Rules 5 and 7 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 5 covers the share certificate for shares not held in demat form: when it may be issued, the Form SH-1 content, who signs it, and the entry in the Register of Members. Rule 7 covers the printing, numbering, custody and preservation of blank certificate forms and the books around them.
This article is as amended up to G.S.R. 43(E) dated 21 January 2023 per the MCA e-book. Later amendments should be checked. For transfers of shares and certificates, see our share transfer service.
A share certificate is issued only under a Board resolution and on surrender of the letter of allotment (bonus issues and certain acceptances excepted), in Form SH-1, signed by two directors or by a director and the company secretary, with the common seal affixed in their presence if the company has one. Blank forms are printed on a Board resolution, machine-numbered and kept in custody; books are preserved not less than thirty years.
Rule 5: certificate of shares (where shares are not in demat form)
Rule 5(1): when a certificate may be issued
Where a company issues any share capital, no certificate of any share or shares 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.
The proviso says that if the letter of allotment is lost or destroyed, the Board may impose reasonable terms, if any, as to seeking supporting evidence, indemnity and payment of out-of-pocket expenses incurred in investigating the evidence, as it thinks fit.
Rule 5(2): Form SH.1
Every certificate shall be in Form No. SH.1 or as near thereto as possible and shall specify the name or names of the persons in whose favour the certificate is issued, the shares to which it relates and the amount paid up. See our posts on the share certificate in Form SH-1 and the specimen under rule 5.
Rule 5(3): who signs
Sub-rule (3) was substituted by the Amendment Rules, 2018. Every certificate shall specify the shares to which it relates and the amount paid up and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed a company secretary. The proviso says that where the company has a common seal, it shall be affixed in the presence of the persons required to sign the certificate.
Explanation to sub-rule (3):
- (a) In the case of a One Person Company, it is sufficient if the certificate is signed by a director and the company secretary or any other person authorised by the Board for the purpose.
- (b) A director or company secretary is deemed to have signed the certificate if his signature is printed on it as a facsimile signature by a machine, equipment or other mechanical means such as engraving in metal or lithography, or is digitally signed, but not by means of a rubber stamp, provided that the director or company secretary is personally responsible for permitting the affixation of the signature and for the safe custody of any machine, equipment or material used. The words "director or company secretary" came in by the Amendment Rules, 2019 of 16 August 2019.
Our post on share certificate signing under rule 5, with and without a seal goes through the signing options. Earlier versions of rule 5(3) in the e-book notes had a different seal and signing scheme; the current text above is what applies.
Rule 5(4): the Register of Members
The particulars of every share certificate issued under sub-rule (1) shall be entered in the Register of Members maintained under section 88, with the name or names of the persons to whom it was issued, indicating the date of issue.
Example: Halcyon Textiles Private Limited allots shares and the Board resolves to issue certificates. Two directors sign each Form SH-1 certificate; because the company has a common seal, it is affixed in their presence. The company has a company secretary, so a director and the company secretary may sign instead of two directors. The Register of Members records each certificate with the holder's name and date of issue. If a certificate were stamped with a rubber stamp for a signature, it would not be validly signed under the Explanation.
Rule 7: blank forms and the books
Rule 7(1): printing and custody
All blank forms for share certificates shall be printed, and the printing shall be done only on the authority of a Board resolution. The blank forms shall be consecutively machine-numbered, and the forms, blocks, engravings, facsimiles and hues relating to the printing shall be kept in the custody of the secretary or such other person as the Board authorises. That person is responsible for rendering an account of these forms to the Board.
Rule 7(2): who is responsible
The following are responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates, including the blank forms:
- (a) the committee of the Board, if so authorised by the Board, or where the company has a company secretary, the company secretary; or
- (b) where the company has no company secretary, a director specifically authorised by the Board.
Rule 7(3): preservation and cancellation
All books in sub-rule (2) shall be preserved in good order not less than thirty years, and permanently in disputed cases. All certificates surrendered to a company shall immediately be defaced by stamping or printing "cancelled" in bold letters, and may be destroyed after the expiry of three years from the date on which they are surrendered, under the authority of a Board resolution and in the presence of a person duly appointed by the Board. The proviso says the sub-rule does not apply to cancellation of certificates of securities under section 6(2) of the Depositories Act, 1996 when cancelled in accordance with sub-regulation (5) of regulation 54 of the SEBI (Depositories and Participants) Regulations, 1996; those instruments are quoted as printed, so check the current law.
| Item | Rule | Requirement |
|---|---|---|
| Authority to issue certificate | 5(1)(a) | Board resolution |
| Form | 5(2) | SH.1 or as near as possible |
| Signing | 5(3) | Two directors, or a director and the company secretary |
| Seal | 5(3) proviso | If any, affixed in the presence of the signatories |
| Register entry | 5(4) | Register of Members, with the date of issue |
| Printing of blanks | 7(1) | Board resolution; consecutively machine-numbered |
| Preservation | 7(3) | Not less than thirty years; permanently if disputed |
| Surrendered certificates | 7(3) | Stamped "cancelled"; may be destroyed after three years |
For replacement and duplicate certificates, see our article on rules 6 and 11. For the Act's provisions on certificates, read our sections 44 to 46 guide.
Need help with share certificates and transfers?
Certificates, registers and transfer papers need to match. TaxClue can prepare the certificates, update the registers and handle transfers; see our share transfer page.
Key takeaways
- A certificate needs a Board resolution and surrender of the letter of allotment (with listed exceptions).
- Form SH.1; signed by two directors, or a director and the company secretary; the common seal, if any, in their presence.
- Facsimile or digital signatures are valid; rubber stamps are not.
- The certificate is entered in the Register of Members with the date of issue.
- Blank forms are printed on Board authority, machine-numbered and kept in custody; books are kept at least thirty years.
- Surrendered certificates are stamped "cancelled" and may be destroyed after three years.
Read next
- Rules 6 and 11: duplicate certificates and the SH-4 instrument of transfer
- Rule 19: nomination by securities holders, SH-13 and SH-14
- Share certificate signing under rule 5, with and without a seal
- Sections 44 to 46 of the Companies Act, 2013: share certificate
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.