{"id":9561,"date":"2020-03-21T10:22:52","date_gmt":"2020-03-21T04:52:52","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=9561"},"modified":"2020-04-16T15:48:52","modified_gmt":"2020-04-16T10:18:52","slug":"how-to-issue-a-company-share-certificate","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/","title":{"rendered":"How to Issue a Company Share Certificate?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">After completing the incorporation process, Company gets registered under Companies Act, 2013 and issues its shares to raise capital. During allotment of Shares, a Company grants Share Certificate to its shareholders as per the law. If you need complete knowledge about the procedure to issue a Company Share Certificate, then thoroughly study this write-up. It will provide an overview of <strong>Share Certificate<\/strong> and entail its important aspects like process, requirement and penalty in case of breach of the provisions.\u00a0\u00a0 <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3080794b96c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3080794b96c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#What_does_Share_Certificate_stand_for\" title=\"What does Share Certificate stand for?\">What does Share Certificate stand for?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Timelines_to_issue_a_Share_Certificate\" title=\"Timelines to issue a Share Certificate\">Timelines to issue a Share Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Format_of_a_Company_Share_Certificate\" title=\"Format of a Company Share Certificate \">Format of a Company Share Certificate <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Prerequisites_for_issuance_of_Share_Certificate\" title=\"Prerequisites for issuance of Share\nCertificate \">Prerequisites for issuance of Share\nCertificate <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Procedure_to_issue_a_Company_Share_Certificate\" title=\"Procedure to issue a Company Share Certificate\">Procedure to issue a Company Share Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Penalties_for_Contravention\" title=\"Penalties for Contravention\">Penalties for Contravention<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-issue-a-company-share-certificate\/#Conclusion\" title=\"Conclusion \">Conclusion <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_Share_Certificate_stand_for\"><\/span>What does Share Certificate stand for?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Share Certificate implies a written document signed by a Company which serves as legal evidence that a person specified is the owner of its Shares.\u00a0 Companies Act, 2013 has mandated Companies to issue Share Certificate within two months\u00a0of its incorporation. <\/p>\n\n\n\n<p><em>A list of essentials that a Company Share Certificate must contain: <\/em><\/p>\n\n\n\n<ul><li>Name of the\nCompany<\/li><li>Corporate\nIdentification Number or CIN&nbsp;of the Company<\/li><li>Registered address\nof the Company\u2019s Office<\/li><li>Name of\nthe shareholder <\/li><li>Folio\nnumber of member<\/li><li>Number\nof shares which are represented by Share Certificate<\/li><li>Amount paid\non such Shares<\/li><li>Distinctive\nnumber of Shares<\/li><li>Date of\nissuance of Shares<\/li><li>Number\nof Share Certificate <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Timelines_to_issue_a_Share_Certificate\"><\/span>Timelines to issue a Share Certificate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Share Certificate is issued after the Company\u2019s\nincorporation and after receiving capital from the shareholders. Companies Act,\n2013 has stipulated a timeframe for the Companies within which they can issue\nthe Certificates. It prescribes two conditions under which the Company needs to\nissue Share Certificate in the given timeframe, which is mentioned below:<\/p>\n\n\n\n<ul><li>In case, Companies\nallot additional Shares to the new or existing shareholders; they are required\nto issue Share Certificates within two months from the date of Share\u2019s allotment.<\/li><li>&nbsp;In case of Shares transfer\/transmission, Share\nCertificate must be issued to the Transferee within one month of the receipt\u2019s\ndate of the instrument of transfer by the Company.<\/li><li>If the company\nissues debentures, then it needs to issue Share Certificate within six months\nfrom the date of Debenture\u2019s allotment. <\/li><\/ul>\n\n\n\n<p>The signatories of a Share Certificate also differ for Private Company and One Person Company. In the Private Company, 1 or 2 Directors along with a Company Secretary (if appointed) has to sign Share Certificates whereas, when a <strong><a href=\"https:\/\/swaritadvisors.com\/one-person-company-registration\"><em>One Person Company<\/em><\/a><\/strong> issues Share Certificates, it must be signed by 1 Director &amp; Company Secretary or some person authorized by the Board.