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Online stamping of Share Certificates

A share certificate is a certificate of the type SH-1 that is delivered to an equity shareholder of the company. As an instrument, a share certificate needs to be stamped. Stamp duty on share certificates is a state-based issue, and there are penalties for paying stamp duty late. First, at the time of incorporation and then again for each further share allocation, stamp duty on share certificates must be paid.

A certificate of share is a printed, signed document that certifies the legal ownership of the stated number of shares.

Stamp Duty
 

When a share certificate is issued, the stamp duty becomes applicable. Prior to providing the share certificate to its shareholders, the corporation must make sure that the stamp duty has been paid in full.

A share certificate is not regarded as being legitimate until the stamp duty has been paid on it and a stamp on the paper indicating confirmation of the payment has been applied. Your specific Stamp Duty Act, which varies from state to state, specifies the stamp duty rate.

Shares issued in Demat form are subject to stamp duty:
 

The process for paying stamp duty while issuing shares through Demat has recently undergone major alteration. Due to the fact that depositories, clearing organisations, and stock exchanges are responsible for collecting stamp duty. The State government of each district must receive the stamp duty payments made for the issuance of shares in their respective bank accounts.

Under the Companies Act 2013 now mandates that even public organisations hold and shift their capital to dematerialized securities, according to the most recent report.

However, as private enterprises have not yet seen such implementations, the decision to use a dematerialized security account rests entirely with the business.

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Advantage:

  • Convenience: Online stamping allows you to complete the stamping process from the comfort of your own home or office. You can avoid the hassle of visiting physical stamping offices or government departments, saving time and effort.
  • Time-Saving: With online stamping, you can submit the required documents and make payments electronically, which often results in faster processing times compared to traditional methods. This can be particularly beneficial when you have urgent stamping requirements.
  • Cost-Efficiency: Online stamping eliminates the need for physical transportation of documents and reduces paperwork, which can help lower costs associated with courier services, printing, and other administrative expenses.
  • Accuracy and Error Reduction: By submitting documents electronically, the chances of errors or discrepancies are minimized. Online stamping systems typically have built-in validation checks that ensure the accuracy of the information provided, reducing the possibility of mistakes.
  • Secure and Reliable: Government portals or designated online stamping platforms typically employ robust security measures to protect sensitive data and financial transactions. Encryption and authentication protocols are used to ensure the privacy and integrity of your documents and payments.
  • Trackability and Documentation: Online stamping processes often provide a digital trail of your transactions, allowing you to track the progress of your application and maintain a record of all the relevant documents and receipts for future reference.
  • Accessibility: Online stamping services are usually available 24/7, allowing you to initiate the stamping process at any time that suits you. This can be especially beneficial for individuals or businesses operating in different time zones.


 



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Documents:

If shares are distributed to shareholders at incorporation time:

  • Company COI, Memo Of Association, and Article Of Association Form PAS 3 with a signed share certificate and payment receipt were filed with the ROC (in case of additional allotment)
  • Subscribers' list
  • Board decision allocating shares to subscribers
  • Board resolution authorising the issuance of share certificates and the payment of stamp duties
  • The Directors' List
  • Certificate of Practicing Professional to Whom Power to Pay Stamp Duty Is Given

If shares are distributed after incorporation:
 

  • AOA Form PAS-3, Company COI, MOA, and signed share certificate were submitted to the ROC, together with a payment receipt (in case of further allotment)
  • list of recipients
  • Board decision allocating shares to allottees
  • Board decision authorising the issuance of share certificates and the payment of stamp duties
  • The Directors' List
  • Certificate of Practicing Professional to whom Stamp Duty Payment Authority is Granted.
  • Optional certificate of previously paid stamp duty


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