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Quick answer: A share certificate is the document that shows who owns shares in your company and how many. Every shareholder should have one, and the company must keep a securities register that matches them.
What a certificate shows
- The company name and registration number
- The shareholder's name
- The number and class of shares
- The certificate number and date issued
The securities register
Besides the certificates, the company keeps a securities register: a record of every share issued, to whom, and every transfer. It is one of the records a company must keep, and it is the starting point when the companies registry asks who owns and controls the company for beneficial ownership.
Why it matters
Banks, investors, buyers of the business and auditors ask for share certificates to confirm ownership. Between co-founders, clear certificates and a signed shareholders' agreement prevent most disputes. Without them, proving who owns what can become expensive.
When shares change hands
- The seller and buyer sign a share transfer form and agree the price.
- The old certificate is cancelled and a new one issued to the buyer.
- The securities register is updated.
- If the change affects who owns 5% or more, or who controls the company, update the beneficial ownership register with the companies registry within 10 business days.
Share transfers can have tax consequences, including securities transfer tax in some cases, so ask your accountant before transferring shares.
Lost certificates
The company can cancel a lost certificate and issue a replacement, usually against a signed declaration that the original is lost. Record the replacement in the register.
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