Choose the correct delivery branch at allotment
Section 56(4)(d) of the Companies Act, 2013 sets a six-month period from debenture allotment for delivery of the certificate, subject to the opening qualification for prohibition by law or competent order. Where securities are dealt with in a depository, the proviso requires immediate intimation of allotment details to the depository. Six months is not a grace period for that intimation. Determine whether physical issue is legally available before using the physical calendar. Check section 29, the applicable dematerialisation rules for the issuer, and any listing requirements. The delivery clock does not itself authorise a physical allotment.
Read the applicable text: India Code: Companies Act, 2013, section 56(4) Gazette amendment introducing Rule 9B.
Distinguish debentures from shares and transfers
Section 56(4) has different triggers for memorandum subscribers, share allotments, transfers or transmissions, and debenture allotments. A subscription payment, board proposal, return-of-allotment filing or ISIN creation should not be substituted for the actual allotment date. This article concerns original debenture allotments. Read the applicable issue terms and any separate listing or dematerialisation requirements for the issuer.
For physical issues, track delivery beyond certificate preparation
Where legally permitted, match certificate numbers and quantities to the allotment list, and record issue, dispatch and delivery evidence separately. A printed or signed certificate is not itself evidence of delivery. Maintain pending, returned and disputed items and investigate the recipient and address before any repeat dispatch. Confirm the applicable statutory and contractual delivery rules before drawing a default conclusion.
For depository issues, reconcile sent, accepted and credited quantities
Keep the date and time of allotment and of the transmitted details, acknowledgment and exception logs. Reconcile allottee identifiers and quantities and retain records of corrections and final credit. A depository credit is an important downstream confirmation; distinguish it from the company's evidence of immediate intimation. Document the nature of a rejection or pending credit rather than marking all allotted units complete.
Review by allotment batch, not by issue name alone
One debt programme may contain multiple allotment events. Use a separate date and population for each event and capture holder-level discrepancies. Escalate a prohibited physical route, delayed intimation or unmatched allocation promptly. An accurate exception log gives the issuer and its professionals the evidence to assess any correction or reporting obligations.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Single lawful physical allotment
Assume debentures are allotted on 12 January 2026 and physical issue is legally permitted. The six-month calendar marker is 12 July 2026, a Sunday. Plan delivery in advance rather than assuming a next-working-day extension. Delivery on 8 July is four calendar days ahead of that marker.
Illustrative example 2: Two tranches have two clocks
Assume lawful physical allotments on 10 February and 18 March 2026. Their six-month calendar markers are 10 August and 18 September respectively. A common issue name does not combine the two dates.
Illustrative example 3: Certificates sent but not all delivered
Of 120 physical certificates, 112 are evidenced as delivered, five are returned and three lack proof. Eight remain unresolved and require individual follow-up.
Illustrative example 4: Depository quantity reconciliation
The company transmits allotment details for 8,000 debentures on the allotment date. The depository accepts 7,950 units and rejects the remaining 50. Retain timestamps to assess whether intimation was immediate, identify why the records were rejected and confirm the corrected acceptance and credit. A same-date transmission is not conclusive evidence of compliance.
Illustrative example 5: Different denomination and amount
An allottee is due 250 debentures of ₹1,000 each but its credited record shows 240. The discrepancy is 10 debentures, or ₹10,000 face value.
Illustrative example 6: Signatures before delivery
A physical batch of 64 has signed certificates; only 60 have supporting delivery evidence. The close leaves four unsupported deliveries even though all 64 certificates were signed.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm the security class | Terms and register distinguishing debentures and shares |
| 2 | Identify each allotment | Board records and final allottee list |
| 3 | Check physical issue eligibility | Issuer status and applicable securities rules |
| 4 | Check for a prohibition or order | Relevant legal and competent-authority records |
| 5 | Select the statutory branch | Physical delivery or immediate depository intimation |
| 6 | Verify holder quantities | Allotment file and security identifiers |
| 7 | Evidence physical delivery | Certificates, dispatch and receipt records |
| 8 | Evidence depository intimation | Transmission timestamps and acknowledgments |
| 9 | Resolve open differences | Rejected, returned or unmatched item register |
| 10 | Close tranche by tranche | Reconciled register and documented sign-off |
Sixteen practitioner FAQs
1. When does the six-month period start?
From the date of debenture allotment for the physical-certificate rule.
2. Does the same period apply to original share allotment?
No. Section 56(4)(b) has a separate period.
3. Is it six months from subscription money receipt?
No. Verify the actual allotment date.
4. Does a return of allotment evidence delivery?
It is a separate filing and does not establish delivery by itself.
5. Can every private issuer choose physical debentures?
No. Check section 29 and the rules for the issuer. Rule 9B generally requires covered private companies to issue in dematerialised form after their compliance date. Establish small-company status for the relevant year and check any specific exception or transitional provision.
6. Does section 56(4) override a legal prohibition?
Its opening qualification expressly addresses a prohibition by law or competent order.
7. How soon does the proviso require intimation?
Immediately on allotment where the securities are dealt with in a depository.
8. Does opening an ISIN fulfil intimation?
No. Check transmission of the actual allotment details.
9. Should a delayed depository credit be logged?
Yes. Distinguish company transmission, acceptance and ultimate credit.
10. Do printed certificates count as delivered?
Keep the delivery evidence separately.
11. What if post is returned?
Log and resolve the exception; do not assume dispatch proves delivery.
12. Can tranches share a single clock?
Track each actual allotment event on its own.
13. Should face value be reconciled as well as units?
Yes. Verify denomination and units; either can reveal a mismatch.
14. Does the article cover redemption default?
No. Redemption is a separate lifecycle and legal issue.
15. Can the six-month rule be applied to transfers?
Section 56(4)(c) has a separate receipt-based period.
16. What should an auditor receive?
The batch chronology, eligibility conclusion, delivery or intimation proof and unresolved exception list.
Official sources
India Code: Companies Act, 2013, section 56(4) Gazette amendment introducing Rule 9B