Share Certificate – Evidence of Ownership in a Company

Holding shares in a company represents one’s stake of ownership in the business. How does a shareholder show that he/she/it is the rightful owner of the shares as claimed? The answer lies with the share certificate.

It is a document issued by the company to its shareholders, and it states that the person or entity named in the share certificate owns a certain number of shares issued by the company as at a particular date.

However, note that a share certificate is not conclusive of title to the shares, because any transfer or allotment of any share in a private company on or after 3 January 2016 only takes effect after you have lodged the relevant returns with the Accounting and Corporate Regulatory Authority (“ACRA”) and the electronic register of members (“eROM”) of the company is updated.

If you wish to have a quick recap on eROM, you can refer to our earlier blog post – Understanding Register of Members.

Details in a Share Certificate

A share certificate must set out the following details:

• the name of the company and the authority under which the company is constituted;
• the address of the registered office of the company in Singapore;
• the name of person or entity holding the shares;
• the number of shares held by the person or entity; and
• the class of the shares, whether the shares are fully or partly paid up and the amount (if any) unpaid on the shares.

The common seal of the company should be affixed to the share certificates. However, with effect from 31 March 2017, the Companies Act 1967 (the “Act”) has removed the requirement for common seal. Henceforth, the issuance of share certificates need not require affixation of common seal. It would suffice for it to be signed in accordance with Section 41B of the Act as follows:

• by a director and a secretary of the company;
• by two directors of the company; or
• by a director of the company in the presence of a witness who attests the signature.

When are share certificates issued?

Ownership in shares is generally established under the following three circumstances, which leads to the issuance of share certificates:

1. At the point of incorporation

2. After allotment of shares

3. After effecting a transfer of shares

This occurs when there is a change in share ownership arising from the transfer of existing shares in the company from one shareholder to another individual or entity.

You may wish to view our vlog for more information on what needs to be done for Allotment of Shares and Transfer of Shares.

Timeline to Issue Share Certificates

The timeline to issue share certificates is provided for in the Act. Share certificates must be issued by the company:

• Within 60 days after the allotment of shares
• Within 30 days after the date on which a notice of transfer of shares is lodged with the Registrar

Lost the share certificates?

It is not the end of the world if the shareholder loses the share certificate. What the shareholder needs to do is to submit an application to the company for issuance of a duplicate share certificate.

The company can accept the application and arrange to issue a duplicate share certificate in place of the lost share certificate. This is done on the premise that the applicant executes a statutory declaration that the share certificate was lost or destroyed and has not been pledged, sold or otherwise disposed of.  The applicant is also required to undertake that if the share certificate is subsequently found or received, it will be forwarded to the company for cancellation.

Where the value of the shares represented by the share certificate exceeds $500, prior to accepting the application, the company may require the applicant to advertise in a newspaper stating that the share certificate has been lost or destroyed and that the owner intends to apply for a duplicate share certificate after the expiration of 14 days after the publication of the advertisement. The applicant may also be required to furnish a bond for an amount equal to the current market value of the shares indemnifying the company against loss following the production of the original share certificate.

Is Share Certificate a must?

First and foremost, it is a requirement under the Act for a company to issue share certificates to its shareholders.

As mentioned earlier, the share certificate is not conclusive of title to the shares. However, share certificates are typically listed as one of the items required for the completion of a corporate action, as the parties to the transaction usually require the share certificates to validate the ownership of the shares held by the current owners.

In our next blog post, we will touch on the various types of shares which are typically issued by companies in Singapore.