Share Certificates under Section 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.
A share certificate is your company's formal declaration of who owns what. Section 46(1) makes it prima facie evidence of title — issued under the common seal if you have one, or signed by two directors, or by a director and the company secretary where you've appointed one.
It's a one-page document with three recurring failure points: the deadline, the signatures, and stamp duty.
The third one is what gets found in diligence, years later, and it's expensive to cure.
Two months from incorporation for subscribers — running from incorporation, not from when the money lands. Two months from allotment, one month from a transfer. Signed by two directors, or one director and the CS. Pay stamp duty at the time of issue — State law, usually within 30 days. Penalty for default is ₹50,000 on the company and ₹50,000 on every officer.
When do certificates have to be issued?
| Situation | Time limit |
|---|---|
| Subscribers to the memorandum | Two months from incorporation |
| Allotment of shares | Two months from allotment |
| Transfer or transmission | One month from receipt of the transfer instrument or transmission intimation |
| Allotment of debentures | Six months from allotment |
Look hard at the first row. The two months for subscribers runs from incorporation — not from the date the subscription money arrives.
Which means a company that takes 150 days to collect subscription money is already in breach of Section 56(4)(a) long before it ever gets round to filing INC-20A. Two separate defaults, one root cause. INC-20A and the 180 days →
Penalty — Section 56(6): ₹50,000 on the company and ₹50,000 on every officer in default.
What has to be on the certificate?
Rule 5 prescribes Form SH-1, or as near to it as circumstances admit. Every certificate must state:
- the company name and CIN;
- the registered office address;
- the member's name and folio number;
- the number of shares, in figures and words;
- the distinctive numbers;
- the nominal value per share and the amount paid up;
- the certificate number and date of issue.
Section 45 requires every share to be distinguished by its distinctive number — except where the share is held in demat form, where the depository's record does that job.
Who signs it?
Under the seal, if you have one, affixed in the presence of and signed by:
- two directors authorised by the Board or a committee, or
- one director and the company secretary, where the company has appointed one.
Where the company has only one director, Rule 5(3) has that director sign together with a person authorised by the Board.
Four things that go wrong here:
- A director with a deactivated DIN can't validly sign. Check DIN status before a certificate run — this is a real problem whenever a DIR-3 KYC cycle date has just passed. DIR-3 KYC →
- Where a director signs by attorney, the power of attorney must have been filed with the company.
- The common seal has been optional since 2015. No seal is fine; the signatures do the work.
- Board authorisation must be recorded. The resolution allotting the shares should also authorise the issue and signing of the certificates.
The stamp duty everyone forgets
This is the most-missed obligation in the whole sequence, and the classic pre-investment diligence finding.
Stamp duty on a share certificate is levied under the Indian Stamp Act, 1899 as adapted by your State. It is a State subject — rate and mechanism differ across States. Broadly:
- Duty is payable on issue of the certificate, computed on the consideration (market value or issue price, depending on the State).
- The general timeline is thirty days from the date of issue, though State law governs.
- Payment is by franking, e-stamping, or through the State's online portal.
- Duty on a transfer of shares in physical form is separate — traditionally 0.25% of consideration on the SH-4 transfer form — while demat transfers attract duty under the amended Indian Stamp Act, collected through the depository.
Unstamped or under-stamped certificates are found in diligence constantly. The cure is paying duty with penalty, which in several States is a multiple of the duty itself. Pay at the time of issue and it's a small number. Pay five years later and it isn't.
Lost, torn or defaced — issuing a duplicate
Rule 6 lets you renew a certificate or issue a duplicate where the original is proved lost or destroyed, or is defaced, mutilated or torn and surrendered.
Board approval is required. A duplicate goes out only with the Board's prior consent and against whatever documentation the Board thinks fit — typically an affidavit, an indemnity bond, and, where the value is significant, a police complaint and a newspaper advertisement.
Mark it properly. Every renewed or duplicate certificate must state on its face, and be recorded in the register, as "duplicate issued in lieu of share certificate No. ___". The word "duplicate" must be stamped or printed prominently on the face.
Record it in SH-2. Particulars go into the Register of Renewed and Duplicate Share Certificates in Form SH-2, kept where the register of members is kept, preserved permanently, and authenticated by the company secretary or a person authorised by the Board.
Time limit: three months from submission of complete documents, for an unlisted company.
And a warning. Section 46(5): a company that with intent to defraud issues a duplicate certificate is punishable with a fine of not less than five times the face value of the shares, extending to ten times the face value or ₹10 crore, whichever is higher — and every officer in default faces action under Section 447 for fraud.
That provision is that severe because duplicate certificates are the classic instrument of share fraud.
What if your shares are in demat?
Then no physical certificate is issued at all. Section 46(3) makes the depository's record the prima facie evidence of the beneficial owner's interest.
And for a growing private company that isn't optional any more. Rule 9B requires every private company that isn't a small company, as on the last day of a financial year ending on or after 31 March 2023, to dematerialise within eighteen months of that year end — and to demat promoter, director and KMP holdings before any future issue, buy-back, bonus or rights offer. Rule 9B in full →
Certificate run checklist
- Board resolution allotting the shares and authorising issue and signing.
- Enter the allotment in the Register of Members (MGT-1) — folio, distinctive numbers, certificate numbers.
- Prepare certificates in Form SH-1 with every prescribed particular.
- Check distinctive numbers run continuously and don't overlap earlier issues.
- Get signatures of two directors, or a director and the CS — with valid DINs.
- Affix the seal if you have one.
- Pay stamp duty within your State's timeline.
- Deliver within the Section 56(4) deadline and take acknowledgements.
- File PAS-3 within thirty days of allotment — a separate obligation under Section 39(4).
- Keep a specimen certificate and the stamping evidence in the records.
Key takeaways
- Subscribers' certificates run from incorporation, not from receipt of money.
- Two months for allotment, one month for a transfer.
- Distinctive numbers are mandatory on every physical certificate.
- A deactivated DIN invalidates a signature.
- Stamp duty at issue. Curing it later costs a multiple.
- Duplicates need a Board resolution, prominent marking and an SH-2 entry.
- PAS-3 within thirty days is a separate filing — don't conflate it with the certificate.
Read next
- Post-Incorporation Compliance: The First 180 Days
- Demat of Shares by Private Companies (Rule 9B)
- Statutory Registers a Private Company Must Maintain
- Private Placement under Section 42 and PAS-3
Disclaimer: Stamp duty is a State subject and rates differ. Positions stated as on 4 September 2026. Verify State stamp law and the current Rules, and take professional advice.