CERTIFICATE OF SHARES AND DEBENTURES

CERTIFICATE OF SHARES AND DEBENTURES

74. Limitation of time for issue of certificates.-- (1) Every company shall,

within ninety days after the allotment of any of its shares, debentures or debenture stock,

and within forty-five days after the application for the registration of the transfer of any

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55

such shares, debentures or debenture stock, complete and have ready for delivery the

certificates of all shares, the debentures, and the certificates of all debenture stock allotted

or transferred, and unless sent by post or delivered to the person entitled thereto, within

that period, shall give notice of this fact to the shareholders or debenture-holders, as the

case may be, immediately thereafter in the manner prescribed, unless the conditions of

issue of the shares, debentures or debenture stock otherwise provide.

1[Provided that the company shall, within five days after an application is made

for the registration of the transfer of any shares, debentures or debenture stock to a

central depository, register such transfer in the name of the central depository.]

Explanation-- The expression "transfer", for the purposes of this sub-section,

means a transfer duly stamped and otherwise valid, and does not include such a transfer

as the company is for any reason entitled to refuse to register and does not register.

(2) If default is made in complying with the requirements of sub-section (1) the

company, and every officer of the company who is knowingly a party to the default, shall

be liable to a fine not exceeding one hundred rupees for every day during which the

default continues.

75. Issue of duplicate certificates.- (1) A duplicate of a certificate of

shares, debentures or debenture stock issued under section 74 shall be issued by the

company within forty-five days from the date of application if the original--

(a) is proved to have been lost or destroyed, or

(b) having been defaced or mutilated or torn is surrendered to the company.

(2) The company, after making such inquiry as to the loss, destruction,

defacement or mutilation of the original, as it may deem fit to make, shall, subject to such

terms and conditions, if any, as it may consider necessary, issue the duplicate:

Provided that the company shall not charge fee exceeding the sum prescribed and

the actual expenses incurred on such inquiry.

(3) If the company for any reasonable cause is unable to issue duplicate

certificate, it shall notify this fact, alongwith the reasons within thirty days from the date of

the application, to the applicant.

1 Proviso added by the Central Depository Act.

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56

(4) If default is made in complying with the requirements of this section, the

company and every officer of the company who is knowingly a party to the default shall

be liable to a fine not exceeding five hundred rupees.

(5) 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 twenty

thousand rupees and every officer of the company who is in default shall be punishable

with imprisonment for a term which may extend to six months, or with fine which may

extend to ten thousand rupees, or with both.

TRANSFER OF SHARES AND DEBENTURES

76. Transfer of shares and debentures.- (1) An application for registration

of the transfer of shares and debentures in a company may be made either by the

transferor or the transferee, and subject to the provisions of this section, the company

shall enter in its register of members the name of the transferee in the same manner and

subject to the same conditions as if the application was made by the transferee:

Provided that the company shall not register a transfer of shares or debentures

unless proper instrument of transfer duly stamped and executed by the transferor and the

transferee has been delivered to the company alongwith the scrip.

(2) Where a transfer deed is lost, destroyed or mutilated before its lodgment,

the company may on an application made by the transferee and bearing the stamp

required by an instrument of transfer, register the transfer of shares or debentures if the

transferee proves to the satisfaction of the directors of the company that the transfer deed

duly executed has been lost, destroyed or mutilated:

Provided that before registering the transfer of shares or debentures the company

may demand such indemnity as it may think fit.

(3) All references to the shares or debentures in this section, shall in case of

a company not having share capital, be deemed to be references to interest of the

members in the company.

(4) Every company shall maintain at its registered office a register of

transfers of shares and debentures made from time to time and such register shall be open

to inspection by the members and supply of copy thereof in the manner stated in section

150.

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57

(5) Nothing in sub-section (1) shall prevent a company from registering as

shareholder or debenture-holder a person to whom the right to any share or debenture of

the company has been transmitted by operation of law.

(6) In the case of a public company, a financial institution duly approved by

the Commission may be appointed as the transfer agent on behalf of the company.

(7) If a company makes default in complying with any of the provisions of

sub-sections (1) to (4), it shall be liable to a fine not exceeding five thousand rupees and

every officer of the company who is knowingly or willfully a party to such default shall be

liable to a like penalty.

77. Directors not to refuse transfer of shares.- The directors of a

company shall not refuse to transfer any fully paid shares or debentures unless the

transfer deed is, for any reason, defective or invalid:

Provided that the company shall within thirty days 1[or, where the transferee is a

central depository, within five days] from the date on which the instrument of transfer

was lodged with it notify the defect or invalidity to the transferee who shall, after the

removal of such defect or invalidity, be entitled to relodge the transfer deed with the

company:

Provided further that the provisions of this section shall, in relation to a private

company, be subject to such limitations and restrictions as may have been imposed by the

articles of such company.

78. Notice of refusal to transfer.- (1) If a company refuses to register a

transfer of any shares or debentures, the company shall, within thirty days after the date

on which the instrument of transfer was lodged with the company, send to the transferee

notice of the refusal indicating reasons for such refusal.

