28 December 2010
Hi, Me and other person (person A) are founding director in a pvt ltd company. We both had 50% shares in the company at the time of foundation. Could you guys help me in answering my following queries: 1. Signature of Person 'A''s wife appears on the share certificate, while his wife has no relation with the company. She is not even an employee of the company. There was no resolution/ special resolution passed to authorize his wife to sign on the share certificate. 2. Person A has increased his paid-up capital but the share certificate of his increased shares still shows the issue date of share certificate of the foundation date.
I would like to understand whether he is conducted a fraud and what sort of action I can take against him.
29 December 2010
1) The share certificate bearing "A"'s wife signature is not at all valid. As per Companies Act, 1956 share certificate shall bear the common seal of the company which is to be affixed in the presence of 2 directors and a company secretary or any other person authorised by the board. So please ensure that the share certificate bears the common seal of the company. Normal procedure is that the Board normally passes a resolution authorising 2 directors and company secretary or CFO to sign the Share certificate and affix the common seal. 2) Shares can be alloted only after receipt of the money. Backdating of share certificate will amount to alloting shares prior to receipt of share money. The motive behind these actions being unknown, the best way is to have open discussions with the director who is resorting to such practices and if you smell any foulplay you may approach the Company Law Board for redressel.
CAclubindia
