Start with the form of issue, then test the certificate
When the company can lawfully issue the shares in physical form, Rule 5 of the Companies (Share Capital and Debentures) Rules, 2014 requires Board authority and prescribed certificate particulars. Use Form SH-1 or a substantially similar form. Check any applicable dematerialisation requirement before using this workflow; Rule 5 does not create an exception to it. This guide concerns original issue, rather than lost-certificate replacement or the statutory delivery clock.
Read the applicable text: Companies (Share Capital and Debentures) Rules, Rule 5 and linked SH-1 Original notified SH-1 form (read execution with amended Rule 5) Companies Act, section 46 Companies Act, section 88.
Build the issue file from the allotment
Keep the Board resolution supporting issue, allotment evidence and the underlying capital reconciliation. Rule 5(1) generally requires surrender of the allotment letter or relevant fractional coupons, subject to the stated exceptions for issue against acceptance or renunciation letters and bonus shares. Where the allotment letter is lost or destroyed, document the reasonable evidence, indemnity or investigation costs the Board actually requires under the proviso. That is a different event from a lost original certificate.
Complete the SH-1 data from controlled records
Match the certificate holders, the shares it relates to and their paid-up amount to the approved allotment and member records. Keep nominal amount, called and paid amounts and premium separate in the source data. Check distinctive ranges where applicable, including quantity, overlap and gaps. Do not derive paid-up share capital from cash received without checking premium, adjustments or unpaid calls.
Verify signatories and any seal
Rule 5(3) provides for two directors or a director and the company secretary where the company has appointed one. If there is a common seal, it is affixed in the presence of the required signatories. The OPC explanation, as amended in 2019, permits a director or company secretary as one signatory, and the company secretary or another person authorised by the Board as the other. Use two distinct signatories. Rule 5(3) treats a director or company secretary as signing where the signature is printed as a facsimile by the stated means or is digital; it excludes rubber stamping. The director or company secretary is responsible for permitting use of the relevant mechanism and for its safe custody. Keep authority and custody records for controlled signature material.
Post issuance to the member register
Under Rule 5(4), record the certificate particulars, holders and issue date in the section 88 register. Reconcile issued certificates to the approved share count and paid-up capital. Section 46 makes a qualifying certificate prima facie evidence of title; a discrepancy should be resolved from the corporate records rather than papered over by a manual certificate edit.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Inclusive range count
Distinctive numbers 1,001 through 1,250 represent 250 shares. At ₹10 paid per share, paid-up amount is ₹2,500. Verify that both endpoints are included.
Illustrative example 2: Partly paid allotment
A certificate represents 800 shares of ₹10 face value, with ₹6 paid per share. Paid-up capital represented is ₹4,800; nominal value is ₹8,000. The ₹3,200 difference is not certified as paid.
Illustrative example 3: Premium is separate
For 500 fully paid ₹10 shares issued at ₹24, the subscription receipt is ₹12,000. The shares represent ₹5,000 paid-up capital and ₹7,000 premium.
Illustrative example 4: Overlapping ranges
One certificate records 401–500 and the next 500–580. The printed totals are 100 and 81, but the combined ranges contain only 180 distinct numbers. Number 500 appears twice and must be resolved.
Illustrative example 5: Register discrepancy
The Board-approved issue is 1,250 shares. Certificate controls show 750 for A and 500 for B, but B is entered at 450 in the register. The register totals 1,200, a 50-share shortfall. Check and correct the supported entry before closing.
Illustrative example 6: OPC signatory control
An OPC prepares 15 certificates. Twelve have a director’s signature and a separate Board-authorised second signature; three have only the director’s signature. The three are exceptions and should be held for proper execution.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm physical issue is lawful | Demat applicability and transaction review. |
| 2 | Find the issue resolution | Signed Board authority. |
| 3 | Reconcile approved allotment | Share count, class and member evidence. |
| 4 | Verify surrender or applicable exception | Allotment letters, coupons or exception record. |
| 5 | Match SH-1 fields | Names, shares and paid-up amount. |
| 6 | Test distinctive numbers | Inclusive counts and overlap check. |
| 7 | Confirm signature authority | Director, company secretary or OPC authorisation. |
| 8 | Check seal and signature controls | Execution record and custody evidence. |
| 9 | Enter certificate details in register | Section 88 register and issue dates. |
| 10 | Resolve discrepancies before release | Signed certificate-to-capital reconciliation. |
Sixteen practitioner FAQs
1. Does Rule 5 permit a company to ignore demat obligations?
No. Confirm the lawful form of issue first.
2. Is SH-1 an ROC filing in this workflow?
It is the certificate form referred to by Rule 5(2).
3. Is a Board resolution needed?
Yes. Rule 5(1) requires issue pursuant to Board resolution.
4. Must an allotment letter always be surrendered?
The rule includes specified exceptions and a proviso for loss or destruction.
5. How does a lost allotment letter differ from a lost certificate?
The former is supporting evidence before original issue; the latter is a replacement question.
6. What should a partly paid certificate show?
The amount actually paid up on the relevant shares.
7. Is securities premium part of paid-up share capital on the certificate?
Keep premium separate from the nominal amount paid up.
8. Can the same distinctive number appear on two live certificates?
Resolve the overlap against the approved allotment and register.
9. Who can sign for a company with a company secretary?
Rule 5(3) provides for two directors or a director and the appointed company secretary.
10. What is the OPC signatory rule?
The OPC explanation, as amended in 2019, permits a director or company secretary as one signatory, and the company secretary or another person authorised by the Board as the other. Use two distinct signatories.
11. Must every company adopt a seal to issue?
No. Where the company has a seal, apply the stated presence requirement.
12. May a rubber stamp substitute for a signature?
Rule 5 expressly excludes that method.
13. Can a permitted digital signature be used?
Yes, subject to the rule and accountable authorisation.
14. What must the register show?
Certificate particulars, holders and issue date.
15. Does an original certificate conclusively settle disputed title?
Section 46 gives prima facie evidentiary effect; review competing records.
16. What if printed details and the register conflict?
Hold the discrepancy and reconcile to approved source records before correction or release.
Official sources
Gazette G.S.R. 363(E), 2018: substitution of Rule 5(3); Gazette G.S.R. 574(E), 2019: OPC and signature amendment; Companies (Share Capital and Debentures) Rules, Rule 5 and linked SH-1 Original notified SH-1 form (read execution with amended Rule 5) Companies Act, section 46 Companies Act, section 88