ISSUE OF SHARE CERTIFICATES
A share certificate is a document of title to the shares in a company. It is issued by a company to its members in whose names shares are registered in the register of members of the company.
A share certificates certifies the —
(i) nature of the shares, i.e. equity or preference.
(ii) member(s) in whose name(s) it is issued is(are) the rightful owner(s) of the shares, with distinctive numbers, as detailed therein; and
(iii) amount paid to the company by the shareholder on each share at various stages, i.e., on application, on allotment, as first call, as the second and final call.
All blank forms to be used for issue of share certificate shall be printed and printing shall be done only on the authority of a resolution of the Board. The blank forms shall be consecutively machine numbered and the forms and the blocks, engravings fascimiles etc. shall be kept in safe custody of the Secretary or the person authorised by the Board.
A share certificate is issued by a company under the signatures of at least two of its directors, one of whom should be a person the managing director, if there is one in the company, and the company secretary or an Authorised Signatory.
A share certificate is issued under the common seal of the company, which is affixed in the presence of directorssecretary authorised signatory, according to the provisions contained in the articles of association of the company and the companies (Issue of Share Certificates) Rules 1960. However, the director(s) may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other mechanical means such as ingraving in metal or lithography, but not by means of a rubber stamp provided that the director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose. However, the Secretary or Authorised Signatory should sign share certificate by his hand. The issue of share certificates by a company is regulated by
(i) The Companies Act, 1956;
(ii) The Companies (Issue of Shares Certificate) Rules, 1960;
(iii) Listing Agreements entered by the company with recognised stock exchanges;
(iv) SEBI rules and regulations; and
(v) Articles of Association of the company.
According to Section 113 of the Companies Act, 1956, every company shall, within three months after the allotment of any of its shares and within two months after the application for the registration of transfer of any such shares, deliver, in accordance with the procedure laid down in Section 53, the certificates of all shares allotted or transferred. The Act, however, confers power on the Company Law Board to extend the aforesaid periods of three months and two months within which the debenture certificates or debenture stock certificates allotted or transferred shall be delivered, to a further period not exceeding nine months, if it is satisfied on an application that it is not possible for the company to deliver such certificates within the said periods.
It may also be noted that those companies, whose shares have been dematerialised and a depository is the registered owner of their shares, are required to intimate the depository immediately on allotment of shares and the depository is required to immediately enter in its electronic records, the names of owners of the shares, as beneficials.
It shall be substituted by Central Government on the commencement of Companies (Second Amendment) Act, 2002.