YEAR’S SECOND AMENDMENT IN SHARE CAPITAL RULES

The Ministry of Corporate Affairs placed here on its website a draft of the Companies (Share Capital and Debentures) Second Amendment Rules, 2015. These amendment Rules will come into force from the date of its publication in Official Gazette.

These amendment rules proposed to amend Rule 5(3) of the Companies (Share Capital and Debentures) Rules, 2014. Earlier this sub – rule was amended in 18^th March 2015 by the Companies (Share Capital and Debentures) Amendment Rules, 2015. Before comment, I read this copy of amended Rule 5(3), with amendment by this amendment rule in bold letters:

“Every share certificate shall be issued under the seal of the company under the seal, if any, of the company, which shall be affixed in the presence of, and signed by-

(a) two directors duly authorized by the Board of Directors of the company for the purpose or the committee of the Board, if so authorized by the Board; and

(b) the secretary or any person authorised by the Board for the purpose:

Provided that, in companies wherein a Company Secretary is appointed under the provisions of the Act, he shall deemed to be authorised for the purpose of this rule:

Provided that in case a company does not have a common seal, the share certificate shall be signed by two directors or by a director and the company secretary, wherever the company has appointed a Company Secretary:

Provided further that Provided further that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be a person other than the managing or whole-time director:

Provided also that Provided further also that, in case of a One Person Company, every share certificate shall be issued under the seal of the company, if any, of the company, which shall be affixed in the presence of and signed by one director or a person authorized by the Board of Directors of the company for the purpose and the Company Secretary, or any other person authorized by the Board for the purpose,  and in case the One Person Company does not have a common seal, the share certificate shall be signed by the persons in the presence of whom the seal is required to be affixed in this proviso.

Explanation.- For the purposes of this sub-rule, a director shall be deemed to have signed the share certificate if his signature is printed thereon as a facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography, or digitally signed, but not by means of a rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.”

These amendments in the Rules are alignment with the Companies (Amendment) Act, 2015 relevant part of which came into effect from 29^th May 2015. Purpose of these amendments in the Rules is to provide law in event of company exercise its option not to have a common seal.

Now, a company

• may have common seal and in that case shall affix it on Share Certificate, or
• may not have common seal and therefore not affixing it on share certificates

These share certificate shall be signed by

• two directors (one director in case of One Person Company), and
• company secretary or authorized person.

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