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Share certificate

BHAVINI SHAH (Company Secretary) (193 Points)

08 May 2012

Can a director of a private limited company who is also a shareholder sign his own share certificate as per companies act?

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(Guest)

Dear Bhavini,

As per the Companies (Issue of Share Certificates) Rules, 1960, under the heading, 'Sealing and Signing of Certificate' :

Every share certificate shall be issued under the seal of the company, which shall be affixed in the presence of :

(i) two directors or persons acting on behalf of the directors under a duly registered power-of-attorney ; and

(ii) the secretary or some other person appointed by the Board for the purpose. The two directors or their attorneys and the secretary or other person shall sign the share certificate.

Provided that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be a person other than a managing or whole-time director.

Explanation.-For the purpose of this rule, a director may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other mechanical means such as engraving in metal or lithography but not by means of a rubber stamp, provided that the director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose.

Thus, these rules do not prohibit a director from signing his own Share Certificate as it would be verified by the signature of some other director.

I have attached the above rules for your reference.

Regards,

Veeral Gandhi

Attached File : 698334 977206 companies issue of share certificates rules 1960.pdf downloaded: 222 times

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Rashmi Rajgarhia (Employee) (50 Points)
Replied 10 May 2012

I have posted a query in this regard in the MCA Portal because even independent director is not an apt category .Still,for the time being filling one of theother two categories and attaching a note alongwith in this regard seems to be a practical solution.

Thankyou both of you.