SHARE CAPITAL AND NATURE, NUMBERING AND

CERTIFICATE OF SHARES, TRANSFER OF SHARES AND

OTHER SECURITIES.
Numbering of shares. Sec 60
o Every share in a company having a share capital shall be distinguished by its distinctive
number
o This section shall apply to a share held by a person whose name is entered as holder of
beneficial interest in such share in the records of a central depository system.

Nature of shares or other securities. Sec 61

o The shares or other securities of any member in a company shall be movable property
transferable in the manner provided by the articles of the company.

Shares certificate to be evidence. Sec 62

o A certificate, if
a) issued in physical form under common seal of the company or under official seal , or
b) issued in book-entry form, specifying the shares held by any person or shares held in
central depository system
shall be prima facie evidence of the title of the person to such shares.
Transfer of shares and other securities
 Application for
Transfer of
Shares/Securities

Transfer to
Accept Transfer Refusal of Successor-in-
Transfer Deed Lost transfer interest/Nominee
of Deceased

Issue and Give Prove Give notice

Deliver Share that transfer of refusal
certificate was made with reason

Change in Give File an appeal

May accept
the register Indemnity refusal
against refusal to
of member commission
then transfer
Transfer of shares and other securities Sec 74
o An application for registration of transfer of shares and other transferable securities
may be made to the company either by the transferor or the transferee.
o Application must be
a) along with proper instrument of transfer
b) duly stamped and executed by the transferor and the transferee

o The company shall within 15 days after the application complete the process and
a) ensure delivery of the certificates to the transferee at his registered address; and
b) enter in its register of members the name of the transferee.

o The company shall within 10 days after an application of transfer is made for the
registration of the transfer of any shares or other securities to a central depository,
register such transfer in the name of the central depository
Transfer deed lost, destroyed or mutilated

o Where a transfer deed before its lodgment is

a) lost,
b) destroyed or
c) mutilated,
the company may register the transfer of shares or other securities
i. on an application made by the transferee
ii. application must bearing the stamp required by an instrument of transfer and
iii. the transferee must proves to the satisfaction of the board that the transfer deed
duly executed has been lost, destroyed or mutilated.
o Before registering such transfer of shares or other securities, the company may
demand such indemnity as it may think fit.
Register of Transfers
o Every company shall maintain at its registered office a register of transfers of shares
and other securities.
o such register shall be open to inspection by the members and supply of copy thereof in
the manner stated in section 124.
o Nothing shall prevent a company from registering as shareholder or other securities
holder a person to whom the right to any share or security of the company has been
transmitted by operation of law.
o Any violation of this section shall be an offence liable to a penalty of level 2 on the
standard scale.

Board not to refuse transfer of shares Sec 75

o The board shall not refuse to transfer any shares or securities unless the transfer deed
is, for any reason, defective or invalid.
o The company shall within 15 days or, where the transferee is a central depository,
within five 5 days from the date on which the instrument of transfer was lodged with it
notify the defect or invalidity to the transferee.
o The transferee shall, after the removal of such defect or invalidity, be entitled to re-
lodge the transfer deed with the company.
Notice of refusal to transfer. Sec 77
o If a company refuses to register a transfer of any shares or other securities, the
company shall, within 15 days after the date on which the instrument of transfer was
lodged with the company, send to the transferee notice of the refusal indicating
reasons for such refusal
o Any failure of the company to give notice of refusal after the expiry of the period shall
be deemed refusal of transfer.
o Any violation of this section shall be an offence liable to a penalty of level 2 on the
standard scale
Appeal against refusal for registration of transfer Sec 80
o The
a) transferor or
b) transferee, or
c) the person who gives intimation of the transmission by operation of law, as the case
may be, aggrieved by the refusal of transfer may appeal to the Commission within a
period of sixty 60 days of the date of refusal.
o The Commission shall, provide opportunity of hearing to the parties concerned
o The Commission may, by an order in writing, direct that the transfer or transmission
should be registered by the company
o the company shall give effect to the decision within fifteen 15 days of the receipt of the
order.
o The Commission may also give such incidental and consequential directions as to the
payment of costs or otherwise as it deems fit.
o If default is made in giving effect to the order of the Commission within the period
specified every director and officer of the company shall be liable to a penalty of level 3
on the standard scale.
Restriction on transfer of shares by the
members of a private company
Restriction on transfer of shares by the members of a private
company. Sec 76
o a member of a private company desirous of selling any shares held by him, shall
intimate to the board of his intention through a notice.
o On receipt of such notice, the board shall, within a period of 10 days, offer those shares
for sale to the members in proportion to their existing shareholding.

o The letter of offer for sale shall be dispatched to the members through
a) registered post or
b) courier or
c) through electronic mode.

o The letter of offer for sale shall specifying

a) the number of shares to which the member is entitled,
b) price per share and
c) specifying the time limit, within which the offer, if not accepted, be deemed as
declined,

o If the whole or any part of the shares offered is declined or is not taken, the board may
offer such shares to the other members in proportion to their shareholding.
o If all the members decline to accept the offer or if any shares are left over, the shares
may be sold to any other person as determined by the member, who initiated the offer.
o The mechanism to determine the price of shares shall be such, as may be specified.
o the member selling shares to any other person shall ensure that as a result of such sale,
the limit of maximum number of members for a private company is not be exceeded.
o a private company may transfer or sell its shares in accordance with its articles of
association and agreement among the shareholders, if any, entered into prior to the
commencement of Companies Act 2017
o Any such agreement will be valid only if it is filed with the registrar within 90 days of
the commencement of this Act.

