A share certificate is the prima facie evidence of a shareholder's title to the shares of a company. In India, the form, contents, time limit, stamp duty, and procedure for issuing share certificates are tightly regulated under the Companies (Share Capital and Debentures) Rules, 2014. Form SH-1 prescribes the standard format. This guide covers what SH-1 is, its mandatory contents, statutory timelines, stamp duty across states, common errors, demat conversion, and the duplicate issuance process.
What SH-1 is
Form SH-1 is the format of share certificate prescribed under Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014. It is the document, signed by two directors and the company secretary (or where there is no CS, a person authorised by the board), that evidences ownership of a specific number of shares of a specific class in a specific company.
SH-1 is not a registered form filed with the MCA — it is a physical document held by the shareholder. The MCA approves the broad format; companies prepare and issue SH-1 certificates themselves.
Mandatory contents per Rule 5
Every share certificate in form SH-1 must contain:
- Company's name, CIN, registered office address, and registered office state
- Authorised, issued, subscribed, and paid-up capital
- Folio number assigned to the shareholder in the register of members
- Shareholder's full name and address
- Number of shares represented by the certificate (in figures and words)
- Distinctive numbers of the shares — from-to range
- Class of shares (equity, preference, etc.) and any rights attached
- Amount paid up per share and any unpaid amount
- Date of issue of certificate
- Common seal of the company (if the company has one — common seals became optional under the Companies (Amendment) Act, 2015)
- Signatures of two directors and the company secretary (or authorised person)
- Revenue stamp affixed (the stamp paper value depends on the state)
Where the company has a common seal, the certificate must be issued under the seal of the company. If no common seal exists, the certificate is signed by two directors or a director and the CS or such other person as the board may authorise.
Time limit for issuance
Section 56(4) of the Companies Act, 2013 specifies the timelines:
- Subscribers to the memorandum (at incorporation) — within 2 months from incorporation
- Allottees of fresh shares — within 2 months from the date of allotment
- Transferees — within 1 month from the date of receipt of the transfer deed
- Debenture holders — within 6 months from the date of allotment
The 2-month and 1-month deadlines are strict. Section 56(6) imposes a penalty of ₹25,000 to ₹5,00,000 on the company and ₹10,000 to ₹1,00,000 on every officer in default for missing these deadlines.
Stamp duty
Stamp duty on share certificates is governed by Article 19 of Schedule I of the Indian Stamp Act, 1899 (as amended in 2019 to unify duty rates for securities). Under the unified rates effective 1 July 2020:
- On issue of shares: 0.005% of the issue value (consideration plus any premium)
- On transfer of shares (off-market): 0.015% of the consideration
- For demat issuance/transfer: stamp duty is collected by the depository at the time of allotment/transfer and remitted to the relevant state
For physical share certificates, the stamp duty is paid to the state where the registered office is situated. The duty is paid via:
- Adhesive revenue stamps affixed on each certificate
- Franking from a sub-registrar (preferred for large issues)
- E-stamping where the state offers it (Karnataka, Maharashtra, Delhi, Haryana, etc.)
Failure to stamp a share certificate renders it inadmissible as evidence in court — a major weakness in any future dispute or due diligence exercise.
Common errors
- Issuing without stamping — the most common defect found in due diligence
- Wrong distinctive numbers — gaps or overlaps with prior issuances
- Missing common seal where the AoA requires it
- Single director signature instead of two — invalidates the certificate
- Folio number not matching the register of members
- Issued before allotment is approved by the board — substantive irregularity
- Issuing without first filing PAS-3 — PAS-3 must be filed within 30 days of allotment under Section 39
Demat conversion under PAS-6
Under Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014, every unlisted public company is required to issue securities only in dematerialised form, and to facilitate dematerialisation of existing securities. The form PAS-6 is filed half-yearly with the MCA, reconciling the share capital with demat holdings.
For private companies, demat is voluntary but increasingly common — especially for cap tables with 30+ shareholders or where institutional investors require demat. Setting up demat requires an ISIN from NSDL or CDSL, appointment of a Registrar and Transfer Agent (RTA), and execution of a tripartite agreement.
