What is a Share Certificate?

A share certificate is an official document issued by a company to certify that a person is the registered owner of a specific number of shares. Although the world is rapidly shifting towards digitization, physical share certificates still hold relevance in various corporate and legal settings. Share certificate printing is a critical aspect of company compliance and corporate governance, especially for private limited companies and startups.

When does a Company issue a Share Certificate?

A Share certificate is Issued in these cases:

• After Share Allotment: Within 2 months of allotting shares to new shareholders.
• For Bonus or Rights Issue: When issuing bonus or rights shares to existing shareholders.
• For Stock Splits or Mergers: When a company restructures shares due to a split or merger.
• On Shareholder’s Request: If the original share certificate is lost or damaged.
• During Share Transfers: Within 1 month, when shares are transferred to a new owner.

Why Ebizfiling?

EbizFiling.com is a leading business platform providing comprehensive corporate legal services, including company incorporation, compliance, advisory, and management consultancy, both in India and internationally. The platform offers fast, easy, and affordable Shareholders Agreement, Share Offering services, Share Transfer & Transmission, Pvt Ltd annual filing, and trademark registration. You can contact with compliance manager at 09643203209 or email info@ebizfiling.com.

Important Rules and Legal Compliance

• Time Limit: Companies are required to give out share certificates within two months after they are incorporated or when new shares are allotted. If shares are being transferred to someone else, the certificate must be issued within one month of the transfer.
• Consequences of Delay: If the company doesn’t issue share certificates on time, it can face heavy fines, and the responsible directors or officers may also be penalized.
• Security Measures: To avoid misuse or fraud, share certificates should include security features like watermarks, unique certificate numbers, and secure printing techniques that make them hard to copy or fake.

Shift Towards Digital Share Certificates

Even though some companies still give out paper share certificates, most share transactions in India now happen electronically. Digital share certificates go through the same process of approval and issuing but are sent to shareholders through email instead of being printed.

Duplicate Share Certificates

If a shareholder loses their original share certificate, or if it gets damaged or destroyed, they can request a duplicate. To do this, they need to provide certain documents usually an indemnity bond and a copy of the police report (FIR). Once the application is received, the company is required to put a hold on any transfers of those shares for 30 days. Only after completing the necessary steps and verifications can the company issue a duplicate share certificate.

Penalty for Not Issuing a Share Certificate on Time

If a company fails to issue share certificates within the legal timeframe, it may face penalties. Both the company and responsible officers, such as directors or the company secretary, can be fined. The penalty amount varies based on the organization’s policy, duration for delay, and non compliance severity.