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Share Certificate Franking and Stamping

A company is under obligation to issue share certificates to its members within 60 days of allotment of shares and in case of new company incorporation within 60 days of its incorporation. It is pertinent to mention here that immediately after registration of a company there are few mandatory compliances which have to be done within its due date(s). Please refer to our webpage detailing all the necessary Post Incorporation Compliance for a Private Limited Company or OPC
The share certificate is required to be issued to every shareholder of a company in India, and it must be done within a period of sixty days from the date on which such shares have been issued. The payment of stamp duty of the share certificates must be made within 30 days of its issue in terms of section 3 of the Indian Stamp act. Every state government has a separate stamp act, and the duty is levied by the state government which whose jurisdiction the share certificates were issued. The companies act nowhere specifies as to where a company shall issue the share certificate. Hence we can issue shares anywhere in India where the board of directors meeting takes place approving the issue of share certificate. The requirement of the issue of the share certificate is similar for all kinds of companies, whether it is an OPS, Small Company, any other Private Limited Company or Public Limited Company.
Section 3 of the Indian stamp act makes it mandatory for every share certificate to bear the essential stamp duty in accordance with the prevailing rate of the stamp duty in the respective state or union territory. The stamp duty is payable in all cases, even if the shares are issued in dematerialized format. Please note that the stamp duty on the share certificate is payable on the issue price of the security and not on the Par/ Nominal value of shares.
A share certificate is required to be issued to every shareholder of a company in India, and it must be done within a period of sixty days from the date on which such shares have been issued. The payment of stamp duty of the share certificates must be made within 30 days of its issue in terms of section 3 of the Indian stamp act. Every state government has a separate stamp act, and the duty is levied by the state government which whose jurisdiction the share certificates were issued. The companies act nowhere specifies as to where a company shall issue the share certificate. Hence we can issue shares anywhere in India where the board of directors meeting takes place approving the issue of share certificate.
Share franking is a process of embossing a stamp on the share certificate indicating the vale of stamp duty paid on the issue of share certificate. In general, the stamp duty to the government is paid in many ways some of the popular methods by which stamp duty is paid are as under
  1. By adhesive stamp, for example, revenue stamp, court fee, notary stamp, etc
  2. By way of stamp paper
  3. By way of issue of a certificate of stamp payment
  4. By way of Franking the document
Nowadays some state governments collect the stamp duty on the share certificate by way of issue of a certificate as proof of the stamp duty, for example, the state of Haryana, NCT of Delhi. Whereas the states like Maharashtra and Karnataka usage a machine for franking the share certificate with the appropriate value of stamp duty. Some state governments like UP usages revenue stamp as a method of payment of stamp duty.
Franking of the share certificate is one among several methods by way of which the stamp duty is paid on the share certificate, these are impressions made on the share certificate by using a Franking Machine, which is typically installed in the office of the sub-registrar or collector of stamp office. Usually, these machines can affix impressions of up to Rs. 999 on stamp paper. An application must be appropriately made to the office of the sub-registrar with a request letter for franking the share certificates.

Table of Contents

Stepwise Procedure for Issue of Share Certificate and Franking

Print the Share Certificate

The first step is to print the share certificate on good quality paper as per the format prescribed in the rules. We have created a tool to prepare a share certificate. You are encouraged to use the same or download blank format from here [Word Format]

Issue of Share Certificate in Board Meeting

Next step is to convene a board meeting for approval of the share certificate, and after its adoption, it needs to be signed by two directors or the company and they must be handed over to the respective shareholder.

Prepare Documents for Franking

To pay the stamp duty on the share certificate company have to prepare documents, and after obtaining the required signature, the same must be scanned for its upload to the SHCIL website

Pay Stamp Duty Online

After the documents are uploaded the same need to be digitally signed with the signature of one director and further attested by a professional who is a CA/ CS/CWA after that option for making payment gets activated. Pay the stamp duty and wait for the approval.
The Below table is an attempt to compile the stamp duty on share certificate for all states of India.
S.No Name of State Stamp Duty of Share Certificate
1.
Andhra Pradesh
Thirty Paisa/Since 30 paisa Stamp is not available, use Rs. 1 Revenue stamp irrespective of the amount, (on Folio)
2.
Arunachal Pradesh
Rs. 5.00 Revenue stamp irrespective of the amount
3.
Haryana
Rs. 1 stamp irrespective of the amount, (on Folio)
4.
Himachal Pradesh
Forty Paisa/Since 40 paisa Stamp not available, use Rs. 1 Revenue stamp irrespective of the amount, (on Folio)
5.
Karnataka
Fifty Paisa irrespective of the amount, (on Folio)
6.
Maharashtra
Rs. 1 for every 1000 Rs of the value of share certificate or a part thereof of the value of the share, scrip or stock.
7.
Manipur
Not Applicable.
8.
Nagaland
Forty Revenue stamp irrespective of the amount
9.
Orissa
One rupee Revenue stamp irrespective of the amount
10.
Punjab
Ten Rupees [40 n.p. under act 34 of 1960 and 25 n.p. prior thereto irrespective of the amount, (on Folio)
11.
Rajasthan
One rupee for every one thousand or a part thereof of the value of the shares, scrip or stock
12.
Tripura
Not Applicable
13.
Uttar Pradesh
One Rupee (irrespective of face value market value)
14.
NCT Delhi
One rupee for every one thousand or a part thereof of the value of the shares, scrip or stock
15.
Tamil Nadu
Rs. 1 Revenue stamp irrespective of amount
16.
Madhya Pradesh
Not Applicable
17.
Gujarat
One rupee for every one thousand rupees or a part thereof of the value of the share, scrip or stock.
18.
Bihar
Not Applicable
19.
West Bengal
Rs. 1 for every 1000 Rupee of share certificate value or a part thereof of the value of the share, scrip or stock.
20.
Jharkhand
Not Applicable
21.
Chhattisgarh
Not Applicable
22.
J&K
Not Applicable
23.
Uttrakhand
Not Applicable
24.
Meghalaya
Not Applicable
25.
Goa
One rupee for every one thousand rupees or a part thereof of the value of the share, scrip or stock.
26.
Assam
Not Applicable
27.
Sikkim
Not Applicable
28.
Mizoram
Not Applicable
29.
Chandigarh
Forty paise Forty Paisa/Since 40 paisa Stamp is not available, use Rs. 1 Revenue stamp irrespective of the amount, (on Folio)
30.
Andaman and Nicobar Islands
Not Applicable
31.
Dadra and Nagar Haveli
One rupee for every one thousand rupees or a part thereof of the value of the share, scrip or stock.
32.
Daman and Diu
Not Applicable
33.
Lakshadweep
Not Applicable
34.
Puducherry
Not Applicable

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.

3 thoughts on “Share Certificate Franking and Stamping”

  1. i UNDERSTAND IN TAMILNADU SHARE CERTIFICATE STAMP TO AFFIXED RS FOR rS 1000 VALUE BUT YOU HAVE MENTIOND AS RS 1/- PER CERTIFICATE IRRESPECTIVE OF VALUE
    WHAT TYPE OF ADHESIVE STAMP TO BE USED LIKE REVENEUE STAMP, SHARE TRANSFER STAMP

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