Share certificates

A share certificate is a certificate issued by a company certifying that on the date the certificate is issued a certain person is the registered owner of shares in the company.

The key information contained in the share certificate is:

Unless the terms of issue or the articles provide to the contrary, the company must issue a share certificate within two months of the issue (CA 2006, sec769) or transfer (CA 2006 sec776) of any shares.

A share certificate (in England under seal) is prima facie evidence (in Scotland 'sufficient evidence unless the contrary is shown') of the member's title to the shares: CA 2006, sec768).

At common law a company may be stopped from denying statements in a share certificate against someone who has relied on the statement. Full consideration of this area is beyond the scope of this database.

Most companies will require the share certificate to be produced when a request is made to transfer shares. Duplicate certificates may be made available, but usually on receipt of a statement of the facts and an indemnity against any liability incurred by the company.

The usual practice is for a company to issue just one certificate in respect of all the shares issued or transferred at a particular time, but a shareholder may request split certificates.

Articles provisions

Model articles
Table A

Model Articles
The provisions of the Model Articles relating to share certificates are:

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.

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.

Table A
The provisions of Table A (which many companies registered before 1.10.2009 will still have in their articles) relating to share certificates are:

6. Every member, upon becoming the holder of any shares, shall be entitled without payment to one certificate for all the shares of each class held by him (and, upon transferring a part of his holding of shares in any class, to a certificate for the balance of such holding) or several certificates each for one or more of his shares upon payment for every certificate after the first of such reasonable sum as the directors may determine. Every certificate shall be sealed with the seal and shall specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up thereon. The company shall not be bound to issue more than one certificate for shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.

7. If a share certificate is defaced, worn-out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of the expenses reasonably incurred by the company in investigating evidence as the directors may determine but otherwise free of charge, and (in the case of defacement or wearing out) on delivery up of the old certificate.

Incorporation Services Limited provides an expert service for all your company formation and company law requirements, including advice about different classes of shares. We supply sets of registers containing share certificates and books of share certificates.

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