Definition of Share Certificate (What is a Share Certificate?)
A share certificate is a written document signed on behalf of a corporation that serves as legal proof of ownership of the number of shares indicated. A share certificate is also referred to as a stock certificate.
A certificate under the common or official seal of a company specifying any shares held by any member of the company shall be prima facie evidence of the title of the member to the shares.
Every share certificate shall be under the common seal of the company or, in the case of a share certificate relating to shares on a branch register, the official seal of the company and shall state as at the date of the issue of the certificate —
- a) the name of the company and the authority under which the company is constituted;
- b) the address of the registered office of the company in Singapore, or, where the certificate is issued by a branch office, the address of that branch office; and
- c) the class of the shares, whether the shares are fully or partly paid up and the amount (if any) unpaid on the shares.
Failure to comply shall affect the rights of any holder of shares. If default is made in complying with issuance of share certificate, the company and every officer of the company who is in default shall be guilty of an offence in Singapore.
A Share Certificate is:
- For issuance of fully paid shares only.
- A Share Certificate typically needs to be signed by two directors, or one director and the company secretary of the company.
- A Share Certificate is not required to be affixed with Common Seal when it is signed by two directors, or one director and the company secretary of the company.
- A certificate that evidences the holder’s title to shares.
- Required for any type of equity investment.
- A very important document that must be kept in safe custody.
- A certificate that evidences the holder’s title to shares. You may use this certificate for ordinary shares or a different class of shares.
Information from Share Certificate
When companies issue shares in the market, shareholders who buy in are issued a share certificate. The share certificate basically acts as a receipt for purchase and ownership of shares in the company. The document certifies registered ownership of shares from a particular date.
Key information on a share certificate includes:
When a share certificate is to be issued
Time frame to adhere with law
Voting rights without share certificate
Sometimes a shareholder with a stock certificate can give a proxy to another person to vote the shares in question. Similarly, a shareholder without a share certificate may give a proxy to another person to allow them to vote the shares in question. Voting rights are defined by the Constitution of the Company and Company Act.
Replacement Share Certificate
A share certificate that is damaged, lost or stolen can be reissued with a replacement certificate in respect of the same number of shares. The shareholder in such a case must return the damaged document to the company before a replacement can be issued. At this time, the shareholder may also exercise the right to be issued a single certificate or separate certificates.
Central Depository Account
Today, in modern financial markets, individual investors rarely take physical possession of their share certificates. In fact, some countries, such as Sweden, have completely abolished the issue of share certificates as proof of share ownership in a company and have streamlined the process of registering owners via electronic registration. In the United States, the Central Securities Depository (CSD) is responsible for electronically holding shares, either in certificated or uncertificated (dematerialized) form, so that ownership can be easily transferred through a book entry rather than the transfer of physical certificates.
CDP Account in Singapore
A CDP Account is a Central Depository Account (Henceforth referred to as CDP)
If you want to buy and own your first shares, you will need to set up a CDP. A CDP account acts like your personal safe for your stocks. Whenever you buy a share in a listed company through the open market, it gets deposited into your CDP account.
Set Up A CDP Account In Singapore
There are 2 easy ways for you to set up your own CDP account.
Do-It-Yourself Via SGX
Get Your Brokers To Do It For You
A share certificate can be in either registered form or bearer form. A registered share certificate is only evidence of title ownership, while a bearer share certificate, now uncommon, entitles the holder to exercise all legal rights associated with the stock.
Removal of requirement for common seal
With effect from 31 Mar 2017, companies and limited liability partnerships (LLPs) are no longer required to use the common seal in the execution of documents as a deed, or other documents such as share certificates. Companies and LLPs can execute documents by having them signed by authorised persons as below mentioned.
Here are some questions and answers pertaining to abolishment of common seal in Singapore
Can companies and LLPs choose to retain the use of a common seal?
What are the safeguards for ensuring authenticity and authority of documents executed by companies and LLPs after the requirement for a common seal is removed?
If a company’s constitution has specific provisions on how a deed or document should be executed, can it still execute a deed or document by way of the new “authorised persons” option as listed above?
For an existing company, if it wishes to remove the provisions of the common seal from its constitution, how should this be done?
For a newly incorporated company, what should a company do if it chooses not to have a common seal?
At ACHI BIZ, we provide the customised Constitution of the Company according to the requirements of the business for any new incorporations. Hence, you may no longer be required to pay much attention to this removal of common seal requirement.
Seeking professional service provider for issuance of Share Certificate
Where your existing Private Limited Company has not yet issued the share certificates for whatever the reasons, ACHI BIZ could assist you to adherence with compliance for issuance of share certificates for both share allotments and share transfers. Hence, many shareholders and directors in private companies prefer to engage a Corporate Service Provider (CSP) like ACHI BIZ to assist with issuance of share certificates and for various other matters which may arise in the course of the transaction.