Share certificate

A company needs to issue a share certificate for newly created shares and whenever a shareholder transfers their shares to another.

Evidence

A share certificate is evidence of a shareholder’s title to their shares. It is therefore an important document. When a shareholder sells their shares, or gives them away, they are usually required to return their share certificate to the Company along with their completed stock transfer form. The company then completes a new certificate for the new owner. Likewise, when new shares are allotted, the company will provide the shareholder with a certificate in respect of their new shares.

Companies usually give each of their shares a unique number, to make record keeping easier. If your company has not done so, simply omit the references to the share numbers. Note that partly-paid shares must be given unique reference numbers.

Most shares are fully paid up, so the model assumes that this is the case. However, if the shares are partly paid, the share certificate should state that they are partly paid, and specify how much has been paid in respect of each share.

Timing

The share certificate must be issued within two months of the stock transfer form being lodged with the company, or the allotment of new shares.

Lost certificates

If a shareholder has lost their certificate, the directors can usually replace it for them. The shareholder will be required to provide the company with an indemnity (in case there is a dispute about the ownership of the shares) and may have to pay a fee.

A company’s articles might require the certificate to be produced in order to transfer the shares, or it might give the directors the option of refusing to register the transfer if no certificate is produced. If the directors have a discretion, they may accept alternative evidence of ownership. Otherwise, a replacement will have to be obtained.