Time Period for Delivery of Share Certificates [Section 56(4)]
# Time Period for Delivery of Share Certificates
## Statutory Mandate
Every company is obligated to deliver share/security certificates within prescribed time limits — unless prohibited by any provision of law or any order of a Court, Tribunal or other authority.
## The Time Limits at a Glance
Event
Time Limit
Trigger Date
Subscribers to Memorandum
2 months
From date of incorporation
Allotment of shares
2 months
From date of allotment
Transfer of securities
1 month
From date company receives instrument of transfer
Transmission of securities
1 month
From date company receives intimation of transmission
From the relevant event (incorporation/allotment/transfer/transmission)
## Memory Aid
2-2-1-1-6 — the standard sequence (Subscribers, Allotment, Transfer, Transmission, Debentures).
IFSC companies enjoy a uniform 60-day window for everything.
## Depository Carve-Out
Where securities are held in dematerialised form, the company need not physically issue certificates. Instead, it must immediately intimate the depository on allotment, and the depository updates the demat account.
## Penalty for Default — Section 56(6)
If the company or any officer-in-default fails to comply with sub-sections (1) to (5) of Section 56:
Penalty: ₹50,000 on the company AND on every officer in default.
## Liability of Depository — Section 56(7)
Where a depository or depository participant transfers shares with intent to defraud, it shall be liable:
Under Section 447 (Punishment for Fraud), AND
Under the Depositories Act, 1996.
## Linkage with Dematerialisation
Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 now requires unlisted public companies to dematerialise all their securities — making physical forgery practically negligible.
Worked example
### Example 1
Example 1 — Allotment date trigger: ABC Ltd allots 10,000 equity shares on 1st April 2026. By when must certificates be delivered?
Answer: Within 2 months from date of allotment, i.e. on or before 1st June 2026.
### Example 2
Example 2 — Transfer delay: XYZ Ltd receives a duly executed instrument of transfer on 5th May 2026 but issues the certificate on 20th June 2026. Has the company defaulted?
Answer:Yes. Transfer certificates must be delivered within 1 month from receipt, i.e. by 5th June 2026. Company and every officer-in-default are liable for ₹50,000 penalty each.
### Example 3
Example 3 — Debentures: PQR Ltd allots debentures on 1st January 2026. Last date for delivery of debenture certificates?
Answer:1st July 2026 (6 months from allotment of debentures).
⚠️ Common exam mistakes
Confusing the time limit for transfer (1 month from receipt of instrument) with the time limit for allotment (2 months from allotment).
Forgetting that debenture allotment has a longer 6-month window, not the 2 months applicable to share allotment.
Treating IFSC companies under the general timelines — they have a uniform 60-day rule.
Overlooking that the penalty under Section 56(6) is ₹50,000 on BOTH the company AND every officer in default — not a combined sum.
Assuming physical certificates are still issued where securities are in demat form — instead, the company merely intimates the depository.
Confusing the depository's liability under Section 447 (fraudulent transfer) with the routine Section 56(6) penalty.
Bare-Act text Section 56(4), 56(6), 56(7) · The Companies Act, 2013 · click to expand
Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted — (a) within a period of two months from the date of incorporation, in the case of subscribers to the memorandum; (b) within a period of two months from the date of allotment, in the case of any allotment of any of its shares; (c) within a period of one month from the date of receipt by the company of the instrument of transfer or, as the case may be, of the intimation of transmission; (d) within a period of six months from the date of allotment in the case of any allotment of debenture. Where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities. Where any default is made in complying with the provisions of sub-sections (1) to (5), the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.