Upgrad LLM

fraud in share certificate

Me and other person (person A) are founding director in a pvt ltd company. We both had 50% shares in the company at the time of foundation.
Could you guys help me in answering my following queries:
1. Signature of Person 'A''s wife appears on the share certificate, while his wife has no relation with the company. She is not even an employee of the company. There was no resolution/ special resolution passed to authorize his wife to sign on the share certificate.
2. Person A has increased his paid-up capital but the share certificate of his increased shares still shows the issue date of share certificate of the foundation date.

I would like to understand whether his conduct is as per Company law and if it is a fraud then what sort of action I can take against him.

Thanks a lot in advance.



You can lodge a complaint with the Registrar of Companies for an inquiry.


Practising Company Secretary

Dear Mr. Alok,

1. As per Companies ( Issue of Share Certificate ) Rules,1960 ; share certificate is required to be signed by two directors and an Authorised Signatory as may be authorised by the Board of Directors by passing a resolution.The Authorised Signatory can be any one including wife of a director.

2.For initial issue of shares i.e. at the time of incorporation of a Company, names of subscribers/ shareholders are mentioned on the last page of  the Memorandum of Association of the Company . This is the permanent record of a company which can not be changed.

3.For all further allotment of shares there must be Board Resolution and Form-2 is required to be filed with Registrar of Companies.

4.Details of allotment /transfer of shares is available in the Annual Return filed by the Company with Registrar of Company.

5. In case of any dispute with another director,you are to file a Petition with Company Law Board under section 397& 398 of the Companies Act,1956 .

6.There are Supreme Court Rulings for further issue of shares which may be helpful to you.



Sunil K. Jain

Practising Company Secretary



Fraud vitiates the document(s)/transaction. Supreme Court.




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