Share Certificate: Issue, Format, Timeline, Transfer and Rules

Important Keywords: Share Certificate, Section 46 Companies Act, 2013, Section 56 Companies Act, 2013, Section 10A Companies Act, 2013, Timeline for Issue of Share Certificate, Two Months Share Certificate Rule, Subscription Money, Issue of Share Certificate Without Payment, Penalty for Non-Issuance of Share Certificate, Section 56(6) Penalty, Form SH-1, Format of Share Certificate, Proof of Share Ownership, APTIA Group India Private Limited Case, Tejas Cargo India Limited Case.

Words: 3,385, Read time: 18 minutes.

Last Updated: May 2026 (As per latest MCA amendments)

Overview

As we know that share certificate is a paper based legal document. which shows who owns shares in a company. It serves as official proof of a shareholder’s investment and contains important details such as the shareholder’s name, permanent address, number of shares owned, and the date the shares were issued or allotted.

Certificates always make it easier for companies to stay legal and organized.

This article explains share certificates in a simple way. You’ll learn what a share certificate is, How a private company issues one, and the benefits it provides. It also covers why companies need to handle them carefully, especially in today’s digital and regulated business world.

What is share certificate?

As explained above under the definition of a share certificate in the Companies Act, 2013, It is a paper-based document which is issued by the company. It is either stamped with the company’s seal or signed by two directors, or by one director and the company secretary.

The certificate clearly shows who owns the shares and how many shares they own in the company. It contains basic details such as the shareholder’s name, address, number of shares, and the date when the shares were given or allotted. Because of this, the certificate works as official proof that the person named in it is the real owner of those shares.

It is the duty of the company that prepare and give the share certificate to the shareholder within two months from the date the shares are allotted (Incorporation).

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How it is as prima facie evidence

Section 46(1) of the companies Act 2013, talks about that when the company issue a share certificate in the name of shareholder under the seal of the company and signed under the seal by the 2 director of the company or a director or a company secretory who is appointed by the company to handle all the takin care of this document of the company. In that case, It may consider as prima facie evidence of the title of the person to such shares. w.e.f. 29th May 2015, this seal is optional for those company who has not a seal as per their article.

Further, in case the shares are in dematerialized form, the record of the depository shall be treated as the prima facie evidence of the interest of the beneficial owner.

Principle of estoppel

Here is one of the principles of estoppel which is known as the name of estoppel that means this principle use ever in the case of share certificate. when the company issue a share certificate in that case the company binding in two ways first as estoppel as to title and second as estoppel as to payment.
The principle of estoppel means that a person is prevented (Stopped) from denying or going back on a statements, if another person has relied on it and acted upon it.

Format of share certificate

As per Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014, every company must issue this certificate in a fixed format called Form SH-1. This means it should be in Form SH-1 or very close to it.

This certificate shows important details about the shares and the shareholder. According to Form SH-1, This document usually includes:

Front side:

• Name of the company.
• corporate identity number(CIN).
• Address of the registered office.
• Nominal value per share.
• Amount paid-up per share.
• Register Folio Number.
• Certificate Number.
• Name of the holders (including the joint holders).
• Number of share held in words and in number.
• Distinctive numbers from to.
• Signatory of directors and secretary/any other authorized person.

Back side:

• Name of the Transferor.
• Name of the Transferee.
• Number of shares.
• Date of share transfer.
• Signature of the authorized signatory

When company issue a share certificate to the shareholder?

As per the Companies Act, 2013, Section 46 deals with the issue of share certificates and states that it is a prima facie evidence of title to the shares mentioned therein. Section 56 of the companies Act, 2013 explains the time limit for giving this certificate— the company must issue the share certificate within 60 days after shares are allotted, and within 30 days when shares are transferred or passed on (transmission).

Here are the following way to issue share certificate:

1. Requirement and Time frame: As per Section 46 of the Companies Act, 2013 and SEBI regulations, a company is required to issue share certificates to its shareholders within two months from the date of incorporation.

2. Share allotment: After allotment of shares, company must issue share certificate to its shareholder within 2 months at the date of allotment.

3. In case of transfer: When the company receives the transfer documents, it must issue the share certificate within one month of receiving them.

