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Key takeaways
- A share certificate is the statutory document that serves as prima facie evidence of share ownership under Section 46 of the Companies Act, 2013. In dematerialised form, the depository's record replaces the certificate as evidence of title.
- Every share certificate issued by an Indian company must follow Form SH-1, prescribed under Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014.
- Mandatory fields include the company's name, CIN, registered office, shareholder name and address, folio number, certificate number, share class, number of shares, distinctive numbers (physical only), nominal value, amount paid up, and date of issue.
- A private limited company's certificate must be signed by two directors, or one director and the company secretary. An OPC requires one director and the company secretary (or authorised person).
- Stamp duty must be paid within 30 days of certificate issue.
- Issuance timelines are 2 months from allotment (or from incorporation for subscribers) and 1 month from receipt of a transfer instrument.
- Under Rule 9B, most non-small private companies must now issue shares only in demat form and must have dematerialised existing shares by June 30, 2025.
Share certificate format in India: Form SH-1, mandatory fields, and issuance rules
A share certificate is a formal document issued by a company to a shareholder as legal proof of their ownership of a specified number of shares. In India, its format, content, and issuance process are governed by Section 46 of the Companies Act, 2013 read with Rule 5 of the Companies (Share Capital and Debentures) Rules, 2014. Every certificate must be issued in or as near as possible to Form SH-1 — the prescribed statutory format.
Most founders encounter share certificates at incorporation, at a funding round, or when ESOPs are exercised. Getting the format wrong, missing mandatory fields, or failing to stamp the certificate within the prescribed timeline creates compliance gaps that surface during due diligence, audits, or share transfers. This guide covers what Form SH-1 must contain, how to fill it correctly, who must sign it, and how stamping works across Indian states.
What is a share certificate under Indian company law?
A share certificate is a document that serves as prima facie evidence of title — meaning it is treated as proof of ownership unless proven otherwise. The phrase "prima facie evidence" comes directly from Section 46(1) of the Companies Act, 2013, and it has a precise legal implication: the certificate shifts the burden of proof. If a dispute arises over who owns a particular block of shares, the person holding a properly issued certificate does not need to produce additional evidence of purchase; the other party must disprove the certificate's validity.
This is distinct from dematerialised shares held in a demat account. Under Section 46(4), when shares are held in demat form, the depository's record — not a physical certificate — is the prima facie evidence of the beneficial owner's interest. Physical share certificates, therefore, remain primarily relevant to private limited companies that have not yet dematerialised, and to transactions predating the demat mandate.
The statutory basis of share certificate: Section 46 and Rule 5
Section 46 Companies Act 2013 sets out when a share certificate is legally valid and how it must be issued, including rules for issuing duplicate certificates. It also makes clear that these requirements come from statutory rules, and a company cannot override them through its Articles of Association.
The procedural rules are set out in Rule 5 of the Companies (Share Capital and Debentures) Rules, 2014. Rule 5(1) requires that no share certificate be issued except in pursuance of a board resolution. Rule 5(2) prescribes that every certificate must be in Form SH-1, or as near thereto as possible, and must specify the names of the persons in whose favour the certificate is issued, the shares to which it relates, and the amount paid up. Rule 5(4) requires that the particulars of every certificate issued be entered into the Register of Members (maintained in Form MGT-1) under Section 88 of the Act.
Form SH-1 – Share certificate format under the Companies Act, 2013
The statutory Form SH-1, prescribed under the Companies Act, 2013 read with the relevant rules, sets out the format and mandatory particulars for share certificates issued by Indian companies. While companies may adopt a format “as near thereto as possible,” the essential contents specified in Form SH-1 must be strictly complied with.
Mandatory fields of a share certificate
a. Certificate number
A unique sequential identifier assigned by the company to each certificate it issues. The company maintains a series — Certificate No. 1, 2, 3 and so on — with each number corresponding to a specific issuance event. This number is also cross-referenced in the Register of Members (Form MGT-1) and, where applicable, the Register of Renewed and Duplicate Share Certificates (Form SH-2).
b. Company name, CIN, and registered office
The company's full legal name as registered with the Ministry of Corporate Affairs (MCA), its Corporate Identification Number (CIN) — a 21-character alphanumeric code assigned at incorporation — and the full address of the registered office. The registered office address on the certificate must match the address currently filed with the ROC. If the company has shifted its registered office, certificates issued after the shift should carry the updated address.
c. Folio number
The folio number is the shareholder's unique identification number in the company's Register of Members. Think of it as a ledger entry reference: every shareholder gets a folio at the time their name first appears in the register, and all share movements against that shareholder are recorded against this folio. One folio can cover multiple share certificates if the shareholder holds shares acquired at different times or in different lots.
d. Shareholder name and address
The full legal name and contact address of the registered holder. For joint holdings, all joint holders are named, with the first-named holder being the primary contact for corporate purposes such as dividend payments and voting.
e. Share class and number of shares
The class of shares (equity, preference, or a sub-class such as Series A Compulsorily Convertible Preference Shares) and the total count — stated both in figures and in words.
f. Distinctive numbers
Distinctive numbers are the sequential share numbers assigned to the specific shares covered by this certificate. For example, if a company has issued 10,000 equity shares total and this certificate covers shares 5,001 to 6,000, the distinctive range would be "5001 to 6000." These numbers allow each individual share to be uniquely identified.
