# Share Certificate — Section 46

## Form: SH-1

## Prima Facie Evidence of Title

A share certificate issued under the common seal (if any) or signed by the prescribed signatories shall be prima facie evidence of the title of the person to such shares.

## Signing Requirements

The certificate must be issued:

Under the common seal of the company (if it has one), OR
Signed by 2 directors OR
1 director + Company Secretary (if the company has a CS)

Important condition: Out of the directors signing, at least 1 director shall be other than MD/WTD, if the composition of the Board permits.

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# Duplicate Share Certificate

## When Issued

A duplicate share certificate may be issued in two scenarios:

### Scenario A — Defaced / Mutilated / Torn

Original certificate to be surrendered
Duplicate issued in exchange

### Scenario B — Lost / Destroyed

Loss / destruction must be proved to satisfaction of the Board
Surrender not possible (since lost)

A duplicate share certificate may be issued only after passing a Board Resolution.

## Time Limit for Issuing Duplicate

Type of Company	Time Limit
Unlisted	3 months from submission of documents
Listed	45 days from submission of documents

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## Register of Duplicate / Renewed Share Certificates

Particular	Detail
Form	SH-2
Location	Registered Office, OR other place where Register of Members (ROM) is kept
Custody	Company Secretary OR other authorised person
Authentication	CS OR authorised person

## Procedure on Surrender

When original certificate is surrendered:

1. Cancel the surrendered certificate

2. Deface it by stamping 'CANCELLED'

3. Destroy after 3 years

4. Destruction must be done after Board Resolution and in presence of an authorised person

## Penalty for Issuing Duplicate SC to Defraud

Defaulter	Penalty
Company	Higher of: (a) 5 times face value of shares, OR (b) Rs.10 crore
Officer in Default	Higher of: (a) 10 times face value of shares, OR (b) Rs.10 crore AND liable under Section 447 (fraud)

## Preservation of Records

Type of Record	Preservation Period
Records related to share certificates	30 years
Records of disputes regarding share certificates	Permanently

## Final Notes

In case of joint ownership of shares, only 1 certificate is issued (jointly).

Worked example

### Example 1

Example: Mr. A's share certificate was destroyed in a fire. Can XYZ Ltd (unlisted) issue a duplicate? What is the timeline?

Answer: Yes. Since the certificate was destroyed, Mr. A must prove the destruction to the satisfaction of the Board. XYZ Ltd must pass a Board Resolution and issue the duplicate within 3 months from the date of submission of complete documents (since unlisted). If XYZ were listed, the timeline would be 45 days.

### Example 2

Example: A listed company's officer issued a duplicate share certificate fraudulently for shares having face value of Rs.5,00,000. What is the penalty on the officer?

Answer: Officer is liable to pay penalty being higher of: (a) 10 × Rs.5,00,000 = Rs.50,00,000, OR (b) Rs.10 crore. Hence penalty = Rs.10 crore. Additionally, the officer is liable under Section 447 for fraud.

### Example 3

Example: Mr. P and Mrs. Q hold 1,000 shares jointly in Sky Ltd. Can they ask for two separate certificates?

Answer: No. In case of joint ownership, only one share certificate is issued (in joint names). They cannot demand separate certificates for the same jointly-held shares.

⚠️ Common exam mistakes

Confusing the form numbers: SH-1 is for share certificate; SH-2 is the Register of Renewed/Duplicate Share Certificates.
Mixing up the timelines: 3 months for unlisted, 45 days for listed (not the other way round).
Forgetting that out of two signing directors, at least one must NOT be the MD/WTD (if board composition permits).
Assuming common seal is mandatory — companies may issue under common seal OR by signatures of directors.
Forgetting the BR requirement before issuing duplicates, and again before destroying cancelled certificates.
Confusing preservation periods — share certificate records are preserved for 30 years; dispute records permanently.
Stating penalty as 'lower of' — the penalty for fraudulent issue is the HIGHER of FV-based amount and Rs.10 crore.

Bare-Act text Section 46 / Rule 6 · Companies Act, 2013 read with Companies (Share Capital and Debentures) Rules, 2014 (Rule 6) · click to expand

Section 46(1) — A certificate, issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary, specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares. Section 46(5) — If a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who is in default shall be liable for action under section 447.

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Share Certificate and Duplicate Share Certificate (Section 46)

Worked example

⚠️ Common exam mistakes