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Step-by-Step Process for Share Certificate Preparation

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Financial Analyst

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Step 1: Pass Board Resolution for Share Allotment

Before issuing certificates, the company must formally approve allotment.

Action points:

  • Conduct a board meeting.
  • Pass a resolution approving the allotment of shares.
  • Record details of shareholders, shares allotted, and consideration received.

Step 2: Update Register of Members (Form MGT-1)

After allotment, the company should update the member records.

Action points:

  • Enter shareholder name, address, PAN, and number of shares.
  • Mention distinctive numbers and certificate number.
  • Record date of allotment.

This register becomes the primary source while preparing certificates.

Step 3: Pay Stamp Duty on Share Certificates

Stamp duty is mandatory and varies by state. It must be paid on the value of shares allotted, not on the face of the certificate.

Action points:

  • Pay stamp duty via the SHCIL portal or state e-stamp system.
  • Keep the challan/e-stamp receipt for records.
  • Ensure duty payment within 30 days of allotment.

Step 4: Prepare the Share Certificate Format

The company must use a standardized structure as per Form SH-1.

Key details to include:

  • Company name, CIN & registered address
  • Certificate number
  • Folio number
  • Name of shareholder
  • Number and class of shares
  • Distinctive number range
  • Date of issue
  • Seal of the company (if applicable)

SavingMantra Tip: Use tamper-proof paper or digital certificate format (if permitted).

Step 5: Verify Shareholder Details

Before printing or generating certificates, cross-check all information.

Verification checklist:

  • PAN and KYC details
  • Number of shares allotted
  • Proper sequence of distinctive numbers
  • Spelling of names as per official documents

This step helps avoid compliance errors and future disputes.

Step 6: Sign the Share Certificate

The certificate becomes valid only when properly signed.

Signing rules:

  • Must be signed by two directors, OR
  • One director and the company secretary, OR
  • One director with an authorized person (if no CS exists)
  • Digital signatures may be used where legally allowed.

Step 7: Issue or Deliver the Share Certificate to Shareholder

The company must issue the certificate within 60 days from the date of allotment.

Delivery methods:

  • Physical handover with acknowledgment
  • Registered post/courier
  • Digital certificate with tracking (if permitted)

Maintain a Share Certificate Issue Register for compliance.

Documents Required for Share Certificate Preparation

  • Board Resolution for allotment
  • Register of Members (MGT-1)
  • Proof of stamp duty payment
  • Share application forms
  • PAN/KYC of shareholders
  • Share certificate book or digital template

Common Mistakes to Avoid

❌ Incorrect distinctive numbers
❌ Missing signatures
❌ Delay in stamp duty payment
❌ Wrong shareholder name or address
❌ Issuing certificates without board approval

SavingMantra Compliance Tip

To avoid penalties, ensure:
✔ Allotment filings (PAS-3) are completed
✔ Stamp duty is paid within 30 days
✔ Certificates issued within 60 days
✔ Registers are updated regularly

If you need, I can also create downloadable formats:
📄 SH-1 Share Certificate Template
📊 Register of Members (Excel)
📑 Share Certificate Issue Register
📝 Board Resolution for Allotment

Conclusion

Share certificate preparation is a structured compliance process involving approvals, stamping, documentation, and timely issuance. Following the correct steps ensures transparency, legal compliance, and smooth shareholder communication.

SavingMantra helps businesses streamline statutory documentation and filing processes with accuracy and speed.

The information provided in this blog is for general informational and educational purposes only and should not be construed as legal, tax, or professional advice. While every effort has been made to ensure accuracy and compliance with the applicable provisions of the Companies Act, 2013 and related rules, laws and regulations may change over time and interpretations may vary based on specific facts and circumstances.

All services are subject to applicable laws, rules, and government approvals prevailing at the time of execution.

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