The provision regarding the time limit for issue of share certificates to members consequent to new/ fresh allotment of shares or transfer/ transmission of securities are to be found in section 56 of the Companies Act, 2013 which has got a heading “Transfer & Transmission of Securities” instead of at section 46 which has the heading “Certificate of Shares”
According to Section 56(4) share certificates have to be issued to members within
(a) 2 months from the date of incorporation, in case of subscribers to the memorandum; (previously there was no such time limit);
(b) 2 months from the date of allotment of shares in case of any other allotment (previously it was 3 months u/2 113 of CA 1956);
(c) 1 month from the date of receipt of transfer of securities or date of intimation of securities – (here the word used is securities rather than shares, so it includes both shares as well as debentures, previously it was 2 months time limit);
(d) 6 months from the date of allotment of debentures (previously the time limit was 3 months)
Under proviso to section 113(1) of the Companies Act, 1956 companies could apply for an extension of time limit for issue of certificates upon allotment/ transfer of debentures by a further period of 9 months. Now under the Companies Act, 2013, that proviso has been removed, so the above limits under section 56(4) (a) to (d) are absolute and if the company is unable to issue certificates within that period then penalty process is attracted under section 56(6) which is minimum Rs.25,000/- for the company but may extend to Rs.5.00 lakhs and minimum Rs.10,000/- for every officer which could extend upto Rs.1.00 lakh per officer.
So all the more reason to adopt a strict compliance system to be in consonance with the new norms of the Act. The only way for companies to ensure that they have a robust compliance system in place is to effectively engage company secretaries.