CERTIFICATE OF SHARES-OVERVIEW

CERTIFICATE OF SHARES-OVERVIEW

A certificate:

Ø issued under the common seal, if any, of the company or

Ø signed by two directors or

Ø by a director and the Company Secretary, wherever the company has appointed a Company Secretary,

Specifying the shares held by any person, shall be PRIMA FACIE evidence of the title of the person to such shares.

A DUPLICATE CERTIFICATE of shares may be issued, if such certificate —

(a) is proved to have been lost or destroyed; or

(b) has been defaced, mutilated or torn and is surrendered to the company.

COMMENT: Notwithstanding anything contained in the articles of a company, the manner of issue of a certificate of shares or the duplicate thereof, the form of such certificate, the particulars to be entered in the register of members and other matters shall be such as may be prescribed.

COMMENT: CERTIFICATE OF SHARES (WHERE SHARES ARE NOT IN DEMAT FORM)

(1) Where a company issues any share capital, no certificate of any share or shares held in the company shall be issued, except-

(a) in pursuance of a resolution passed by the Board; and

(b) on surrender to the company of the letter of allotment or fractional coupons of requisite value, save in cases of issues against letters of acceptance or of renunciation, or in cases of issue of bonus shares:

NOTE: The Board has power to impose reasonable terms in case it has been observed by the Board that letter of allotment is lost or destroyed, as to seek supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating evidence, as it may think fit.

(2) Every certificate of share or shares shall be in FORM NO. SH.1 or as near thereto as possible and shall specify the name(s) of the person(s) in whose favor the certificate is issued, the shares to which it relates and the amount paid-up thereon.

(3) Every certificate shall specify

Ø the shares to which it relates and

Ø the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary:  

NOTE: Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate.  

EXPLANATION - FOR THE PURPOSES OF THIS SUB-RULE, IT IS HEREBY CLARIFIED THAT:-

in case of an One Person Company, it shall be sufficient if the certificate is signed by

Ø a director and the company secretary or

Ø Any other person authorised by the Board for the purpose.

(a)   a director or company secretary shall be deemed to have signed the share certificate if his SIGNATURE IS PRINTED thereon as

Ø  facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed,

Ø BUT NOT BY MEANS OF RUBBER STAMP, provided that the director or company secretary shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.

(4) The particulars of every share certificate issued in accordance with sub-rule (1) shall be entered in the Register of Members maintained in accordance with the provisions of section 88 along with the name(s) of person(s) to whom it has been issued, indicating the date of issue. 

(5) The record of the depository is the prima facie evidence of the interest of the beneficial owner in case a share is held in depository form.

(6) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with

Ø 5 Times the face value of the shares<= fine<= 10 Times the face value of such shares or

Ø Rs. 10 crores, whichever is higher and

COMMENT: Every officer of the company who is in default shall be liable for action under section 447.

DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.

THE AUTHOR – CS DEEPAK SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911.