Stamp duty on issue of share certificates

This query is : Resolved 

25 April 2012

Dear Professionals,

Kindly let me know when provisions of stamp Act will attract stamp duty in case of share capital in following manner
1. if increase of share capital
2. allotment of shares and issue of share certificates.
3. transfer of shares certificates in physical forms.

Beside above mentioned queries please provide me what would be procedure for
1. allotment of shares
2.transfer of shares
in secretarial perspective

Thanks and Regards,

Ajay Mishra (Expert)
26 April 2012


Procedure for transfer of shares:

Generally articles contain the detailed provisions as regards the procedure for transfer of shares. Usually following steps shall be followed by a private company to give effect to the transfer of shares:—
(i) Transferor should give a notice in writing for his intention to transfer his share to the company.
(ii) The company in turn should notify to other members as regards the availability of shares and the price at which such share would be available to them.
(iii) Such price is generally determined by the directors or the auditors of the company.
(iv) The company should also intimate to the members, the time limit within which they should communicate their option to purchase shares on transfer.
If none of the members comes forward to purchase shares then the shares can be transferred to an outsider and the company will have no option, other than to accept the transfer.
It is to be noted that any transfer of shares to an outsider without complying with the procedure as specified in the articles for effecting transfer of shares will not be operative against the company. Even in the case where the procedure prescribed by the articles was not followed and such failure was not due to any fault on the part of the selling shareholder, the transfer to an outsider was held not to be effective.
Transfer of shares without consent of holder of shares and without prior sanction of board of directors as required under articles of association of a private company concerned could not be held to be valid. [John Tinson Co. (P) Ltd. v Mrs. Surjeet Malhan (1997) 88 Comp Cas 750 (SC)].

Ajay Mishra (Expert)
26 April 2012


In case of Private Limited company wanted to issue fresh shares within authorized capital, you can do so by passing of Board resolution for allotment of shares. Form No 2 is compulsory to file with ROC with in 30 days of allotment. List of Allottees is required to be attached with Form No. 2.

Ajay Mishra

Harvinder kumar (Querist)
27 April 2012

Thank you Sir for reply. Please also tell me how the stamping of share certificated to be get done. Please provide the step by step procedure related effect of it.

Thanks and Regards,

Ajay Mishra (Expert)
27 April 2012


For stamping on share certificate you should do the following:


Payment of Consolidated Stamp Duty on allotment & issue of Share Certificate.

Respected Sir,

With due regard we would like to acknowledge you that Our Company incorporated on the date………….. having company No. ……………. and subsequently wants to allotte shares to the shareholders. Company decided to make consolidated payment of stamp Duty in respect of share Certificate issue to the Shareholders.

The Share allotment details are hereunder:

Type of Security No of Share Certificate Folio No. Distinctive No. Face Value of Share Total Amount Paid

For ………………..

Director/ Authorized Person


1. Share Certificate (Specimen)
2. Memorandum & Article of Association
3. Board Resolution authorizing allotment of Shares
4. Form-2
5. Share Holding Pattern
6. Power of Attorney to present the matter.

Procedural Step:

Stage-1 Application to SDM (Concerned Registered Office of the Company)
Stage-2 Application forwarded by SDM to Finance Secretary
Stage-3 Finance Secretary Send Note to the Governor of the state
Stage-4 After due approval Finance secretary issue an approval to SDM
Stage-5 SDM issue challan on the basis of approval
Stage-6 Amount of stamp duty deposited in bank
Stage-7 A certificate of payment of duty issued by the SDM


Harvinder kumar (Querist)
27 April 2012

Thanks a lot sir......

With Regards,

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