Issue of Capital " Shares: Section 2(46) defines “A Share means ‘share’ in the Share Capital of a company”. " Share capital is divided into shares of different denominations. These denominations are called ‘shares’ which are issued by the company to the public for subscription. " The holder of a share is issued a Share Certificate. A Certificate shall be prima facie eviStock: Shares can be converted into Stock when they are fully paid up. = A sum total of fully paid up shares is Stock. Fully paid up shares may be converted into stock for purposes of convenience, as stock can be divided into fractions of any amount; irrespective of the original value of the share. If any shares are converted into stock, company shall, within 30 days after doing so, give notice thereof to the Registrar. ‘SHARES © The companies act defines a share as “share in the share capital of the company, and includes stock except where a distinction between stock and share is expressed”.STOCKS 0 Share clubbed together is known as STOCK. co When company issue share certificate, then it is STOCKSDISTINCTION BETWEEN SHARE AND STOCK © Stocks are fully paid up whereas shares may be fully paid up or partly paid up. © Shares may be issued when a company is incorporated but stock cannot be issued under such circumstances. Only fully paid shares can be converted into stock, Stocks is convenient method of transferring because it can be issued or transferred in fractional parts whereas shares cannot be divided below the face value of each share. ° © Stocks are not numbered whereas shares are serially numbered.a Shares are always registered and not transferable by mere delivery but stock man may be registered or unregistered or unregistered stock can be transferred by mere delivery. °Share CertificateSHARE CERTIFICATE 3A share certificate is a registered ‘evidence of title’ to the shares, issued by the company under its common seal, duly stamped and signed by one or more directors and countersigned by the secretary of the company, as per Articles, = Ashareholder is entitled to have one share certificate in respect of shares registered in his name from the company free of charge, certifying that he is the holder of the specified no. of shares in the company. « A share certificate is not a ‘document of title’, for, the rights under it are not transferable by a mere endorsement and/or delivery of the certificate. In order to transfer shares evidenced by a share certificate an ‘instrument of transfer’ duly completed must be lodged with the company for approval by the Board of Directors.ISSUE OF CERTIFICATES » As per sec. 113, a share certificate must be issued or despatched to the allottee within three months after the date of allotment or within two months after the application for the registration of the transfer. » However, the Company Law Board has been empowered to extend the aforesaid periods in appropriate cases for a further period not exceeding nine months. Under the Securities Contracts (Regulation) Rules, 1957, a listed ‘company is required to issue certificates within one month after the application for the registration of the transfer is received by the company. = With the introduction of the ‘Depository System’ there is no need to issue share certificates for the shares registered in the name of the ‘depository’. Instead, the co. should intimate the details of allotment of shares to the depository immediately on allotment of such shares.[New sub-section (4) of Sec. 113 inserted by the Depositories Act, 1996]LEGAL EFFECTS OF SHARE CERTIFICATE The legal effects of the issue of a share certificate are mainly two : 1 Estoppel as to title to the shares : A share certificate is a prima facie evidence of title; i.e., it estoppes the company from denying the title of the person, to the shares, whose name is mentioned therein, provided he acquires the shares in good faith, for value and under genuine transfer. 2 Estoppel as to payment : Secondly, if the share certificate states that the full amount on the shares has been received, the company is estopped, as against a bona fide purchaser of shares for value, from alleging that the shares aren’t fully paid-up.ISSUE OF DUPLICATE SHARE CERTIFICATE The directors are empowered to issue new duplicate share certificate in place of original certficate if such certificate : (e) Is having to have been lost or destroyed, or (») Having been defaced or multilated or torn is surrendered to the company [Sec. 84(2)].Penalty for fraudulent renewal : If a company with intent to defraud renews a certificate or issues a duplicate thereof, the company shall be punishable with fine which may extend to Rs. 10,000 and every defaulting officer shall be punishable with imprisonment up ‘to six months or fine up to one lakh rupees or with both [Sec. 84(3)]. Penalty for personation of shareholder : (Sec. 116) If any person falsely and deceitfully personates a shareholder or the owner of a share warrant, and thereby obtains or attempts to obtain any such share certificate or any such share warrant or receives or attempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term up to 3 years and shall also be liable to fine.