Procedure for Issue & Delivery of share certificates after allotment

When companies issue shares in the market, purchasing shareholders are issued a share certificate. The basic sharing certificate serves as a receipt for the purchase and ownership of shares in the company. The document confirms the registered owner of the shares from a certain date. It transfers the rights and duties of a company member to any other person who wishes to become a member of the company. It is a voluntary member action that is accompanied by articles cited in the company AOA. This article will talk about the procedure for the issue of the share certificates after allotment and its delivery.

Details to be provided in the share certificate

• Every share certificate issued in India must contain the following:
• Name of the Issuing Company
• CIN number (Company ID number) of that Company
• Company registered office address
• The name of the owners of such shares
• Member Folio number
• The number of shares represented by that sharing certificate
• The amount payable on those shares
• Different number of shares

Procedure for the issue of the share certificate

The Board resolution is required to issue a Share Certificate. The procedure for the issue of the share certificate is as follows-

• Prepare a share certificate form-SH 1 
• Every unregistered public company will issue its securities in a dematerialized form.
• Shared Certificates shall be signed-
  • by two directors or;
  • the director and secretary of the company, wherever there is a company secretary
• If the company has a common seal it will be affixed in front of each person who is required to sign the certificate.
• In the case of an OPC or a One Person Company, the Share Certificate shall be signed by the director and company secretary or any other person approved by the Board.
• Registration of members on Form MGT-1 within 7 days of allocation.
• Verification of registered entries by CS or an authorized person under the provisions and standards of rates for that state in the Stamp Act.
• Stamp duty adjudication where the company’s registered office is situated.
• The company submits collateral, distributed, transferred, or transmitted certificates:
• If they are registered for the memorandum – Within 2 months from incorporation.
• In the case of any share’s allocation – Within 2 months from the date of allotment.
• In the case of transmission of securities- Within 1 month from share transfer receipt
• Debenture allotment- Within 6 months from the date of allocation

Note: The public company IFSC will submit certificates of all collateral to the registrants upon submission, distribution, transfer, or transmission within 60 days.

Time to issue a Share Certificate:

After the company’s incorporation, the company is required to issue shares certificates within two months from the date of incorporation. When additional shares are allocated to new or existing shareholders, share certificates must be issued within two months from the date of allocation. In the case of a transfer of shares, share certificates must be issued to the transferors within one month of receipt of the transfer instrument of the Company.

Notification and delivery of Share Certificate

The company secretary needs to inform all shareholders that the stock certificates are ready and will be issued in exchange for share letters and bank receipts confirming the payment of the dividend. Public notice must be issued with the general information of members. Members submit their assignment letters, the sharing certificate is sent by registered mail to them. Local shareholders may also voluntarily collect share certificates at a registered company office or a designated posting center

Penalty for violating the issuance of a share certificate

If a company commits any failure to comply with the provisions relating to the issuance of share certificates, that company will be penalized with a fine not less than INR 25,000 but up to INR 5,00,000 and every official who fails to pay that company’s tax will be. may be fined not less than INR 10,000 but may extend to INR 1,00,000.

Final words

Therefore, a share certificate means a document issued by a company proving that the person listed on the certificate is the shareholder in the Company as stated in the share certificate. The Indian Companies Act authorizes companies to issue share certificates after their incorporation. Hope you got an insight on the procedure for the issue of the share certificates and more about it.