Companies Act Section 46 — Certificate of shares
CHAPTER IV SHARE CAPITAL AND DEBENTURES
Commercial / Corporate
Summary
Sub-section (1) states that a share certificate issued by a company, either under its common seal (if it has one) or signed by two directors, or by one director and the Company Secretary (if the company has appointed one), which specifies the shares held by a person, serves as prima facie evidence of that person's title to those shares. This means the certificate is accepted as proof of ownership unless proven otherwise.
Sub-section (2) allows a duplicate share certificate to be issued in two situations. Under clause (a), a duplicate may be issued if the original certificate is proved to have been lost or destroyed. Under clause (b), a duplicate may be issued if the original certificate has been defaced, mutilated, or torn, and the original is surrendered to the company.
Sub-section (3) provides that, regardless of what the company's articles say, the manner of issuing a share certificate or its duplicate, the form of such certificate, the particulars to be entered in the register of members, and other related matters shall be as prescribed by rules. This means the government's prescribed regulations will govern these details, not the company's own internal rules.
Sub-section (4) states that when a share is held in depository form, the record of the depository serves as prima facie evidence of the interest of the beneficial owner. This means the depository's records are accepted as proof of ownership for shares held electronically.
Sub-section (5) provides that if a company issues a duplicate share certificate with the intent to defraud, the company shall be punishable with a fine of not less than five times the face value of the shares involved in the issue of the duplicate certificate, and which may extend to ten times the face value of such shares or ten crore rupees, whichever is higher. Additionally, every officer of the company who is in default shall be liable for action under section 447 of the Act.
Official Text
(1) A certificate, 1[issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary], specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares.
(2) A duplicate certificate of shares may be issued, if such certificate —
(a) is proved to have been lost or destroyed; or
(b) has been defaced, mutilated or torn and is surrendered to the company.
(3) Notwithstanding anything contained in the articles of a company, the manner of issue of a certificate of shares or the duplicate thereof, the form of such certificate, the particulars to be entered in the register of members and other matters shall be such as may be prescribed.
(4) Where a share is held in depository form, the record of the depository is the prima facie evidence of the interest of the beneficial owner.
(5) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who is in default shall be liable for action under section 447.