Issue of Shares Certificates to Subscribers of Memorandum

The subscribers to the Memorandum of Association are considered as the first shareholders of the Company. 

As per Section 56 (4) (a) the Companies Act, 2013, a Company shall issue Share Certificates to the subscribers of Memorandum within 2 months from the date of Incorporation. The share certificate issued to the subscribers is the documentary evidence that the shares are held by them.

The Company should receive the Share subscription money before issuing share certificates. So, share certificates can be issued only after the receipt of money.

Sign and Seal on Share certificate.

If the company has a Common Seal, the share certificate has to be issued under the Common seal, if any.

The share certificate has to be signed by any two directors along with an authorised signatory. The authorised signatory could be a third Director, if any or any other person authorised by the Board of Directors the purpose of singing the share certificate. 

Format of Share Certificate

Company has to issue Share Certificates in Form No. SH-1 and the Certificate must contain the Name of the Person to whom it is issued along with his Folio Number and Number of shares, and its distinctive number and Amount paid on those shares.

Stamping of Share Certificate

Share Certificate issued by the Company has to be stamped as per the respective State Stamp Act and Stamp Rules. Stamp Duty on Share Certificate varies state to state. Nonpayment of stamp duty on share certificates shall invalidate the share certificates as such.