Share purchased but not alloted

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 November 2013 Hello
I purchase share of one company & letter issued for this share but share not allotted yet so what procedure for taking share

Ajay Mishra

Ajay Mishra (Expert)
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10 November 2013 Please check their shareholding patter and demand from him and collect share certificate as per section 113 of the Companies Act, 1956.

Ajay Mishra

Ajay Mishra (Expert)
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10 November 2013
Issuance of shares certificates:

The moment shares had been allotted, share certificates signed and the shareholder's name is entered in the register maintained for the purpose, the person would become the shareholder of the company irrespective of whether the person had received the share certificate or not.
Under section 113 allotment of shares, which shall be the date on which the offer of allotment of rights issues has been accepted by the petitioners by depositing the amount, the company is bound to issue share certificates within the period of three months. If share certificate is not issued within the period of three months and if the company has not obtained the order of extension of period from the CLB (now Tribunal) for issuance of share certificates, the period of limitation commences for enforcement of rights for issuance of shares and consequently on completion of three months from allotment of shares by the company period of limitation for recovery of the amount shall commence under article 47 of the Limitation Act, 1963. [Gurdino Jiwatram Kukreja v Eastern Mining and Allied Industries Ltd. (2004) 121 Comp Cas 762 (Gau)].

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Ajay Mishra

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10 November 2013
Service of shares certificates:

When a document is sent by post, service thereof should be deemed to be effective by properly addressing, prepaying and posting the letter containing the document. The presumption, which had been raised under section 53, was reputable and a shareholder might allege that he had not been delivered the share certificate or that it was not properly addressed.

Section 113 only requires company to keep certificates ready for delivery and does not impose an obligation on company to deliver them.

What is punishable under sub-section (2) of section 113 is non-delivery in accordance with the provision laid down under section 53 of the certificates of shares within prescribed time. So, if the documents are posted within stipulated time, there would be compliance of section 113 and there would not be any offence. [H.V. Jayaram v Industrial Credit & Investment Corpn. of India Ltd. (2000) 23 SCL 64 (SC)].
In the case of Herdilia Unimers Ltd. v Renu Jain (1998) 92 Comp Cas 841 (Raj), the registration receipt produced was bulk registered receipt from which it was not evident whether it was sent to registered address and/or on the basis of a document, which was not complete in itself.

Ajay Mishra

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10 November 2013
Complaint for delay in issue of share certificates within stipulated time should be filed only in a Court within whose jurisdiction the registered office of the company is situated:

Section 113(2) provides for non-delivery of share certificates to the allottees whereas sub section (3) provides for delivery of share certificates. Under sub section (2) the Court is authorised to impose penalty whereas sub section (3) gives authority to CLB (now NCLT) to issue direction to deliver share certificates. If the Complainant wants to proceed against the company under sub section (2) the complaint will have to be filed in the Court of Magistrate having jurisdiction over the registered office of the company is situated whereas if he wants to resort to summary remedy for delivery of share certificates he can approach the CLB (now Tribunal) under section 113(3). [Indian Petro Chemicals Corp. Ltd. v State of Rajasthan (2000) 39 CLA 70 (Raj)].
In H.V. Jayaram v ICICI (2000) (2) SCC 36 CLA, it was explained that a complaint relating to non delivery of share certificates could be filed only in the court within whose jurisdiction the company's registered office is situated and not where the complainant resides.
Criminal Court has jurisdiction to entertain a complainant for an offence committed under section 113(2). [Bank of Rajasthan Ltd. v State of Bihar (2000) 26 SCL 1 (Pat)].