It is important that one obtains a share certificate when incorporating a new company in Singapore. This should also apply when investing in a company. The certificate validates and protects your ownership and interests in the company. It should not be ignored, which is why we look at it below.
Share Certificate: What is it?
This is a document that is legally issued by a company to shareholders after it has distributed shares to them. These certificates may be issued in paper or electronically depending on the type of company. The certificates are also applicable to companies limited by shares. These are private limited companies and public listed companies. Paper certificates are applicable only to private limited companies while those for public listed companies are electronically issued and transferred. The Central Depository (CDP) manages this by requiring anyone with shares in a public listed company to have a CDP account. Shares and certificates are administered through this account.
What is contained in a Share Certificate?
A share certificate Singapore is required to fulfill some minimum requirements by having certain contents. The certificate should contain the following information:
- Company’s full name and address of the head office
- Company’s registration number
- Information about the numbers of shares that are being issued. This should be indicated both in numerical form as well as spelled in full
- Shareholders name to show to whom the share is being issued.
- Contact details of the owner to the certificate
A counterfoil may also be included in the certificate so that shareholders can use it as an acknowledgment of receipt and as proof in case of return. A company should practice proper records by maintaining copies of all the share certificates given out and make sure it regularly updates the contact details of each shareholder. This will enable the company keeps in touch with its shareholders.
How is it issued?
Share certificates are prepared and issued by the company secretary. This is done by recording the following information first:
- Share certificate number
- Shares being transferred
- Shareholder details
The secretary will then prepare these certificates ensuring that certificates are not similar or carry the same number. Shares and consequently share certificates can be issued by a company pursuant to the following factors:
- Whether the Companies Act has vested authority on the directors to issue shares by approval of the shareholders. This applies when new shares are being issued.
- Processes in the articles of association and memorandum are followed during issuance if any exist. This applies during transfer and issue of new shares.
When is it issued?
There are three cases in which a share certificate may be issued by a company in Singapore, with different procedures for each one.
1. Transfer of shares
This happens when a shareholder gives or sells their shares to another. This new shareholder may be an individual or corporation. The first shareholder either remains one with fewer shares or ceases to be a shareholder, in which case their share certificate is canceled. In the case of the former, two new share certificates are issued with the old one being canceled.
2. Allotment of shares
This is the issuance of new shares to new members by the company. This increases a company’s share numbers without affecting existing and thus no shares are canceled. The crucial thing, as mentioned earlier, is that directors be granted the powers to create new shares that exist for a period and is renewed annually. New share certificates are issued and the register of shareholders is updated together with the register of share allotments.
Learn more about share allocation.
3. Loss of certificate
In this case, the lost certificate is canceled and a new one replaces it through the update of relevant registers.
Safekeeping of Share Certificates
There is much debate about who should keep the share certificates in a company. Nonetheless, the secretary is best posed to keep certificates so that they are safe and accessible. The shareholders are issued with copies, though the certificate remains with the secretary. Shareholders may also keep the share certificate Singapore while the secretary remains with copies of the same.
Receipt of Share Certificates
Shareholders are advised to collect and confirm receipt of his or her certificate in person to avoid situations where one misses a certificate or receives one that does not belong to them.