Meaning:
- A Share Certificate is a document of title to shares. It is
issued to the shareholders of the company, as evidence to their shareholding in
the company. The company issues the Share Certificate under its
Common seal. It must be signed by two directors and countersigned by the
authorized signatory or secretary of the company. Every Share Certificate must
be stamped with revenue stamp of proper value.
Definition:
- Section 84 of the companies Act
defines share certificate as ‘A certificate, under the common seal of the
company, specifying only the shares held by any member, shall be a prima facie
evidence of the title of the member of such shares’.
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Contents of Share
Certificate
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a.
Name and
Address of the registered office of the company.
b.
Name(s) of the Shareholder(s).
c.
Serial number of share certificate.
d.
Number of Share(s) held.
e.
Number and class of shares. (i.e.
whether Preference or equity shares)
f.
Nominal value and amount paid on
each share.
g.
Distinctive Number(s) of shares.
h.
Date of issue of Certificate.
i.
Signature of two directors and one
authorized signatory.
j.
Seal of the company against the
affixed revenue stamp.
k.
The face value of the shares.
l.
Whether the face value is fully paid
or partly paid.
The share
certificate is required for the transfer and transmission shares. It is a
registered document and not a bearer document. It can be transferred only by
following a certain transfer procedure.
Statutory
Provision regarding share Certificate
1.
Time Limit: -The share
certificate must be prepared and delivered to the shareholders within 3 months of allotment of shares.
In case of transfer, the share certificate should Reach the transferee within 2
months from the date if transfer.
2. Resolution: -Share certificate is
issued only after passing of resolution in the board meeting to that effect.
3. Contents in certificate: -Share
certificate must specify the name of the shareholder, number, type of shares,
amount paid on each shares etc. it should be signed by two directors and the
secretary and bear the common seal of the company.
4. Entry in the Register: -All the
particulars of share certificate must be entered in the Register of Members.
These entries must be authenticated by the secretary or signatories to the
certificate.
5. Duplicate and Surrendered Certificates: -If the company
issues duplicate certificate, it should be clearly mentioned on the certificate
by putting a stamp of word ‘Duplicate’
on the face of the certificate.
In case of surrendered certificates a cancellation mark must be put on
the face of the certificate such certificates may be destroyed after three
years.
