Companies Act 2013 · Rules · G.S.R. 265(E)
Companies (Share Capital and Debentures) Rules, 2014
How a company issues and manages share capital and debentures: shares with differential voting rights, share certificates, sweat equity, preference shares, transfers, ESOPs, preferential allotment, bonus shares, buy-back, debentures and nomination.
Last checked: 27 October 2026 against the Ministry of Corporate Affairs consolidated rules text.
| Notification | G.S.R. 265(E) dated 31 March 2014 · made for Chapter IV of the Act |
|---|---|
| Act sections | 43, 46, 54, 55, 56, 61, 62, 63, 64, 67, 68, 70, 71, 72 |
| MCA forms | SH-1, SH-2, SH-3, SH-4, SH-5, SH-6, SH-7, SH-8, SH-9, SH-10, SH-11, SH-12, SH-13, SH-14 |
| Latest amendment | Companies (Share Capital and Debentures) Amendment Rules, 2023 dated 21 January 2023 The latest amendment shown in MCA's consolidated text. Source: MCA consolidated text · 14 amending notifications shown in MCA's text |
The rules, one by one
Rule numbers and headings follow MCA's consolidated text. Rule 1 (short title) and rule 2 (definitions) are left out unless they matter in practice. The notes are a plain-English guide, not the rule text.
| Rule | Heading | What it says |
|---|---|---|
| 4 | Equity shares with differential rights | Conditions for issuing shares with differential voting rights, including articles authority, an ordinary resolution and a cap: such shares may not exceed 74% of the total post-issue voting power. |
| 5 | Certificate of shares | Share certificates in Form SH-1 for shares not held in demat form, issued under the common seal or signed by two directors (or a director and the company secretary). |
| 6 | Renewed or duplicate share certificate | When and how a duplicate certificate may be issued, recorded in the register of renewed and duplicate certificates (SH-2). |
| 7 | Maintenance of share certificate forms | Safe custody of blank certificate forms and related records. |
| 8 | Issue of sweat equity shares | Sweat equity needs a special resolution. In a year it is capped at 15% of the existing paid-up equity capital or ₹5 crore of issue value, whichever is higher, and in total at 25% of paid-up equity capital. A start-up may go up to 50% within 10 years of incorporation. Register SH-3. |
| 9 | Issue and redemption of preference shares | Preference shares must be redeemed within 20 years, out of profits or a fresh issue. Conditions for the issue. |
| 10 | Preference shares for infrastructure projects | An infrastructure company may issue preference shares for up to 30 years, with a part redeemed each year from the 21st year. |
| 11 | Instrument of transfer | Physical transfers are made in Form SH-4. SH-5 is the notice to the transferor. |
| 12 | Issue of employee stock options | ESOPs need a special resolution and a minimum one-year vesting period. They cannot be given to promoters or to directors holding more than 10% of shares, except in a start-up for 10 years from incorporation. Register SH-6. |
| 12A | Period of notice for rights issue | Shortens the offer period for a rights issue when members holding 90% of the share capital agree. |
| 13 | Issue of shares on preferential basis | A preferential allotment needs a special resolution, a price fixed by a registered valuer's report and disclosures in the explanatory statement. The offer is made by private placement under rule 14 of the Prospectus Rules. |
| 14 | Issue of bonus shares | Bonus shares need articles authority and board and general-meeting approval. They cannot be issued instead of dividend. |
| 15 | Notice to Registrar for alteration of share capital | Increase, consolidation, sub-division and similar changes are notified in SH-7 within 30 days. |
| 16 | Purchase of own shares by employees or trustees | A company may give financial assistance to employees or trustees to buy its shares, within limits. |
| 17 | Buy-back of shares | Letter of offer SH-8, declaration of solvency SH-9, register SH-10 and return of buy-back SH-11. |
| 18 | Debentures | Secured debentures, debenture trustees (trust deed in SH-12) and the debenture redemption reserve. The DRR requirement was relaxed for many classes of company in 2019. |
| 19 | Nomination by securities holders | A holder nominates in SH-13 and can change or cancel the nomination in SH-14. |
Related
- Section 62 explainer (further issue of shares)
- All Companies Rules · Companies Act 2013 ready reckoner
Other rules explained in detail: Incorporation Rules · Acceptance of Deposits Rules · Management and Administration Rules · Accounts Rules · Audit and Auditors Rules · Appointment and Qualification of Directors Rules · Meetings of Board and its Powers Rules
Sources: Ministry of Corporate Affairs, Acts & Rules e-book (consolidated rules with amendment notes), and the Gazette of India notifications named on this page. This page is a plain-English guide, not the text of the rules. Check the current rule on the MCA portal before relying on it.