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Time Limits for Allotment and Issue of Share Certificates

Narendra Kumar

| Updated: Aug 19, 2017 | Category: Share purchase agreement

Share Certificate

On-time allotment of shares is a mandatory function of the Company and also, as per Companies Act, Share certificate should be issued within the statutory time frame.

Process Allotment and Issue of Share Certificate

In this article, we will discuss the time limits for the allotment and issue of share certificates.

The time limit for Allotment of shares means the appropriation of a certain number of shares to an applicant in response to his application for shares, i.e., the distribution of shares among those who have submitted a written application on a predetermined basis. There are certain restrictions related to timelines within which securities are to be allotted after the company has received Share Application money and within which the share certificates are to be issued.

By the Companies Act, 2013, a public or private company may issue securities in any of the following manners:

Public Company

  • To the public through issue of Prospectus
  • Private Placement
  • Rights Issue or a Bonus Issue

Private Company

  • Rights or Bonus Issue
  • Private placement

The time limits for allotment of securities and issuance of security certificates are as under: 

Allotment of Securities

S. No.ParticularsExplanation

1.

Allotment within 60 daysAllotment shall be done within 60 days of receipt of application money.

2.

If not allotted within 60 days, refund in next 15 daysIf Allotment is not done within 60 days then refund the whole application money within next 15 days.

3.

If not refunded within 15 daysRefund application money along with interest @12% p.a. after the expiry of 60 days and it shall be treated as a public deposit after the expiry of the said 15 days.

Read Also: Time Limits for Allotment and Issue of Share Certificates.

The Issue of Share Certificates

S. No.

Particulars

Explanation

1.In case of subscribers to memorandumWithin 2 months from the date of incorporation
2.In the event of allotment of sharesWithin 2 months from the date of allotment
3.In the case of transfer or transmission of securitiesWithin 1 month from the date of receipt by the company of the instrument of transfer or intimation of transmission
4.In case of issue of duplicate share certificateWithin 3 months of submission of complete documents and details with the company

5.

In case of allotment of debenturesWithin 6 months from the date of allotment

Time limits in the case of a wholly-owned subsidiary of a foreign Company

  • As per FDI Regulations read with FEMA[1], the share must be allotted against share application money received from non-resident within 180 days of its receipt.
  • Whereas, as per Rule 2(c) (vii) of the Companies (Acceptance of Deposits) Rules, 2014, any amount has been received for the purpose of subscription of shares and shares are not allotted within 60 days of its receipt the same shall be refunded within 15 days from the expiry of 60 days otherwise same shall be treated as deposits.

For any additional information or to regarding Allotment and Issue of Share click here or send us an email at info@enterslice.com. You can also call our customer support at +91 9069142028.

Read Also: Share Certificate Requirement and Procedure to Issue- The Ultimate Guide.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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