Shares can be defined as units of ownership interest in a corporation or financial asset, which in turn provide for an equal distribution in any profits (if any), declared in the form of dividends. Two main types of shares are common shares and preferred shares. It is noteworthy that it is a physical paper stock certificates that have now been replaced with an electronic recording of stock shares, just as mutual fund shares are recorded electronically. Share Certificate is issued by different banks to the shareholders. Companies nowadays issue their stock digitally rather than on paper stock certificates.
Related: The requirement of a Digital Signature in a company
A Share Certificate can be defined as a written document issued by a company, signed on behalf of the corporation. It signifies as legal proof of ownership of the number of shares indicated in the Share Certificate. One can say that a share certificate also signifies the receipt for the purchase and ownership of shares in the company i.e. it certifies registered ownership of shares from a particular date.
- In the case of incorporation: The Share Certificate is issued within a period of 2 months from the date of company incorporation to the subscribers of the Memorandum of Association.
- In the case of Allotment: The Share Certificate is issued within a period of 2 months from the date of allotment of the shares.
- In the case of Transfer: The Share Certificate is issued within a period of 1 month from the date of receipt of the instrument of transfer by the concerned company.
- A Company should provide one certificate to one member for all his shares without the payment of any additional charges.
- If a shareholder wants more than one Certificate: In case of shareholder wants more than one certificate for one or more shares than the company may issue several certificates. However, it should be upon payment of Rs. 20/- for each additional certificate after the issue of the first certificate.
- In case if the shares are being held jointly by several people: The Company shall not be bound to issue more than one certificate. As well as the delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders.
- At the time of Incorporation, there should be an allotment or subscription.
- In the Board Meeting for an issue of Share Certificate, a Board resolution should be passed.
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- All blank form that is being used for issue of share certificates shall be printed and the printing shall be done only on the authority appointed under the resolution of the Board. (Board of Directors in their Meeting will pass a resolution for printing the Blank Share Certificates).
- The blank form should be filed electronically. All the empty blocks, engravings, facsimiles, and hues relating to the printing of the form should be consecutively machine-numbered.
- The Company Secretary/Authorized person will be responsible for rendering an account of these forms to the Board.
- All books relating to the share certificates must be preserved in good order and shouldn’t be less than thirty years.
- Destroying of Surrendered Certificates: All certificates surrendered to a company should be immediately defaced by stamping or printing, Therefore the word “canceled” should be written in bold letters on the surrendered certificates.
- Maybe destroyed after the expiry of 3 years from the date on which they are surrendered.
- Board will pass a resolution for giving authority for destroys of such Certificates.
- Destroy should be done in the presence of a person duly appointed by the Board on this behalf.
Related: The Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018
- The company can issue a fresh certificate by splitting, consolidating, or replacing old certificates.
Fresh Certificate can be issued in the following cases:
- If the Share Certificate is sub-divided consolidated.
- In replacement of those which are defaced, mutilated, torn/old, decrepit/worn out.
- Where the pages on the reverse for recording transfer have been duly utilized.
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