Share certificates are formal certificates that a company must issue to a shareholder to certify that the shareholder in question is the registered owner of the shares in the company on the date of the issue. A company must issue formal share certificates within 2 months of issuing new shares.
Please remember to issue share certificates when you form a new company.
As always, we strongly advise that your company seeks professional advice from lawyers or accountants to make sure that your company is compliant with various rules and regulations that apply to running a company.
Does a company need to issue share certificates after being formed?
Yes. A company needs to issue share certificates after the new company is formed. Companies House Act 2006 requires this in Section 769. For example, after you form a company with MachFast.com you have two months to issue share certificates for your company (even if you just have one shareholder). The company must issue new share certificates when the shares are transferred. Companies Act 2006 requires this in Section 776.
Please note that a company must keep a shareholder register that has the record of all the shares issued, shareholder names and shareholder addresses.
A company may design and create its own share register. This is just an exampe of how you could do it. As always we strongly advise that you talk to accountants, lawyers and/or company secretarial service providers to make sure you are meeting all the requirements.
What information does a share certificate have?
Every share certificate should have the following information:
- Date of Issue
- The company’s name
- The company’s registration number
- Shareholder’s name
- Shareholder’s address
- Company’s registered office address
- Number of shares owned by the shareholder
- Class of shares owned by the shareholder (or type of shares)
- Whether the shares are paid up or deemed to be paid up
Who needs to sign share certificates?
Company directors need to sign share certificates. If you have more than one director, then two directors must sign share certificates (or one director and a company secretary). If your company has only one director, the one director may sign the share certificates but she or he must do it in the presence of a witness.
Some companies have company seals. If you have a company seal, then it can be stamped on the share certificate in the presence of Directors, Company Secretaries and/or witnesses.
What other rules to think about when issuing share certificates?
If your company has standard Articles of Association, then the articles will have specific rules outlining how to issue share certificates. The standard practice is that a company issues a single share certificate for all the shares owned by the shareholder in a particular class and issued at a particular time. Shareholders may request split share certificates. If the company has several classes of shares, then a shareholder who owns multiple classes but be issued with separate share certificates for each class.
How to find share certificate provisions in the model Articles of Association?
You can read the entire standard Articles of Association on the government’s website. Below we include the paragraphs relevant to share certificates. If your company has custom Articles of Association then you may have different provisions. As always, we strongly advise that you seek professional opinion when dealing with matter of company law and legal compliance.
24. Share certificates
24.—(1) The company must issue each shareholder, free of charge, with one or more certificates in respect of the shares which that shareholder holds.
(2) Every certificate must specify—
(a) in respect of how many shares, of what class, it is issued;
(b) the nominal value of those shares;
(c) that the shares are fully paid; and
(d) any distinguishing numbers assigned to them.
(3) No certificate may be issued in respect of shares of more than one class.
(4) If more than one person holds a share, only one certificate may be issued in respect of it.
(5) Certificates must—
(a) have affixed to them the company’s common seal, or
(b) be otherwise executed in accordance with the Companies Acts.
25. Replacement share certificates
25.—(1) If a certificate issued in respect of a shareholder’s shares is—
(a) damaged or defaced, or
(b) said to be lost, stolen or destroyed, that shareholder is entitled to be issued with a replacement certificate in respect of the same shares.
(2) A shareholder exercising the right to be issued with such a replacement certificate—
(a) may at the same time exercise the right to be issued with a single certificate or separate certificates;
(b) must return the certificate which is to be replaced to the company if it is damaged or defaced; and
(c) must comply with such conditions as to evidence, indemnity and the payment of a reasonable fee as the directors decide.
26. Share transfers
26.—(1) Shares may be transferred by means of an instrument of transfer in any usual form or any other form approved by the directors, which is executed by or on behalf of the transferor.
(2) No fee may be charged for registering any instrument of transfer or other document relating to or affecting the title to any share.
(3) The company may retain any instrument of transfer which is registered.
(4) The transferor remains the holder of a share until the transferee’s name is entered in the register of members as holder of it.
(5) The directors may refuse to register the transfer of a share, and if they do so, the instrument of transfer must be returned to the transferee with the notice of refusal unless they suspect that the proposed transfer may be fraudulent.
27. Transmission of shares
27.—(1) If title to a share passes to a transmittee, the company may only recognise the transmittee as having any title to that share.
(2) A transmittee who produces such evidence of entitlement to shares as the directors may properly require—
(a) may, subject to the articles, choose either to become the holder of those shares or to have them transferred to another person, and
(b) subject to the articles, and pending any transfer of the shares to another person, has the same rights as the holder had.
(3) But transmittees do not have the right to attend or vote at a general meeting, or agree to a proposed written resolution, in respect of shares to which they are entitled, by reason of the holder’s death or bankruptcy or otherwise, unless they become the holders of those shares.
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