Transfer to successor-in-interest. Sec 78

o The shares or other securities of a deceased member shall be transferred on
application duly supported by succession certificate or by lawful award, as the case
may be, in favour of the successors to the extent of their interests and their names
shall be entered in the register of members.
Transfer to nominee of a deceased member. Sec 79
o The subscriber to the memorandum shall nominate a person who in the event of death
act as a trustee and to facilitate the transfer of shares to the legal heirs of the deceased
subject to succession to be determined under the Islamic law of inheritance and in case
of a non-Muslim members, as per their respective law.
o The person to be nominated shall not be a person other than the relatives of the
member, namely, a spouse, father, mother, brother, sister and son or daughter.
o The person nominated shall, after the death of the member, be deemed as a member of
company till the shares are transferred to the legal heirs
o If the deceased was a director of the company, other than a listed company, the
nominee shall also act as director of the company to protect the interest of the legal
heirs.
o The nomination shall not bias the right of the member making the nomination to
transfer, dispose of or otherwise deal in the shares owned by him during his lifetime
and, shall have effect in respect of the shares owned by the said member on the day of
his death.
Power to issue shares at a discount Sec 82
It shall be lawful for a company to issue shares in the company at a discount: Provided that
a) the issue of shares at a discount must be authorized by special resolution;
b) the resolution must specify
i. the number of shares to be issued,
ii. rate of discount, not exceeding the limits permissible and
iii. price per share proposed to be issued;

o the issue of shares at discount must be sanctioned by the Commission

o no such resolution for issuance of shares at discount shall be sanctioned by the

Commission if the offer price per share, specified in the resolution, is less than
(i) in case of listed companies, ninety percent of volume weighted average daily closing
price of shares for 90 days prior to the announcement of discount issue; or

(ii) in case of other than listed companies, the breakup value per share based on assets
(revalued not later than 3 years) or per share value based on discounted cash flow.

o not less than three years have elapsed since the date on which the company was entitled
to commence business;
o Approval of the Commission shall not be required by a listed company for issuing shares
at a discount if the discounted price is not less than ninety percent of the par value.

o directors and sponsors of listed companies shall be required to subscribe their portion of
proposed issue at volume weighted average daily closing price of shares for ninety days
prior to the announcement of discount issue;

o Where a company has passed a special resolution authorising the issue of shares at a
discount, it shall apply to the Commission where applicable, for an order sanctioning the
issue. The Commission on such application may, if, having regard to all the circumstances
of the case, thinks proper so to do, make an order sanctioning the issue of shares at
discount subject to such terms and conditions as it deems fit.

o Issue of shares at a discount shall not be deemed to be reduction of capital.

o Every prospectus relating to the issue of shares, and every statement of financial position
issued by the company subsequent to the issue of shares, shall contain particulars of the
discount allowed on the issue of the shares.

o Any violation of this section shall be an offence liable to a penalty of level 3 on the
standard scale.

o in case of listed companies discount shall only be allowed if the market price is lower than
the par value of the shares for a continuous period of past ninety trading days
immediately preceding the date of announcement by the board;
Application of premium received on issue of shares Sec 81
 If a company issues shares at a premium, whether for cash or otherwise, a sum equal to
the aggregate amount or the value of the premiums on those shares must be transferred
to an account, called "the share premium account".
 The amount in share premium account shall be used to write off
i. the preliminary expenses of the company;
ii. the expenses of, or the commission paid or discount allowed on, any issue of shares of
the company; and
iii. in providing for the premium payable on the redemption of any redeemable preference
shares of the company and
iv. to issue bonus shares to its members.
Further issue of capital Sec 83
 Where the directors decide to increase share capital of the company by issue of further share capital,
such shares shall be offered:
i. to persons who, at the date of the offer, are members of the company
ii. in proportion to the existing shares held
iii. by sending a letter of offer
 a letter of offer subject to the following conditions,
i. the shares so offered shall be strictly in proportion to the shares already held
ii. Time of offer not less than 15 days and not exceeding 30 days
iii. The offer , if not accepted within 30 days, shall be deemed to have been declined;
iv. The letter of offer duly signed by at least two directors
v. Letter of offer shall be dispatched to all the existing members before the commencement of period for
the acceptance of offer through registered post or courier or through electronic mode, ensuring that it
reaches the members.
vi. A copy of the letter of offer shall also be sent to the registrar.
vii. if the whole or any part of the shares offered is declined or is not subscribed, the directors may within
a period of 30 days from the close of the offer allot such shares in such manner as they may deem fit.
viii.in the case of a listed company any member, not interested to subscribe, may exercise the right to
renounce the shares to any other person, before the date of expiry stated in the letter of offer;
 where loan has been obtained from any Government by a public sector company
i. Government may direct that such loan or any part thereof shall be converted into shares in that
company
ii. on such terms and conditions as appear to the Government to be just and reasonable in the
circumstances of the case
iii. even if the terms of such loan does do not include the option for such conversion.
iv. where the authorised capital of a company is fully subscribed, or the un-subscribed capital is
insufficient, the same shall be deemed to have been increased to the extent necessary for issue of
shares to the Government
v. the company shall be required to file the notice of increase in share capital along with the fee
prescribed for such increase with the registrar within the period prescribed under this Act.
vi. If company makes defult, the Government, scheduled bank or the financial institution to whom
shares have been issued may file notice of such increase with the registrar and such notice shall be
deemed to have been filed by the company itself.
 Any violation of this section shall be an offence liable to a penalty of level 2 on the standard scale.