Stamping of Shares
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WHY STAMPING OF SHARES IS REQUIRED?
As per Indian stamp Act, within 30 days of issue of share certificates, stamp duty shall be paid.
The superintendent has the power to put penalty, 10 times of the amount of stamp duty. Also If the matter got delayed due to any reason and an application filed is beyond 30 days then the matter will directly be called for hearing.
Documents Required For Stamping of Shares
- Board Resolution for issue of share certificates
- MOA, AOA and COI of the Company
- Authority letter representing the Company.
- Certificate by Practicing Professional
- Application having details of the allotted Shares
- Share Certificates
As per the Indian Stamp Act, Stamping of shares means payment of stamp duty on issuance of share certificates. Whenever Companies make allotments, whether its first allotment or subsequent and issues shares, the Company must pay stamp duty on the total consideration involved in each allotment and Stamp duty on share certificate is a state-related matter.
1. stamping provides the legality to the documents that are executed in India. 2. properly stamped documents are admissible as evidence in the court of law.
Sec. 3 of Indian Stamp Act, 1899 states that every instrument mentioned in the schedule of the Indian Stamp Act, 1899 is chargeable with adequate stamp duty and Article 19 of Schedule IA of the Indian Stamp Act, 1899 talks about the payment of stamp duty on the instrument evidencing the right or title of the holder thereof or any other person to any share or stock in any incorporated company or body corporate.
Rs. 1/- for every Rs. 1000/- or part thereof of the value of the share including amount of premium.
Within 30 days of the issuance of the share certificate, stamp duty shall be paid.
If the share certificates are not stamped within the prescribed time, then the company shall face the following consequences: • Heavy penalty will be imposed by the department which may extend to 10 times of the amount of duty. • The company may not be eligible to apply for tenders as some government authorities ask for stamped share certificates. • The legality of the share certificate cannot be proved in case of disputes or fraud.