Issue of Share Certificates
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Overview
Importance
Process
Special Provisions
Consequences
Issue Of Share Certificates Under Certificates Under Companies Act, 2013
If you’ve just launched a company or are gearing up for your first share allotment, congrats! But before you celebrate it, there’s a small but crucial step: issuing share certificates. These aren’t fancy diplomas—they’re official proofs that someone owns a piece of your company.
Under the Companies Act, 2013, getting this right keeps you out of hot water with the government. And with the big 2025 shift to digital shares, it’s even simpler (mostly). Let’s break it down in easy bites—no legalese overload.
What Exactly Is a Share Certificate?
Picture this: You sell shares to a friend or investor, and they want something to say, “Hey, these 100 shares are mine!” That’s your share certificate—a document from your company stating the owner’s name, number of shares, class (like equity or preference), and issue date. It’s like a title deed for stocks, showing ownership but not making the shares “tradeable” like cash. Legally speaking, under Section 46, it’s solid proof of title.
When Do You Need to Issue Them?
- For Initial Subscribers to the Memorandum of Association: Within 2 months of your incorporation Date.
- For New Allotment of Shares: Within 2 months of the allotment date.
- For Transfers & Transmission: Within 1 month of receipt of the Transfer/Transmission documents.
- For New Allotment of Debentures: Within 1 month of the allotment date.
Step-by-Step Process: How to Issue a Share Certificate
Get Board Approval
Hold a quick Board meeting and pass a resolution okaying the issuance. This is non-negotiable—it’s like your team’s green light.
Prepare the Certificate
Prepare the share certificate in Form SH-1. Fill in details like share numbers, owner info, and pay the stamp duty (based on share value—as per the state-wise applicable rates). Print extras securely and number them to avoid mix-ups.
Sign It Off
It should be signed by two directors or one director and the Company Secretary (CS), if there’s a Company Secretary.
Update The Register
The Company shall maintain and update the details in the Register of Members in Form SH-1.
Hand It Over
The duly signed and stamped share certificates should be given to the respective securityholder within the prescribed timeline.
Special Provisions for Non-Small Private Companies
In case of Non-Small Private Companies (those having paid-up capital of not more than ₹4 crore and turnover of not more than ₹40 crore), they must issue shares in dematerialized (demat) form only.
What are the Consequences of Non-Compliance?
In case of non-compliance with the respective provisions, the Company and every defaulting officer are liable to a penalty of ₹50,000. In case of One Person Company, Small company/Startups the penalty shall be of ₹25,000.
Frequently Asked Questions
How do I start a business in India as a foreign company?
Foreign companies can set up a liaison office, branch office, or wholly-owned subsidiary in India. Corpsecure assists with RBI, FEMA, and ROC compliances for a smooth entry.
What is the cost of company registration in India?
The cost depends on the type of company (Pvt Ltd, LLP, OPC, etc.) and government fees. On average, registration can start from ₹7,999 onwards with professional assistance.
How long does it take to register a company in India?
With proper documents, company registration can take 7–15 working days. Corpsecure ensures faster turnaround by managing documentation and compliance.