Quick Summary
Share Certificate is evidence of title to shares issued by a company to its shareholders.
A share certificate is a document issued by a company under its common seal (if it has one) or signed by authorised signatories, certifying that a named person holds a specified number of shares. Under Section 46 of the Companies Act, 2013, it is prima facie evidence of the member's title to those shares. In demat form the depository record replaces the physical certificate, but private companies and unlisted firms still routinely issue physical certificates in the prescribed format.
Legal basis and format
The certificate is governed by Section 46 read with Rule 5 of the Companies (Share Capital and Debentures) Rules, 2014, and must be issued in Form SH-1. It has to be signed by two directors (or a director and the company secretary, where one is appointed) and bear the company seal only if the company has adopted one, since the common seal became optional after the Companies (Amendment) Act, 2015.
Required particulars
- Certificate number and the member's name and folio
- Number of shares held and their distinctive numbers
- Amount paid up on each share
- Corporate identity number (CIN) and registered office of the company
Time limits for issue
Under Section 56(4), a company must deliver certificates within two months of incorporation to subscribers, within two months of allotment for fresh allotments, and within one month of receiving a valid instrument of transfer. Stamp duty is payable on issue under the Indian Stamp Act as adopted by the relevant state. A duplicate may be issued under Rule 6 if a certificate is lost or defaced.
Key Points
- Proof of share ownership
- Issued under common seal
- Signed by directors
- Must be issued within 2 months
- Required for share transfer