Share Certificate

A share certificate is a certificate issued by a Company to its members specifying the number of shares held by him and the amount paid in each share. Thus, Share certificate is a title of a person in respect of the shares held by him. A certificate, under the common seal of the Company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to such shares. The certificate enables a shareholder to deal with the shares indicated in the share certificate.
A  share certificate creates two kinds of estoppels against the Company issuing such certificate:
1.	Estoppels as to payment-that the Company cannot say that the amount of payment shown on the certificate was entered by mistake or such amount has not been paid by the holder of the share certificate.(Bloomenthal v. Ford, i906)
2.	Estoppels  as to title-that the Company is stopped from denying the validity of the certificate. That is, the Company is not allowed to allege that holder of share certificate is not entitled to those shares.(Dixon v. Kennaway &Company,1900)
Form and content of share certificate.
The Companies Act, 1956 does not provide for any specific form of a share certificate. The Companies (Issue of Share Certificate) Rules, 1960 specifies certain rules in this regard such as:
1.	Every certificate shall specify the name (s) of the person (s) in whose favour the certificate is issued, the shares to which it relates and the amount paid up thereon;
2.	Every share certificate shall be issued under the seal of the company, which shall be affixed in the presence of ·         two directors or persons acting on behalf of the directors under a duly registered power-of-attorney ; and ·         the secretary or some other person appointed by the Board for the purpose.
3.	The two directors or their attorneys and the secretary or other person shall sign the share certificate.
4.	No certificate of any share or shares in the company shall be issued except in pursuance of a resolution passed by the Board
5.	Particulars of every share certificate issued shall be entered in the Register of Members
6.	Particulars of every duplicate share certificate issued shall be entered in a Register of Renewed and Duplicate Certificate
7.	All entries made in the Register of Members or the Register of Renewed and Duplicate Certificate shall be authenticated by the secretary on such other person as may be appointed by the Board for purposes of sealing and signing the share certificate
8.	The printing of blank share certificate shall be done only on the authority of a resolution of the Board
9.	The blank form shall be consecutively machine-numbered.
10.	The forms and the blocks, engravings, facsimiles and hues relating to the printing of such form shall be kept in the custody of the secretary or such other person as the Board may appoint for the purpose and the secretary or other person aforesaid shall be responsible for rendering an account of these forms to the Board.
11.	The Managing Director or the company has no managing director, then every director shall be responsible for the maintenance, preservation and safe-custody of all books and documents relating to the issue of share certificates except the blank forms of share certificates.
12.	All certificates surrendered to a company shall immediately be defaced by the word "cancelled" being stamped or punched in bold letters and may be destroyed after the expiry of three years from the date on which they are surrendered, under the authority of a resolution of the Board and in the presence of a person duly appointed by the Board in this behalf.
Some important points:
1.	Share certificate shall be issued within three months (for listed Company-two months) of allotment.
2.	Share certificate shall be issued within two months (for listed Company-one months) after the receipt of the application for registration of transfers.
3.	As far as listed Companies are concerned, the size, form and contents of the share certificate are required to be approved by the concerned Stock Exchange before issue to public.
4.	Share certificate is not an official publication of the Company like balance sheet, Profit and Loss Account etc.
5.	If a person impersonates or obtains a certificate fraudulently, he may be liable for imprisonment up to three years and with fine. (Section 116).
6.	It is not obligatory to publish the authorized share capital of the Company in the share certificate. If does so, pursuant to Section 148, it is mandatory to publish subscribed and paid up capital of the Company.
Case Study
A share certificate is an evidence to the effect that the allottee is holding a certain number of shares of the Company showing their nominal paid up value and distinctive numbers. This certificate is prime facie evidence of the title to the shares in the possession of the shareholders
Society Generale De Paris v. Walker(1885)
The Company had issued shares at discount, but the certificate issued mentioned that the shares were fully paid up. Though the Company was stopped from disputing this, the directors were liable to compensate the Company.
Hoirche v. Sims (1894)