Applicable Provisions
The issuance of share certificates is governed by Section 46 (issue of share certificates) and subsection (4) of Section 56 (relating to the transfer and transmission of securities) read with Rule 5 of the Companies (Share Capital and Debentures) Rules, 2014.
Time Period for Issuance of Share Certificates (Section 56(2))
Subscriber to the Memorandum: Share certificates must be issued within 2 months from the date of incorporation.
Allotment of Shares: Share certificates must be issued within 2 months from the date of allotment.
Transfer or Transmission of Shares: Share certificates must be issued within 1 month from the date of receipt of the instrument of transfer or transmission.
Allotment of Debentures: Share certificates must be issued within 6 months from the date of allotment.
Stamp Duty on Issue of Share Certificates
Appropriate stamp duty must be paid on the issuance of share certificates within 30 days of their issue. The process for payment of stamp duty varies from state to state.
Compliance Assistance
We assist companies in complying with the mandatory franking or payment of stamp duty requirements across all states, ensuring a smooth and hassle-free process.
Penalties for Non-Compliance
Company: A fine of ?25,000, which may extend to ?500,000.
Officer: A fine of ?10,000, which may extend to ?100,000.
Time Limit for Share Allotment - FEMA & Companies Act, 2013
FDI Regulations under FEMA: Shares must be allotted against share application money received from non-residents within 180 days of receipt.
Section 42(6) of Companies Act, 2013: If a company receives any amount for the purpose of allotment of shares on a private placement basis, shares must be allotted within 60 days of receiving the share application money. If not, the company must refund the money within 15 days.
Rule 2(c)(vii) of Companies (Acceptance of Deposits) Rules, 2014: Any amount received for subscription of shares must be allotted within 60 days. If shares are not allotted within this period, the amount must be refunded within 15 days after the 60-day period expires, otherwise, it will be treated as deposits.
Foreign Body Corporate or Citizens Compliance with FEMA: Amounts received from foreign entities or citizens in compliance with FEMA are not treated as deposits.
Stricter Provisions Prevail
In the absence of any overriding provisions between the Companies Act, 2013, and FEMA, the stricter provisions of the Companies Act shall prevail. Consequently, amounts received from non-residents as share application money must be allotted within 60 days.