Issue /Trf of shares under Companies Act 1956/2013

This query is : Resolved

Prakash Joshi (Querist)
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29 June 2023 Hi Friends,
Please advise on the following issue:
A pvt co incorporated in 2007 as per MGT 7 the shares if the compy trfd few times but the company has no share certicates with the holders or share trf forms and other records.
Now the share holders want the share certificates and also trf them to new new interested parties.
Can the company issue share certificates in current date under CA 2013 and is there any requirement of getting them stamped under the Stamps act.
Pls share your thoughts.

Thanks
PC Joshi

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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09 July 2024 Certainly! Here’s a comprehensive guide addressing the issuance of share certificates and transfer of shares by a private company under the Companies Act, 2013:

### Issuance of Share Certificates:

1. **Requirement under Companies Act, 2013:**
- According to Section 46 of the Companies Act, 2013, every company, including a private company, is required to issue share certificates to shareholders within a specified period from the date of allotment or transfer of shares.
- Share certificates serve as evidence of ownership and are crucial for legal purposes.

2. **Issuance of Share Certificates:**
- **Procedure:** The company can issue share certificates at any time, even if they were not issued previously. This involves preparing share certificates for each shareholder reflecting their shareholding.
- **Stamp Duty:** Share certificates typically need to be stamped as per the Stamp Act applicable in the state where the company is registered. Stamp duty rates vary by state, and it's essential to comply with local stamping requirements to validate the share certificates.

3. **Documentation:**
- **Format:** Share certificates should be in the prescribed format and include details such as the name of the shareholder, number of shares held, distinctive numbers (if any), class of shares, and date of issue.
- **Register:** Maintain a register of shareholders along with details of share certificates issued, as required under the Companies Act.

### Transfer of Shares:

1. **Transfer Procedure:**
- **Share Transfer Form:** Shareholders intending to transfer shares must complete a share transfer form (Form SH-4) and submit it to the company along with the share certificate (if already issued) for endorsement.
- **Board Approval:** The board of directors must approve the transfer of shares. If the transfer involves restrictions as per the Articles of Association, these must be complied with.

2. **Stamp Duty on Share Transfer:**
- Share transfers also attract stamp duty, which is payable by the transferee (buyer) unless otherwise agreed between the parties. The stamp duty rates vary across states.

3. **Entry in Register of Members:**
- Once approved, update the register of members with details of the new shareholder.

### Practical Steps:

- **Verification of Records:** Review internal records to ascertain the current shareholders and their holdings.
- **Preparation of Share Certificates:** Prepare share certificates for each shareholder based on their current holdings.
- **Stamping:** Ensure that the share certificates are stamped as per the applicable Stamp Act provisions.
- **Transfer Process:** Facilitate the transfer of shares by processing share transfer forms and updating records accordingly.

### Compliance and Legal Considerations:

- Ensure compliance with all provisions of the Companies Act, 2013, including issuance of share certificates and maintenance of proper records.
- Address any specific requirements under the Articles of Association regarding share transfers.

### Conclusion:

The private company can issue share certificates to existing shareholders and facilitate the transfer of shares to new interested parties under the provisions of the Companies Act, 2013. It’s essential to comply with stamping requirements under the Stamp Act applicable in the state of registration to validate the share certificates. For precise execution, consider consulting with a company secretary or legal advisor to ensure adherence to regulatory requirements and smooth transfer processes.

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