<\/p>\n\n\n\n<p>Companies with a common seal shall stamp the same on the\nShare Certificate in the presence of the persons mentioned above required to\nsign the Certificate.<\/p>\n\n\n\n<div class=\"browse\">\n<p>Browse through our articles on services provided at <a href=\"https:\/\/swaritadvisors.com\" target=\"_blank\" rel=\"noopener noreferrer\">Swarit Advisors<\/a>, and just let us know if we can help you with your IPO or Comapny Takeover or SEBI Advisory Services.<\/p>\n<div class=\"browse1\">\n<table class=\"table1\">\n\n<tbody>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Mergers and Acquisitions<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/buyback-of-shares\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Buyback of Shares<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/merger-and-amalgamation\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Merger and Amalgamation<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/public-issues\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Public Issues<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/rights-issue\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Rights Issue<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/preferential-allotment\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Preferential Allotment<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/company-takeover\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Company Takeover<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/issue-of-debentures\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Issue of Debentures<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/insurance-broker-license\" target=\"_blank\" rel=\"noopener noreferrer\"><span>Insurance Broker License<\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Format_of_a_Company_Share_Certificate\"><\/span>Format of a Company Share Certificate <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per&nbsp;<strong>Rule 5(2)-Companies (Share Capital and\nDebentures) Rules, 2014<\/strong>, a Share Certificate shall be issued\nin&nbsp;<strong>Form SH-1<\/strong>. Though the Rules\nhave facilitated Companies to have their own format, yet it has to be similar\nto Form No. SH-1. <\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"724\" height=\"1024\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/03\/Share-Certificate-Format-724x1024.jpg\" alt=\"Share Certificate Format\" class=\"wp-image-9563\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/03\/Share-Certificate-Format-724x1024.jpg 724w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/03\/Share-Certificate-Format-212x300.jpg 212w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/03\/Share-Certificate-Format-768x1086.jpg 768w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/03\/Share-Certificate-Format.jpg 827w\" sizes=\"(max-width: 724px) 100vw, 724px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prerequisites_for_issuance_of_Share_Certificate\"><\/span>Prerequisites for issuance of Share\nCertificate <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With effect from 1<sup>st<\/sup>\nApril 2014, a Company must fulfill these conditions before issuing Share\nCertificates to the allottees:<\/p>\n\n\n\n<ul><li>The Board must\nauthorize the issue of such Certificate by passing a Resolution. <\/li><li>Share Certificate\nshall only be issued on surrendering the&nbsp;<strong>\u201cLetter\nof Allotment\u201d<\/strong>&nbsp;or a \u201cFractional Coupon\u201d of requisite value.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_to_issue_a_Company_Share_Certificate\"><\/span>Procedure to issue a Company Share Certificate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are the insights of the process undertaken by a Company\nto issue Share Certificate:<\/p>\n\n\n\n<ul><li><strong>Summon Board Meeting &amp; allot Shares:<\/strong><strong><\/strong><\/li><\/ul>\n\n\n\n<p><strong>The first step is to call for a Board Meeting is\nto determine <\/strong>the allotment of Company\u2019s Shares. The Board of Directors shall assign a\ncommittee known as an allotment committee that will further decide about the distribution\nof Shares. Once the committee renders a report in regards to the allocation of\nShares, the Board shall then approve the Report and pass the Resolution for Shares\nallotment to the respective members. <\/p>\n\n\n\n<ul><li><strong>Deliver Letter of Allotment:<\/strong><\/li><\/ul>\n\n\n\n<p>Subsequent\nto allotting the Shares, the Company Secretary shall send the Letters of Allotment\nto the concerned members. <\/p>\n\n\n\n<p><div class=\"shadow6\"><strong>Note-<\/strong> The Letter of Allotment is\na letter which notifies a member that the Company has allotted a certain number\nof shares in his\/her name. Moreover, it is considered as Share Certificate\nuntil the issuance of the final Certificate.