Share Certificate

A share certificate is an official document that confirms your ownership of a company’s shares, listing key details. Today, most companies issue and store these holdings electronically through a demat account.
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What is Share Certificate
Share Certificate
3 min
26-Jan-2026

A share certificate is an official document issued by a company that confirms the ownership of shares by the individual named on the certificate. As per the Indian Companies Act, it is mandatory for companies to issue share certificates after their incorporation.

What is a share certificate?

A share certificate is an official document issued by a company to confirm that a person owns a specific number of its shares. It includes key details like the shareholder’s name, the number of shares, the date of issue, and authorised signatures. Earlier, these certificates were issued on paper, but today most companies provide them electronically through a demat account. If a certificate is lost, damaged, or stolen, it can be reissued by requesting a stop transfer from the company’s transfer agent. Companies in India must issue share certificates within a set time after shares are issued or transferred, and they may provide one or multiple certificates depending on the type of shares held.

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Components required in share certificates

It is important to note that a stock certificate simply contains information about the shareholder and the number of shares they hold; the certificate is not the stock itself. In India, share ownership certificates provide the following details about the transacting parties:

  1. Components required in share certificates
  2. It is important to note that a stock certificate simply contains information about the shareholder and the number of shares they hold; the certificate is not the stock itself. In India, share ownership certificates provide the following details about the transacting parties:Issuing company name
  3. Corporate Identification Number (CIN) - This is an alpha-numeric allotted to each company once it registers with the Registrar of Companies (ROC), which works under the aegis of the Ministry of Corporate Affairs (MCA).
  4. The registered address of the company
  5. Legal name of the shareholder
  6. Share certificate number - This is a unique code that the company assigns to each certificate.
  7. Number of shares purchased by the investor
  8. Quantum of money spent by the investor to purchase the shares

When does a company issue a share certificate?

After a company is incorporated, it must provide share certificates within two months of its formation. When new units are allotted to any investor, the organisation must issue the documents within two months of that allotment.

A company issues share certificates in several scenarios, including:

  • Incorporation: When a new company is formed, share certificates are given to initial shareholders.
  • Share allotment: When capital is raised by issuing new shares, certificates are issued to the new shareholders.
  • Share transfer: In cases where shares are transferred to another person, a new certificate is issued to reflect the updated ownership.
  • Bonus shares: When the company issues bonus shares to current shareholders, new certificates are provided to cover these additional shares.

Procedure for issuing share certificates

Issuing a share certificate is a formal process through which a company provides written evidence of share ownership to its shareholders. In India, this procedure is governed by the Companies Act, 2013 and must be completed within prescribed timelines to ensure transparency, legal compliance, and shareholder protection. The process follows a defined sequence of approvals, documentation, and authentication steps.

  • The company receives an application or allotment confirmation for shares from the shareholder.
  • The board of directors passes a resolution approving the issue of share certificates.
  • Share certificates are prepared in the prescribed format, mentioning details such as shareholder name, number of shares, and distinctive numbers.
  • The certificates are stamped as per applicable stamp duty laws.
  • Each certificate is signed by at least two directors or authorised signatories and the company secretary, if appointed.
  • The company updates the register of members and records certificate details.
  • Share certificates are delivered to shareholders within the statutory time limit, usually within two months of allotment.

Points to know about share certificates

Here are some key aspects of share certificates within India:

  • Mandatory for certain transactions: They are essential for transactions like selling or pledging shares and transferring ownership.
  • Different classes of shares: Certificates may cover different share classes, like equity or preference shares, each with distinct rights.
  • Dematerialised form: With dematerialisation, shares can be held electronically through a depository participant, eliminating the need for physical certificates.
  • Validity period: Certificates often have a specified validity period, and shareholders should ensure these are current.
  • Register of members: A company keeps a register of shareholders, with certificates corresponding to these records.
  • Legal significance: Share certificates hold legal value and can be used in legal situations involving ownership or disputes.

Advantages of issuing a share certificate

Issuing share certificates offers several benefits:

  • Legal proof of ownership: Certificates provide official proof of shareholding, securing shareholders' rights.
  • Facilitates ownership transfer: They ease the transfer process by documenting ownership changes in the company’s register.
  • Enables shareholder rights: Certificates grant rights like voting, dividends, and participation in company decisions.
  • Enhances transparency: Certificates promote transparency in corporate governance by clearly recording shareholders and their holdings.

Disadvantages of issuing a share certificate

From a company’s standpoint, the main disadvantage lies in the time and cost involved. Producing paper stock certificates is both labor-intensive and expensive. In many cases, businesses must allocate an entire team solely to handle and maintain the share certificate process.

Despite their advantages, share certificates present certain challenges:

  • Administrative effort: Managing and issuing certificates can be demanding for companies with many shareholders.
  • Risk of loss or damage: Physical certificates can be lost or damaged, complicating ownership proof.
  • Delayed transfers: Transferring shares with physical certificates can be slower than electronic transfers.
  • Cost considerations: Printing and distributing certificates can be costly, especially for large shareholder bases.

Conclusion

The dynamic evolution of corporate governance in India through the 21st century was ushered in by a new wave of investor demand that hinged on transparency and accountability. This demand was further supported by more stringent corporate laws and government policies. This metamorphosis has not only reshaped the landscape of corporate functioning but has also reinforced the crucial role of shareholders in driving ethical business practices.

Share certificates have emerged as a prominent tool, as they not only symbolise stock ownership but also secure the trust between companies and their stakeholders, serving as an incorruptible proof of companies’ commitment to transparency and integrity. Such instruments have empowered shareholders to become more vigilant of the companies they have invested in or are planning to invest in. With the rising interest in corporate sustainability, these certificates and other legal documents will be central in the further transformation of the Indian corporate governance landscape.

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Frequently Asked Questions

What do you mean by share certificate?

A share certificate is an official document issued by a company to its shareholders as proof of ownership of a specific number of shares. It includes details like the shareholder’s name, number of shares held, issue date, and the company’s seal or signature.

What is the difference between CD and share certificate?

A CD is an electronic record held with a depository, while a share certificate is a physical document. A CD enables dematerialised trading and faster settlement, whereas share certificates require manual handling, transfer formalities, and carry higher operational risk.

Who owns a share certificate?

The shareholder whose name appears on the certificate is the legal owner of the shares. The certificate serves as documentary evidence of ownership, but the actual rights belong to the person registered in the company’s register of members, as recognised under company law in India.

What are the two types of share certificates?

  1. Physical Share Certificate: A paper document issued to shareholders as evidence of share ownership.

  2. Dematerialised (Demat) Share Certificate: An electronic version stored in a demat account, widely used today for convenience and security.

Can I sell my share certificate?

Yes, you can transfer shares represented by a share certificate, subject to company rules and regulatory compliance. However, the certificate must first be dematerialised or properly endorsed and registered before the transfer is completed, making the process slower than electronic share transfers today.

Who creates share certificates?

Share certificates are created and issued by the company’s registrar or transfer agent, under the company’s authority, usually after the allotment of shares to investors.

Are share certificates safe?

Demat (electronic) share certificates are safe and secure, reducing the risk of loss, theft, or forgery. Physical share certificates, while valid, are more vulnerable and are gradually being phased out in favour of dematerialisation.

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