Share Certificate 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.
The rule still says "under the common seal". It just adds four words that change everything.
The position
No, it is not mandatory to issue share certificates under the common seal of the company. As per the Companies (Amendment) Act, 2015 read with Companies (Share Capital and Debentures) Second Amendment Rules, 2015, every share certificate shall be issued under the common seal, if the company has a common seal. Therefore, it is not mandatory to issue share certificate under the common seal of the Company.
The common seal was once the company's signature. A company is an artificial person with no hand, and the seal was the device by which it executed documents — kept in the custody of the secretary, applied in the presence of directors, and recorded in a seal register.
By 2015 the formality had outlived the assurance. A seal is a physical object in one place; a company that needs to execute a document in another city cannot. It can be applied by whoever holds it, so it evidences custody rather than authority. And its presence tells a reader nothing that the signatures on the same page do not tell them better.
The Companies (Amendment) Act, 2015 therefore made the seal optional. The interesting part is the drafting technique used for every rule that referred to it.
The rules were not rewritten to delete the seal. They were amended to read if the company has a common seal. A company that keeps its seal continues to use it exactly as before, and nothing in its existing practice becomes wrong. A company that does not have one is not in breach.
That is why the answer here reads as it does — the requirement is stated in full and then qualified out of existence for most companies. Read carelessly, "every share certificate shall be issued under the common seal" looks mandatory; the conditional clause is the operative part.
The corresponding provision is section 21, which allows a document to be signed by a key managerial personnel or an authorised officer or employee where the company has no common seal — so authority is evidenced by who signs, which is what actually matters.
What a share certificate needs
| Element | Position |
|---|---|
| Form | SH-1 |
| Common seal | Only if the company has one |
| Signatures | As prescribed by the rules — directors and, where appointed, the company secretary |
| Where there is no seal | Signed under section 21 by a KMP or authorised officer or employee |
Practical points
- Check whether the company still maintains a common seal, and what the articles say about it.
- If the seal has been discontinued, record that decision by board resolution.
- Keep the signing authority consistent across certificates issued in the same series.
- Do not create a seal solely because a template refers to one.
Common mistakes
- Reading the share certificate rule as mandating a seal and missing the conditional clause.
- Continuing to apply a seal the company has formally discontinued.
- Issuing certificates without the prescribed signatures on the assumption the seal was the only requirement.
- Leaving articles referring to a seal the company no longer has.