Once shares are dematerialised, the demat statement issued by the depository replaces the physical SH-1 certificate as the evidence of ownership. The physical certificates are surrendered and destroyed (with proper records).
Replacement and duplicate issuance
When a share certificate is lost, stolen, mutilated, or destroyed, the shareholder may apply for a duplicate. Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014 prescribes the procedure:
- Shareholder submits a written application with an affidavit of loss
- Indemnity bond from the shareholder (and a surety, in some cases)
- FIR copy (where shares are stolen) — recommended for high-value certificates
- Public notice in a newspaper for shares above a threshold (typically ₹10,000 face value)
- Board approval of duplicate issuance
- Duplicate is issued marked "DUPLICATE" on the face
- Register of renewed and duplicate share certificates (SH-2) is updated
The duplicate certificate must be issued within 3 months from the date of application. The original (if subsequently found) must be surrendered and cancelled.
How Kapitalyze helps
Kapitalyze generates SH-1 certificates from your cap table with all mandatory fields auto-populated — folio numbers, distinctive numbers, paid-up amount, and class of shares — eliminating the manual errors that cause due-diligence pain.
The platform tracks the 2-month / 1-month issuance deadlines for every allotment and transfer, with reminders to the company secretary. Stamp duty is computed automatically based on the registered office state and the issue value. For e-stamping states, the platform integrates with the state stamping portal.
For companies moving to demat, demat management manages the RTA workflow, PAS-6 half-yearly filings, and reconciliation between the cap table and depository records. Issuance of duplicates is handled through a guided workflow that captures the affidavit, indemnity, board resolution, and register updates.
Frequently Asked Questions
Is a common seal mandatory on share certificates?
No. The Companies (Amendment) Act, 2015 made common seal optional. If the company has adopted a common seal in its AoA, it must be affixed; if not, two directors and a CS (or authorised person) may sign the certificate.
Can a share certificate be in electronic form?
Physical certificates in SH-1 form must be on paper. For electronic ownership, the company must dematerialise the shares through NSDL or CDSL — the demat statement becomes the equivalent of the certificate.
What if the registered office moves to another state — does stamp duty change?
Stamp duty is paid at the time of issue based on the registered office at that time. A subsequent change of state does not require restamping of previously issued certificates.
Can a single certificate cover shares of different classes?
No. Each class of shares (equity, preference, CCPS, etc.) requires a separate certificate. A single shareholder may hold multiple certificates if she owns multiple classes.
Must I revalidate all old certificates after stamp duty unification in 2020?
No. Certificates issued before 1 July 2020 are governed by the stamp duty rules of that time. The new unified rates apply only to issues / transfers from 1 July 2020 onward.
Workflow integration with PAS-3 and the cap table
Share certificate issuance must be sequenced correctly with the rest of the allotment workflow. The typical chronology for a fresh issue of equity shares:
- Board passes resolution approving allotment, with annexure listing allottees, number of shares, and consideration
- Subscription monies received from allottees and credited to the company's bank account
- Allotment is recorded in the register of members (MGT-1) with folio numbers assigned
- PAS-3 is filed with MCA within 30 days of allotment under Section 39
- Share certificates in SH-1 form are prepared, stamped, and signed
- Certificates are delivered to allottees within 2 months of the allotment date
- Register of renewed and duplicate share certificates (SH-2) is updated (for replacements or splits)
For demat allotments, steps 5–6 are replaced by a corporate action filing with the RTA who credits the demat accounts of allottees.
Transfer of physical certificates
When a shareholder transfers physical shares to another, the transferor delivers the share certificate(s) along with an executed Form SH-4 (instrument of transfer, the renamed Form 7B). Stamp duty is paid by the transferee. The company is required to register the transfer within 60 days under Section 56(1), and the new certificate must be issued to the transferee within 1 month from the date of receipt of the SH-4.
If the company refuses to register a transfer, the transferee may appeal to the NCLT within 60 days under Section 58(3). The company must record the reasons for refusal in the minutes — typically restrictions on transfer in the AoA or SHA (right of first refusal, tag-along, drag-along), unpaid amounts on the shares, or pending dispute on the underlying ownership.