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Basic Requirement for issue of share certificate

Below are some basic and mandatory requirements for the issuance of it:

• When a company is incorporated, shares must be allotted or subscribed.
• The Board of Directors must pass a resolution to issue it.
• Share certificates must include all required details. (Like - Name of Company, CIN of Company and Registered Office Address of the Company, etc.)
• Certificates should be signed by two directors or one director. (If possible, one signer should not be the Managing or Whole-Time Director).
• The Company Secretary (if any) or any person authorized by the Board can also sign the certificate.
• The Company Secretary is generally considered authorized to sign share certificates.

Note:

Share certificate must be issued from the registered office of the company.

After issuing a share certificate, the company must pay stamp duty on it as per the Stamp Act of the respective State. The stamp duty must be paid within 30 days from the date of issuance of the share certificate. If the stamp duty is not paid, the company may face heavy penalties.

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Timelines for issuance of share certificate

As per Section 56 of the Companies Act, 2013, a company must issue share certificates to shareholders when shares are issued, transferred, or passed on to another person, unless restricted by law or a court order. The time limits are as follows:-

(a) For the first shareholders named in the Memorandum of Association, the share certificates must be issued within two months from the date of incorporation of the company.

(b) For shares allotted after incorporation, the company must issue the share certificates within two months from the date of allotment.

(c) In case of transfer or transmission of securities, the share certificate must be issued within one month from the date the company receives the transfer document or intimation of transmission.

(d) For debentures, the company must issue the debenture certificates within six months from the date of allotment.

Important Note: If the securities are dealt with in a depository, the company must intimate the depository immediately upon allotment.

Penalty of non issuance of share certificate

As per section 56(6) of the companies Act, 2013, Where any default is made in complying with the provisions of sub-sections (1) to (5), the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees (₹ 50000). There is no maximum cap beyond this penalty under the updated law.

However, as per section 446B of the companies Act, 2013 talks about that in favor of small companies and startups are eligible to reduce this penalty. In such cases, the penalty shall be reduced to Rs. 25,000 for the company and Rs. 25,000 for each officer in default.

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Issuance of share certificate without receiving of subscription money

Section 10A basically deals with the commencement of business. Section 10A(1) states that a company cannot commence its business or exercise its borrowing powers unless the share capital has been deposited into the company’s bank account.

Further, Section 10A(1)(a) provides that the directors must, within 180 days from the date of incorporation, submit a declaration to the Registrar confirming that all subscribers to the Memorandum have paid the value of the shares agreed to be taken by them.

Section 10A(1) as per Act: A company incorporated after the commencement of the Companies (Amendment) Ordinance, and having a share capital shall not commence any business or exercise any borrowing powers unless— 
(a): A declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

This rule ensures that this certificates are issued on time and avoids any confusion about who owns the shares.

From a simple reading of the law, it is clear that a company must issue this certificate to MOA subscribers within two months of incorporation, even if the subscription money has not yet been received.

This raises a common question—is the company still required to issue share certificates if the subscriber has not paid the subscription money?

The answer, based on recent cases, is Yes — APTIA Group India Private Limited is a recent case involving delay in issuing share certificates under Section 56(4)(a) of the Companies Act, 2013. In this case, the company filed a Suo-moto adjudication application with the Registrar of Companies (ROC) for not issuing certificate within the required two-month period.

Basic Information about the Case

In this case:

• There were two Directors, namely Mr. K. Rangan and Ms. Shubha Singh.
• The companies involved were foreign private limited companies operating in the business outsourcing sector.
• The date of incorporation was 7 July 2023.
  On this date, two companies were incorporated: Aptia Group Limited and Aptia Group Investment Limited.
• Both companies were registered with the Registrar of Companies (RoC), Delhi.
• The authorized capital and paid-up capital of both companies were substantial.

Delay Details:

Subscriber	Required by	Delay in issuing share certificate
Aptia Group Limited	07 September 2023	21 days
Aptia Group Investment Limited	07 September 2023	105 days

Issue in the Case:

The companies failed to issue share certificates within the prescribed time because the subscription money was not credited to the companies’ bank accounts within the statutory two-month period.

