If the shares of the company are fully paid-up and the Articles of Association of the company permits to convert the shares into stock, a resolution to this effect shall be passed in the general meeting of the shareholders. After this the book of transfer of shares is closed and the company gives a notice to the shareholders to surrender their share certificates to the company. After surrendering the share certificates, the company issues a receipt. In return, after some time stock certificates can be obtained. At the time of issue of inventory certificate, necessary entry is made in the register of members and a new book is opened in the inventory register. In this inventory register, instead of the value of the shares held by the members, the value of the stock is shown. The company must inform the Registrar of Companies about the conversion of shares into stock within 30 days. This information should state the number of shares or stocks which have been converted into inventory or which have been converted back into shares.
If a company does not inform the Registrar after making such changes, the company and every guilty officer of the company shall be punished with a fine of ₹ 1000 per day. shall be punishable as long as such offense continues or whichever is less than ₹ 5 lakh.