Share Certificate

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2010 A company receives Share Application money from M/s XYZ ( It is a proprietorship firm). In whose name the share certificate is to be issued i.e. in the firm name or in the name of the proprietor.

CS Vandana Kacholia

CS Vandana Kacholia (Expert)
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01 January 2010 well reference to section 41 a person can be a member by way of a)an agreement in writing and b) an entry in register

but according to section 3(42)OF General Clause act, 1987 person includes any company, aop and individual, government but does not include the proprietor concern as it is not an independent, legal and juristic entity having legal recongnition in the eye of law.

to conclude there is no question of issue of certificate at all.

others views are also invited

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2010 So Should the certificate be issued in the name of the Individual.(But the Cheque has been received from the Firm's Bank Account.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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01 January 2010 You have to issue share certificate to the individual. Eventhough you have received from the firm's bank account you should credit to individual account with a narration that the amounts has been given by the proprietorship firm on behalf of the proprietor.

Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2010 But we have issued share certificates in the name of the Firm and also filed the annual return with the ROC. Is there any remedy.

Also can the share certificates be issued in the name of partnership firm

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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25 July 2025 Here's a clear explanation addressing your concerns about share certificates issued to proprietorship or partnership firms:

Can share certificates be issued in the name of a proprietorship or partnership firm?
Proprietorship firm:
A proprietorship is not a separate legal entity distinct from the proprietor. It does not have legal personhood under the law (Companies Act or otherwise).
Therefore, share certificates cannot be issued in the name of a proprietorship firm. Shares must be issued to the individual proprietor only, even if payment is received from the firm's bank account.

Partnership firm:
A partnership firm is also not a separate legal entity under the Companies Act, but under Partnership Act, it can sue or be sued. However, it cannot hold shares in its own name because the company’s member must be a natural person or a corporate body.
Shares cannot be issued in the name of a partnership firm. They should be issued to individual partners.

What if share certificates were mistakenly issued in the name of the firm?
Remedy:

Rectify the register of members by transferring the shares from the firm’s name to the rightful individual(s) — proprietor in case of proprietorship or partners in case of partnership.

Issue new share certificates in the name(s) of the individual(s) and cancel the old share certificate(s).

File necessary forms with ROC for rectification and transfer of shares. (e.g., SH-4 for transfer and possibly a fresh MGT-7 annual return if changes affect the return).

Maintain records explaining the reason for correction.

Summary:
Entity Type Can Shares be Issued in its Name? What to Do if Mistakenly Issued?
Proprietorship Firm No Transfer shares to proprietor’s name & issue new certificates
Partnership Firm No Transfer shares to partners’ names & issue new certificates
Company / LLP Yes N/A

Important: Cheque from firm’s bank account can be treated as payment on behalf of the individual, but ownership must reflect the individual’s name.

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