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Issue of share certificate

ganesh (Student CS) (49 Points)

19 November 2013

GOOD MORNING

IS THERE ANY TIME LIMIT FOR ISSUE OF SHARE CERTIFICATES AFTER THE ALLOTMENT OF SHARES.

IF YES, WITHIN HOW MANY DAYS WE WANT TO MAKE THE ALLOTMENT. IF THE COMPANY IS IN DEFAULT IN ISSUE OF SHARES AFTER THE ALLOTMENT WHAT WILL HAPPEN.

KINDLY REPLY ME.

THANKS IN ADVANCE

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2 Replies

Ajay Mishra (Company Secretary) (74337 Points)
Replied 19 November 2013

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 (Company Secretary) (74337 Points)
Replied 19 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.

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