Introduction

A company or an organization can issue shares to indicate units of ownership, and issue share certificates indicating the names of the shareholders and the number of shares they have been allotted. The share certificates must be issued within 60 days of allotting the shares. The share certificate issued is similar for all companies-public or private.

Stamp Duty

The share certificates must bear the essential stamp duty as per section 3 and 10 of The Indian Stamp Act, 1899. The stamp duty should be charged as per the State/Union Territory stamp duty rates, and must be paid within 30 days of the issuance of the share certificates. The stamp duty is on the issue price and not on the value of security of the shares. Further, stamp duty is due even if the shares are in dematerialized form.

Franking Shares

The process of embossing a stamp on the share certificate indicating the value of the stamp duty paid is called Franking.

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