(2) If default is made in complying with section 77 or this section, the

company and every officer of the company who is a party to the default shall be liable to

a fine not exceeding 1[twenty] thousand rupees and to a further fine not exceeding 2[one

thousand] rupees for every day after the first during which the default continues.

1 Added by the Central Depository Act.

1 Substituted "two” by Companies (Amendment) Ordinance, 2002.

2 Substituted " fifty" by Companies (Amendment) Ordinance, 2002

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3[78-A. Appeal against refusal for registration of transfer. - (1) The

transferor or transferee, or the person who gave intimation of the transmission by

operation of law, as the case may be, may appeal to the Commission against any refusal

of the company to register the transfer or transmission, or against any failure on its part,

within the period referred to in sub-section (1) of section 78 either to register the transfer

or transmission or to send notice of its refusal to register the same.

(2) An appeal to the Commission under sub-section (1) may be preferred-

(a) in case the appeal is against the refusal to register a transfer or

transmission, within two months of the receipt by him of the notice of

refusal; and

(b) in case the appeal is against the failure referred to in sub-section (1)

within two months from the expiry of the period referred to in sub-section

(1) of section 78.

(3) The Commission shall, after causing reasonable notice to be given to the

company and also to the transferor and the transferee or, as the case may require, to the

person giving intimation of the transmission by operation of law and the previous owner, if

any, and giving them a reasonable opportunity to make their representation, may, by an

order in writing, direct either that the transfer or transmission shall be registered by the

company or that it need not be registered by it and in the former case, the company shall

give effect to the decision within fifteen days of the receipt of the order.

(4) Before making an order under sub-section (3) on an appeal against any

refusal of the company to register any transfer or transmission the Commission may

require the company to disclose to it the reasons for such refusal.

(5) The Commission may, in its aforesaid order, give such incidental and

consequential directions as to the payment of costs or otherwise as it deems fit.

(6) If default is made in giving effect to the order of the Commission within

the period specified in sub-section (3), every director and officer of the company who is in

default, shall be punishable with fine which may extend to five hundred rupees, for every

day after the first during which the default continues.]

79. Transfer to successor-in-interest.- The transfer of shares or

debentures from a deceased member or holder to his lawful nominee successor-in-interest

3 Inserted through Companies (Amendment) Ordinance, 2002.

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59

shall be made on application by such nominee successor duly supported by a document

evidencing nomination or lawful award of the relevant property to such nominee or

successor and thereupon the nominee or successor shall be entered as a member:

Provided that the company may, on furnishing of a suitable indemnity by such

nominee or successor, proceed to transfer the security in his name and enter him in the

register of members.

80. Transfer to nominee of a deceased member.- (1) Notwithstanding

anything contained in any other law for the time being in force or in any disposition by a

member of a company of his interest represented by the shares held by him as a member

of the company, a person may on acquiring interest in a company as member, represented

by shares, at any time after acquisition of such interest deposit with the company a

nomination conferring on one or more persons the right to acquire the interest in the

shares therein specified in the event of his death:

Provided that, where a member nominates more than one person, he shall specify

in the nomination the extent of right conferred upon each of the nominees, so however

that the number of shares therein specified are possible of ascertainment in whole

numbers.

(2) Where any nomination, duly made and deposited with the company as

aforesaid, purports to confer upon any person the right to receive the whole or any

divisible part of the interest therein mentioned, the said person shall, on the death of the

member, become entitled to the exclusion of all other persons, to become the holder of the

shares or the part thereof, as the case may be, and on receipt of proof of the death of the

member alongwith the relative scrips, the transmission of the said shares shall be

registered in favour of the nominee to the extent of his interests unless—

(a) such nomination is at any time varied by another nomination made and

deposited before the death of the member in like manner or expressly

cancelled by notice in writing to the company; or

(b) such nomination at any time becomes invalid by reason of the happening

of some contingency specified therein;

and if the said person predeceases the member, the nomination shall, so far as it relates

to the right conferred upon the said person, become void and of no effect:

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Provided that where provision has been duly made in the nomination conferring

upon some other person such right instead of the person deceased, such right shall, upon

the deceased as aforesaid of the said person, pass to such other person.

(3) The person to be nominated as aforesaid shall not be a person other than

the following relatives of the member, namely, a spouse, father, mother, brother, sister and

son or daughter, including a step or adopted child.

(4) The nomination as aforesaid shall in no way prejudice the right of the

member making the nomination to transfer, dispose of or otherwise deal in the shares

owned by him during his lifetime and shall have effect in respect of the shares owned by

the said member on the day of his death.

81. Transfer by nominee or legal representative.- A transfer of the shares

or debentures or other interest of a deceased member of a company made by his nominee

or legal representative shall, although the nominee or legal representative is not himself a

member, be as valid if he had been a member at the time of execution of the instrument of

transfer.