COMPANY LAW - ISSUE OF SHARE CERTIFICATES.pptx

This is a presentation describes:
What is a share certificate - Section 46(1)
Significance of Share Certificates
Details mentioned in a share certificate
When is a share certificate issued - Section 56(4)
Manner of Issuing Share Certificate -Section 46(3)
Dematerialization of Shares

Can be suitable for Company Law subject in BBA

1. Issue of Share Certificates Made by: Tamanna Srivastava PRN        : 

2. Contents What is a share certificate - Section 46(1) Significance of Share Certificates Details mentioned in a share certificate When is a share certificate issued - Section 56(4) Manner of Issuing Share Certificate -Section 46(3) Dematerialization of Shares

3. What is a share certificate? - Section 46(1) In terms of Section 46(1) of the Company’s Act 2013, a certificate under the common seal, if any, of the company or signed by two directors or by a director and the company secretary, wherever, the company has appointed a Company Secretary, is prima facie evidence of the title of the person to the shares specified therein . The certificate is the only documentary evidence of title in the possession of the shareholder. But it is not a warranty of title by the company issuing it. 

4. Significance of Share Certificates A certificate of shares is evidence to the effect that the allottee is holding a certain number of shares of the company showing their nominal and paid-up value and distinctive numbers. This certificate is a prime facie evidence of title to the shares in the possession of shareholders.  Share certificate is the only documentary evidence of title and that the share certificate is a declaration by the company that the person in whose name the certificate is issued is a  shareholder in the company .  Moreover, when the company issues a certificate, it holds that the facts contained therein are true . Any person acting on the faith of the share certificate of the company, can compel the company to pay compensation for any damage caused by reason of any misstatement in the share certificate as the company is bound by any statements made in the certificate .  Also the company cannot dispute the amount mentioned on the certificate as already paid . 

5. Details mentioned in a share certificate Share certificate No. Name of the company issuing it CIN (Corporate Identification Number) N ame of the shareholder F olio number –  distinctive number to identify the shareholder N umber of shares (quantity) Face value of share A mount that is paid D istinctive number of shares D ate of issue

6. When is a share certificate issued - Section 56(4) After the incorporation of the company, the company needs to issue the share certificates within two months from the incorporation date. Where additional shares are allotted to the new or existing shareholders, the share certificates should be issued within two months from the allotment date. In a case related to the share transfers, the share certificates should be issued to transferees within a period of one month of receipt of the instrument of transfer by such Company.

7. Manner of Issuing Share Certificate - Section 46(3) Rule 5 of the Companies Rules (Share Capital and Debenture Rules) describes the issue of Share Certificates (Original) as follows: Board Resolution must be passed a and Letter of allotment or fractional coupons of requisite value, must be surrendered to company. In case the letter of allotment is lost or destroyed the Board may impose reasonable terms.  Certificate shall be issued in Form No. SH-1 and shall specify the name of person in whose favour the certificate is issued, shares to which it relates and the amount paid-up thereon.   It shall be signed by two directors or by a director and the CS, wherever the company has appointed CS. In case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate. In case of an One Person Company, it shall be sufficient if the certificate is signed by a director and the CS or any other person authorized by the Board for the purpose. A director or Company Secretary shall be deemed to have signed the share certificate if his signature is printed thereon as facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed, 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. Particulars of shares certificates to be entered in the Register of Members.

8. FORMS OF SHARES PHYSICAL FORM DEMAT FORM Share Certificates Records of the depositories

9. Why Dematerialization? The main motive behind investors searching how to convert physical shares to Demat online is the policy where SEBI has announced that investors must convert every physical share certificate into electronic form. SEBI’s direction is not based on assumptions but on valid research that this process accompanies numerous benefits over the holding of physical share certificates.

10. Thank You! Made by: Tamanna Srivastava PRN        :