Share warrant v. Share Certificates

1 Answer(s)

Section 46 of the Companies Act provides that an allotee of shares is entitled to have from the company a document, called the Share certificate, certifying that he is the holder of the specified number of shares in the company. Such obligation needs to be fulfilled within 2 months after the allotment. A share certificate is the prima facie evidence of the title; it gives the shareholder the facility of dealing more easily with his shares in the market. It enables his to sell his share by showing at once a marketable title.


A Share warrant on the other hand, Share warrant is an option issued by the company that gives the warrant holder a right to subscribe equity shares at a pre-determined price on or after a pre-determined time period.

A warrant is basically an option given to the warrant holder to subscribe to the equity shares. In case the warrant holder does not exercise such option then the consideration will stand forfeited.

It defers the issuance of the shares to a future date, while at the same time raising capital immediately. Therefore, the issuer may take advantage of future appreciation in the price of the stock.


Refusal by Company to Register The Transfer of Shares

The circumstances, in which a company may refuse to register the transfer of shares, are different, for company listed on stock exchange and unlisted company.

Listed Company

  • Where the instrument of transfer is not properly signed or stamped or not properly executed.
  • Where the transfer of security is in contravention of any law composition of
  • Where the Board of Director, may change, to such on extent, because of transfer, which may affect interest of company.
  • Where the transfer is prohibited by any law.

Unlisted Companies

  • If partly paid up shares are being transferred and the transferee is known to be financially incapable of paying balance calls.
  • If partly paid up shares are being transferred to a minor incapable of entering into a contract.
  • In case due call money has not been paid by the transferor.
  • When the transferor is a debtor of the company, and the company has a lien on such shares.
  • If instrument is incomplete, irregular and defective, and not properly stamped.

On other reasons, just and equitable and are in the general interests of the company

In the new Companies Act there are no restrictions on an NRI to become a director of a company.


Contributed by Neha Agarwal, Lawfarm Member 

Answered on November 18, 2016.
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