<\/div><\/p>\n\n\n\n<ul><li><strong>Preparing the Register of Members:<\/strong><\/li><\/ul>\n\n\n\n<p>The\nCompany Secretary will maintain a Register of Members from the received Applications\nand allotment sheets. &nbsp;The Register will\nprovide exclusive information about the Shareholders and details of the Shares\nthat have been allotted to them.<\/p>\n\n\n\n<ul><li><strong>Draft and\nPrint Share Certificate:<\/strong><\/li><\/ul>\n\n\n\n<p><strong>&nbsp;<\/strong>The Company Secretary must prepare the\nShare Certificate in the format (Form No. SH-1),\nas suggested by the Articles of Association. After drafting, he has to\nget the Form printed along with all the required details from the Register of\nMembers and allotment sheets. It is indispensable for the Directors to sign the\nCertificate with the Secretary\u2019s signature. Affix the Company\u2019s seal and Revenue\nStamp on each Share Certificate. Therefore, a Board Meeting shall be called again\nto pass the Resolution to issue Company Share Certificate.<\/p>\n\n\n\n<p>&nbsp;After issuing the Share\nCertificate, the Secretary must fill and maintain its details in the Register\nof Members according to Section 88 of Companies Act, 2013. <\/p>\n\n\n\n<ul><li><strong>Intimate\nthe members about delivery of Certificate:<\/strong><\/li><\/ul>\n\n\n\n<p>During this stage, the Company\nSecretary will inform all the approved Shareholders that their Share\nCertificates are ready.&nbsp; He will intimate\nthat the Certificates shall be delivered in exchange for Allotment Letters and\nbank receipts confirming the payment of allotment money. Thus, issue a public\nnotice to notify the information of the members to the general public.<\/p>\n\n\n\n<p>The Company will dispatch the\nShare Certificate through a Registered Post to the members who have provided\ntheir Allotment Letters whereas the local Shareholders can collect their Share\nCertificates from the Company\u2019s Registered Office responsible for the dispatch of\ntheir Certificates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalties_for_Contravention\"><\/span>Penalties for Contravention<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When\nany Company fails to comply or breaches the provisions regarding the issue of Share\nCertificates, then it is subject to penalty. The penalty shall not be less than\nINR 25,000 but cannot extend a limit up to INR 5,00,000. Moreover, each\ndefaulting Officer of such a Company will be liable to pay a minimum fine of\nINR 10,000 that can extend up to INR 1,00,000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><div class=\"shadow4\">Allotment of Shares is an efficient source to raise money as\nit fosters a Company at an initial stage. Though the issuance of Company Share\nCertificate seems to be a tedious task, it is mandatory as per Companies Act,\n2013.<br><br>Thus, it\u2019s better to seek expert guidance while issuing Share Certificate. Consult Swarit Advisors, a Legal firm with a competent team of Lawyers and CAs who can ease your legal hurdles.<\/div><\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/what-is-bonus-share-procedure-to-the-issue-of-bonus-shares\/\" target=\"_blank\" rel=\"noopener noreferrer\">What is Bonus Share? Procedure to the issue of Bonus Shares<\/a><\/mark>.<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>After completing the incorporation process, Company gets registered under Companies Act, 2013 and issues its shares to raise capital. During allotment of Shares, a Company grants Share Certificate to its shareholders as per the law. If you need complete knowledge about the procedure to issue a Company Share Certificate, then thoroughly study this write-up. It [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":9564,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9561"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=9561"}],"version-history":[{"count":5,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9561\/revisions"}],"predecessor-version":[{"id":10061,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9561\/revisions\/10061"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/9564"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=9561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=9561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=9561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}