Certificate of Shares

 

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According to the provisions of the Companies Act,1956, a certificate ,under the common seal of the company,specifying any shares hold by any member,shall be evidence of the title of the member to such shares.A certificate may be renewed or a duplicate of a certificate may be issued if such certificate is provided to have been lost or destroyed ,or have been defaced or mutilated or torn is surrounded to the company.If a Company with intent to defraud renews a certificate or issues a duplicate thereof,the company shall be punishable with fine which shall not be less than five times the face values of the shares  but which may extend to the face value of such shares or rupees ten crores whichever is higher and every officer of the company who shall be liable for action under section 447.Not withstanding anything contained in the articles of a company,the manner of issue of a certificate of shares or duplicate thereof,the form of such certificate,the particulars to be entered into the register of members and other matters shall be such as may be prescribed.

Companies Act,1956:section 84

Section 84 of the 1956 Act established the certificate of shares to be evidence of the title of the member holding such shares. The section also provided for the issue of renewed and duplicate certificates if the original certificate is proved to have been lost/destroyed or having been torn is surrounded to the company.Renewal or issuance of duplicate certificate of a company is punishable offence according to the section – punishable with imprisonment for a term which may extend to six months,or with fine which may extend to one lakh rupees,or with both.The manner of issuance of renewed /duplicate certificates were to be provided under the rules,pursuant to which the Companies Issue of Share Certificates Rules ,1960 were formulated.

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Section 84 of the Act was initially based on clause 78 of the Companies Bill 1953,which in turn was founded on section 29 of the Companies Act(Amendment Bill)1959,section 84 of the 1956 Act was amended as redrafted by the joint committee.The main aim of the Companies amendment Act,1960 for inserting sub-section(2) to(4) of section 84 of the 1956 act was to fraudulent dealing in shares. 

Companies Act,2013:section 46

Section 46 of the 2013 Act was notified SO 902(E) and has been in effect from 01-04-2014.As per the Depositories Act,1996 all the securities under depository mode shall be in fungible form.The share certificate shall be surrounded to the issuer company which will cancel the same and substitute in its record the name of the depository as a registered owner.In turn,the depository shall enter the name of the shareholder in its records as the beneficial owner.However the share certificates will continue to be in vogue in case of shares not covered by the depository mode.

section 46 of the 2013 Act while mostly in consonance with section 84 of the 1956 Act,explicitly states,through sub-section (4) of that for shares held in depository mode,the record of the depository is the evidence of the interest of the beneficial owner.

Share certificate-common seal[Section 46(1) of Companies Act,2013]

For a certificate to be evidence of title of any members to the shares it must bear the common seal of the company and must specify the shares held by the member.The mode of specifying contemplated is to distinguish the shares by the members(section 45 of the 2013 Act).

Number of Share certificates to be issued.

Neither the 2013 Act nor the rules received under it prescribe the number of share certificates to be issued to a shareholder.Therefore,this may be dealt with by the articles of association of the company. Regulation 2 of table F of SCHEDULE 1 to the 2013 Act(model articles for a company limited by shares)provides that every member is entitled to one certificate for all shares without payment and several certificates each for one more of shares upon the payment of twenty rupees for every certificate after the first.In case the shares are held in joint names,delivery of the share certificate to one of the joint holders will be sufficient delivery to all such joint-holders.

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if any share certificate be worn out,defaced,mutilated or torn or if there be no further space on the back for endorsement of further transfer,then upon production and surrender thereof to the company,the new certificate may be issued and any certificates  is lost or destroyed then upon proof to the satisfaction of a company and on execution of such indemnity as company deem adequate ,a new certificate shall be given.Every certificate under this article shall be issued on payment of twenty rupees for each certificates.where the share are dealt on any recognized stock,exchange,the listing agreement will be provided for the issue of the share certificates . 

Split certificates of a company

A Split Certificate means a separate certificate claimed by a shareholder for a portion of his holding.A Shareholder has the right to multiply his certificates in respect of the total number of shares held by him as per rule 6 of the companies (Share capital  and debentures) Rule . 2014.By the articles may be prescribed by the rules prescribe additional fee for obtaining each split certificate .

Certificates of the Debentures

Section 46 of the 2013 Act deals only with share certificates and not debenture certificates.Section 113 of the 1956 Act dealt with limitation for issue of certificates corresponding to which is section 56(4)of the 2013 Act.Section 56(4) of the 2013 Act,prescribe the time limit for issuance of debenture certificates.It shall be issued within a period of six months from the date of allotment of the debenture.however,in case of transfer/transmission of debentures,such certificates shall be issued within a period of one month  from the date of receipt by a company of the instrument of transmission/intimation of transmission.

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Duplicate certificates

The right to obtain duplicate certificate for the original which has been lost or become mutilated is conferred by section 46(2) of the 2013 Act.where the original certificate has been defaced,mutilated or torn;the same shall be surrounded to a company before a duplicate is issued.A duplicate is issued in accordance with the Rule 6 of the company (Share capital and debentures)Rule 2014.The relevant rules are reproduced under the “Issue of duplicate certificates”.

Proof for obtaining duplicate certificate

  once a duplicate certificate is issued,the original certificate becomes extinct.In order to safeguard the original shareholder from any section.It is necessary that there is proof of the fact that the original has lost or destroyed. 

Form of share certificate,duplicate and particulars for Register[Section 46(3) of the Companies Act,2013]: This Act provides the manner in which a share certificate is to be issued,the certificate’s form,particulars to be entered into the register  and other related matters are be prescribed by way of rules.It also provides that these rules shall force not withstanding anything contained in the articles of the company.

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