Procedure for Sub-Division or Consolidation of Share Certificate

Aakanksha Singhal

Aakanksha Singhal

Published on: May 10, 2022

Khushboo Sharma

Updated on: Nov 20, 2024

★★★★★(9 Rating)

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Introduction

“Share Certificate” attributes to a document promulgated by the company indicating that the individual specified in such certificate is in possession of the shares of the Company. Such certificate so promulgated under the company’s common seal, if any, or endorsed by two directors or by a director and Company Secretary, if any, stipulating the shares held by any person, shall be prima facie evidence of the title of the person to such shares. [Section 46(1) of the Companies Act, 2013]

Applicable Provisions:

1. Section 46 of Companies Act, 2013
2. Rule 5, 6 of the Companies (Share Capital and Debentures) Rules, 2014

Mandatory Requirements

1. Issue fresh or renewed share certificate only upon receiving the surrender of the certificate in lieu of which it will be issued [Rule 6(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014]
2. Approval of the Board of Directors by passing a resolution in a Board meeting for splitting/consolidation of share certificate [Rule 5(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014]
3. Maximum up to Rs. 50/- per certificate may be charged by the Board for the issuance of a duplicate share certificate [Rule 6(2)(a) of the Companies (Share Capital and Debentures) Rules, 2014]
4. Particulars of every share certificate to be entered in the Register of Renewed and Duplicate Share Certificates promptly [Rule 6(3)(a) of the Companies (Share Capital and Debentures) Rules, 2014]

Procedure

1. Intimation to the Company [Rule 6(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014]:
   It is obligatory on the shareholder’s part to surrender the old certificate in lieu of which a fresh or renewed certificate shall be issued by the company on account of the reasons cited below:
   • Sub-division or consolidation of shares or
   • Replacement of shares that are defaced, mutilated, torn or old, decrepit, worn out or
   • In case pages on the back for documenting transfers have been duly utilized.
2. Convene a Meeting of Board of Directors [As per section 173 & SS-1 and Regulation 5(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014]:
   Please refer to the Procedure for Conducting Board Meeting of the Directors for further details.
3. Issue Duplicate Share Certificate [Rule 5(2), 5(3), 6(2)(b), and 6(2)(c) of the Companies (Share Capital and Debentures) Rules, 2014]:
   
   • Every share certificate shall be in Form No. SH.1 or as near thereto as possible specifying the name(s) of the person(s) in whose favor the certificate is issued, the shares to which it relates and the amount paid-up thereon
   • Every share certificate is to be signed by two directors or by a director and the company secretary, where the company has appointed a company secretary. And, in case the company has a common seal, the same shall be affixed in the presence of persons required to sign the certificate
   • The company shall inscribe “Duplicate issued in lieu of share certificate No….” by stamping or prominently printing the word duplicate on the face of the share certificate
   • Duplicate share certificates shall be issued:
     • within 03 months In case of unlisted companies and
     • within 45 days in the case of listed companies
     from the submission date of complete documents with the company respectively
     Note: The company may replace all the existing certificates with new certificates upon sub-division or consolidation of shares or merger or demerger or any reconstitution without requiring old certificates to be surrendered subject to compliance with Rules 5(1)(a), 5(2) and 5(3) of the Companies (Share Capital and Debentures) Rules, 2014.
   • Updating the Register of Renewed and Duplicate Share Certificates [Section 15(1) of the Companies Act, 2013 and Rule 6 (3) (a), 6 (3) (b) and 6 (3) (c) of the Companies (Share Capital and Debentures) Rules, 2014]:
     • The company shall enter the particulars of every share certificate issued as per the terms of Rule 6(1) & 6(2) of the Companies (Share Capital and Debentures) Rules, 2014, forthwith in Register of Renewed and Duplicate Share Certificates maintained in Form No. SH. 2 indicating:
       • Name(s) of the person(s) to whom the certificate is issued
       • Number and issue date of share certificate in lieu of which new certificate is issued
       • Requisite changes cited in the Register of Members by apt cross-references in the “Remarks” column
     • The company shall upkeep such register at its registered office or such other place as may deem fit and ensure that the same is preserved permanently in the custody of the company secretary or any other person duly authorized by the Board for the purpose
     • All entries recorded in the Register of Renewed and Duplicate Share Certificates shall be authenticated by the Company Secretary or such other person as recognized by the Board to affect the sealing and signing of share certificate as per provisions of Rule 5(3) of the Companies (Share Capital and Debentures) Rules, 2014
     • Every Alteration made in the Memorandum of Association (MoA) or Articles of Association (AoA) of the company shall be noted in every copy of the memorandum or articles as the case may be.