the directors)

 

3. The share certificate should specify the above matters

 

4. The issuance of share certificates requires the signatures of two directors (one of them should be a managing director or a member of the board of directors other than a full-time director)

 

5. The company secretary, if any or any person authorized by the board of directors (the company secretary will be regarded as the person authorized to sign the share certificate)

 

Note:

 

1. The share certificate must be issued by the company registry.

 

2. After the issuance of the share certificate, the company shall pay stamp duty on the issuance of the share certificate according to the national “Stamp Tax Law”.

 

 

Q: Is an equity certificate required to issue part of the paid-up shares?

A: Yes. Regardless of the issuance of fully paid-up shares or partially paid-up shares, a share certificate must be issued.

 

Q: Can the company charge shareholders for the issuance of copies of equity certificates?

A: The company decides to issue a pre-certificate by the board of directors, and can charge a fee of not more than 50 rupees.

 

Q: Who is required to sign the equity certificate and be responsible for the equity participation by machinery, equipment or other equipment?

A: The director should sign and assume responsibility in his own name, and safely keep any machinery, equipment or other equipment already in use.

 

Q: Once a dispute arises, which one is the priority document?

A: In the event of a dispute, the share certificate has priority when used as preliminary evidence, and its validity takes precedence over the member register. (The member register is easily controlled by the company management)

 

Q: If the company issues copies of equity certificates for fraudulent purposes, what fines or penalties will the company face?

A: If the company has the above behavior, it should be fined not less than five times the par value of the shares stated in the equity certificate involved, and it can also be extended to ten times or 100 million rupees, whichever is higher.

 

 

Author’s Bio

Name: Ajay Rastogi

Educational Qualification: LLB

Profession: Advocate / Lawyer

Work Experience: 20 Years of Legal Practice

Profile Link: https://lawjc.com/members/advajayrastogi/

 

Share This Post
Have your say!
00

Customer Reviews

5
0%
4
0%
3
0%
2
0%
1
0%
0
0%

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

    Thanks for submitting your comment!