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Know Your Compliance for Company Share Certificate Issuance

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Basic Facts on Company Share Certificate Issuance

A share certificate is a document issued by a company evidencing ownership of company shares as per the details specified in the document. Companies Act 2013 requires the company to issue share certificates post-incorporation of the company.

Face Value Of Share Certificate

Post-incorporation of a company, the Company is required to issue share certificates within a period of two months from the date of incorporation.

In case of allotting additional shares to new or existing shareholders, share certificates must be issued within two months from the date of allotment of shares.

In case of transfer of shares, share certificates must be issued to the Transferee within one month of the date of receipt of the instrument of transfer by the Company.

Details Mentioned In Share Certificate

All share certificates of a company issued in India must have the following information mentioned on the share certificate.

  • The share certificate should be issued in Form SH-1 or any document that resembles Form SH-1.
  • Name of the Company.
  • CIN Number of the Company.
  • Registered Office of the Company.
  • Name of the owners of the shares.
  • Folio number of the member.
  • Number of shares represented by the share certificate.
  • Amount paid on the shares.
  • Distinctive number of shares.
  • Number of share certificate.

 

Procedure For Issuing Share Certificates

  • The Company must provide one Certificate to a member for all his shares without paying any charges. If a shareholder requests more than one Certificate, the Company can issue additional shares for payment of ₹20 per each share certificate.
  • The Company must issue a share certificate at allotment or subscription or at the time of Incorporation. A Board resolution should be passed in the Board Meeting for the issue of the Certificate.
  • The prepared share certificates must conform to the standards mentioned above. They should be issued under the signature of two Directors, a Company Secretary, or any other person authorised by the Board of Directors.
  • The share certificate must be issued from the Company's registered office, and payment of stamp duty on the issue of the share certificate must be made as per the Stamp Act of the State.
  • After issuing the share certificate, one must enter the details of share certificates into to Register of Members maintained under Section 88 of the Companies Act, 2013, along with the Name to whom they issued and the date of the issue.

Penalties For Contravention

When any Company fails to comply or breaches the provisions regarding the issue of Share Certificates, then it is subject to penalty. The penalty shall not be less than ₹25,000 but cannot extend a limit up to ₹5,00,000.

Moreover, each defaulting Officer of such a Company will be liable to pay a minimum fine of ₹10,000, extending up to ₹1,00,000.