Distinctive numbers are only applicable to physical share certificates. When shares are held in demat form, they do not carry individual numbers — instead, they are fungible credits in the shareholder's demat account, and ownership is tracked by the depository (either NSDL or CDSL).
g. Amount paid up per share
The amount actually received by the company against each share. For fully paid-up equity shares, this equals the face value plus any securities premium. For partly paid shares, this reflects only what has been received so far. If shares are issued at a premium — which is common in startup funding rounds — the face value and the amount paid up are different numbers, and both must appear on the certificate.
h. Date of issue
The date on which the certificate is formally issued to the shareholder. This is not the same as the date of allotment. The allotment date is when the board resolution approving allotment is passed; the issue date is when the physical certificate is handed over or dispatched. The distinction matters for timeline compliance — the statute counts from the allotment date, not the certificate issue date.
Who must sign a share certificate?
The signing requirement is set out in Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014 and varies depending on company type:
a. Private limited company: Signed by two directors, or by one director and the company secretary (if the company has appointed a company secretary).
b. One Person Company (OPC): Signed by one director and the company secretary, or any other person authorised by the board for this purpose. An OPC has only one member and typically one director, so the requirement of two directors does not apply.
c. Common seal: If the company has a common seal, it must be affixed to the share certificate in the presence of the required signatories. While the use of a common seal is now optional, if a company adopts one, this requirement must be followed.
A director's signature may be a printed facsimile (including a digital signature), but not a rubber stamp. The director is personally responsible for permitting the use of their facsimile signature.
Stamp duty on share certificates in India
A share certificate is an instrument within the meaning of the Indian Stamp Act, 1899, and stamp duty must be paid on it for the certificate to have legal validity. An unstamped certificate can be challenged in legal proceedings and may not be accepted as valid proof of ownership. Stamp duty is a state subject — rates vary by state — and must be paid within 30 days of the date of issue of the certificate.
For dematerialised shares: Stamp duty on demat securities is collected centrally through NSDL or CDSL at the time of the transaction, so the company does not separately stamp a physical certificate. No physical SH-1 is issued when shares are held in demat form.
Timelines for issuing share certificates
Section 56 of the Companies Act prescribes the following timelines:
These are maximum timelines, not targets. A company can issue certificates earlier. The company cannot lawfully issue a certificate before the board resolution approving the allotment or transfer has been passed.
Physical vs. dematerialised certificates — and what Rule 9B changes
Until recently, private limited companies could choose whether to issue physical share certificates or dematerialise their shares. This choice no longer exists for most private companies.
Under Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, inserted by the Ministry of Corporate Affairs via the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, all private limited companies — except small companies and government companies — are required to dematerialise their existing shares and to issue all new shares only in demat form. The deadline for existing shares was June 30, 2025.
What this means in practice: If your private company has outstanding physical share certificates and does not qualify as a small company (i.e., paid-up capital not exceeding ₹4 crore and turnover not exceeding ₹40 crore), those certificates had to be converted into dematerialised form by June 30, 2025. Any physical certificates issued after that date by a non-exempt company may be non-compliant.
For companies that are still exempt (small companies) or are in the process of dematerialising, physical SH-1 certificates remain valid documents in the interim.
Reach out to EquityList if you need help with dematerialisation.
The memorandum of transfer on the reverse of Form SH-1
Physical share certificates under Form SH-1 typically include a memorandum of transfer section printed on the reverse. This section records each successive transfer of the shares covered by that certificate — the name of the transferor, the name of the transferee, the number of shares transferred, and the date.
This memorandum does not substitute for Form SH-4 (the Securities Transfer Form). A physical share transfer requires both instruments: Form SH-4 and the original share certificate surrendered to the company. Upon completing the transfer, the company issues a new certificate to the transferee — and the old certificate is cancelled and retained in the company's records.
Penalties for non-issuance or defective issuance of share certificates
Section 56(6) of the Companies Act, 2013 provides that if a company fails to comply with the provisions relating to transfer or issuance of share certificates, the company and every officer in default are liable to a penalty of ₹50,000.
For fraudulent duplicate certificates — where a company issues a duplicate with intent to defraud — Section 46(5) prescribes a fine of not less than five times the face value of the shares involved, extending up to ten times the face value or ₹10 crore, whichever is higher. Officers in default in this case are liable under Section 447.
FAQs
1. How to make a share certificate format?
A share certificate in India must comply with Form SH-1, as prescribed under Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014. To prepare the certificate, the company first passes a board resolution approving the allotment or transfer of shares. The certificate is then prepared with the required details and must be signed by either two directors or one director and the company secretary. Stamp duty must be paid within 30 days of issue at the applicable state rate. Finally, the certificate’s particulars are entered into the Register of Members using Form MGT-1.
2. What are the types of share certificates?
Under Indian company law, share certificates are primarily classified based on the type of shares they represent. Equity share certificates are issued for ordinary equity shares, while preference share certificates are issued for preference shares.
Within these categories, there are sub-classes such as compulsorily convertible preference shares, optionally convertible preference shares, or equity shares with differential voting rights, and the certificate must specify the applicable class.
Another distinction is between physical certificates and dematerialised certificates.