Due to this reason, the companies did not comply with the legal requirement of issuing share certificates within two months from the date of incorporation, as required under the Companies Act, 2013.

Regulatory Action:

Because of the delay in issuing share certificates, the Ministry of Corporate Affairs (MCA) issued a Show Cause Notice (SCN) on 6 September 2024 to the companies and their officers.

The notice asked them to explain why action should not be taken for the delay in issuing share certificates.

Reply by the Company:

In response to the Show Cause Notice, the companies filed E-Form GNL-1.
(This form is used when the RoC asks a company to submit explanations and supporting documents.)

Through E-Form GNL-1, the companies replied to the adjudication proceedings for violation of Section 56(4)(a) of the Companies Act, 2013.

The companies submitted their reply on 23 September 2024, explaining that the delay occurred due to late receipt of subscription money in the companies’ bank accounts.

Action Taken by the RoC:

After examining the reply, the RoC passed an adjudication order on 30 December 2024.

The RoC held that:

• The share certificates were issued late, and
• Delay in receiving subscription money is not a valid reason to delay the issuance of share certificates.

The RoC clarified that:

• The law provides 180 days from incorporation for subscribers to deposit subscription money (Section 10A), and
• The law also clearly fixes a separate timeline of two months from incorporation for issuing share certificates (Section 56(4)(a)).

The RoC stated that a company cannot refuse or delay issuing share certificates on the ground that subscription money was not received on time.
Instead, the company should follow up with subscribers by sending reminders, emails, or notices, rather than delaying statutory compliance.

Accordingly, The Registrar of Companies (RoC) fined the companies and their directors because they issued share certificates late, which violated Section 56(4)(a) of the Companies Act, 2013. The RoC noted that the delay was due to waiting for subscription money, but still held the company and its officers responsible and imposed penalties in an order dated 30 December 2024.

Similarly, In Tejas Cargo India Limited, the company issued share certificates late by 74 days due to a delay in receiving share subscription money. In this scenario, they asked for leniency, but the ROC Delhi imposed a penalty of ₹50,000 each on the company and its officers under Section 56(6).

"A company cannot delay issuing this certificates, even if the subscriber hasn’t paid yet. If it does, penalties will be imposed under Section 56 of the Companies Act, 2013."

From both cases, it is clear that a company cannot refuse or delay issuing this certificate because the law clearly says that a company must issue this certificate within two months from the date of incorporation or allotment, no matter what.
Even if the subscriber has not yet paid the subscription money, the company still has to issue this certificate within the two-month time limit. The company cannot use non-payment of subscription money as an excuse for delay.
If the shareholder ultimately fails to pay within the allowed period, then the Board of Directors and the Registrar of Companies (ROC) have the power to take action, which may include heavy penalties on the company and its officers.

Current situation in India!

Today, the world’s financial markets are changing very fast, and holding shares in paper form is becoming outdated. Many countries have stopped giving physical share certificates and now provide shares only in electronic form because it is faster, safer, and easier to follow the law.

In India, the government has introduced dematerialization, which means converting paper share certificates into electronic form. Electronic shares are much safer—they cannot be lost, damaged, torn, or misplaced. Since there are no paper certificates, there is also no need to issue duplicates. Buying and selling shares is easier, and shareholding is quickly updated in the shareholder’s account. This system also reduces mistakes and fraud, and it saves a lot of paperwork. Dematerialization is done through a depository system under the Depositories Act, 1996.

SEBI has asked all shareholders holding physical shares to complete their KYC (Know Your Customer) and submit the necessary documents by 1 April 2023. After this date, physical share certificates cannot be sold, transferred, or encased unless they are converted into electronic form. So, physical share certificates have no value unless they are dematerialized.

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In this article, we learned about this certificates. This is an important documents that show who owns the shares in a company. Companies must give this certificate on time to follow the law and avoid fines. According to the Indian Companies Act, 2013, it is mandatory for all companies to issue share certificates after their incorporation.

Even if a shareholder has not paid the subscription money yet, the company must still issue it within two months of incorporation of the company.

If the shareholder doesn’t pay, the company can remind them or even cancel their shares, but it cannot delay giving the this certificate, no matter what.

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