A Share Certificate is proof of a member’s ownership of a company’s share. It is a document issued by the company to its shareholders, and it states that the person named in the certificate owns a certain number of shares issued by the company as at a particular date. It must be noted that the paper Share Certificates are issued only by private limited companies; companies that are publicly listed issue electronic Share Certificates and such electronic shares are issued and transferred into the shareholder’s Central Depositary (CDP) accounts.
The Share Certificate for Singapore Companies
What details do Share Certificates contain?
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 —
- 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, or, where a branch office issues the certificate, the address of that branch office; and
- the class of the shares, whether the shares are wholly or partly paid up and the amount (if any) unpaid on the shares.
Notably, 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. Signature of authorised persons is sufficient to execute documents.
How is a Share Certificate issued?
The Share Certificates are usually prepared and issued by the company secretary who also maintains the register of shareholders/members. As the custodian of the company registers and as the person responsible for corporate regulatory and compliance matters, the management of the shareholders’ register is also generally entrusted to the Company Secretary who keeps track of the number of shares issued/transferred and the personal particulars of the shareholders in the register. Each certificate is distinguished by an appropriate number, and that number is recorded in the register of members.
The company secretary prepares and issues the Share Certificates to the shareholders. Share Certificates are to be signed by any two directors. However, if the company is incorporated with a single director, which is allowed in Singapore, one director and one secretary shall sign the certificates.
After issuing the Share Certificate to the shareholders, the company secretary generally retains the counterfoil portion of the certificate or a note signed by the shareholder acknowledging the receipt of the Share Certificate.
When is a Share Certificate issued?
Share Certificates are generally issued at the time of incorporation and thereafter issued during the allotment of shares and transfer of shares.
Allotment of Shares
Allotment of shares happens when new shares are issued by a company resulting in an increase in the total number of issued and paid up shares. The issuance of shares is normally done to raise more share capital by selling new shares to existing or new shareholders. The issuance of shares is proposed by the board of directors, but the board requires the existing shareholders’ approval to issue new shares as per section 161 of the Companies Act. The board must secure a mandate for this purpose from the shareholders and may need to convene an Extraordinary General Meeting (EGM). The board should follow any procedure stipulated in the company’s constitution in this regard. Following the issuance and subscription of shares by new or existing shareholders, the company secretary must prepare the following documents:
- A Director’s Resolution in Writing (DRIW) recording the allotment of shares;
- Lodgement with Accounting and Corporate Regulatory Authority (ACRA) a “return of allotment” within 14 days; and
- Preparation of new Share Certificate(s).
The “return of allotment” form contains the following information:
- Number of shares in the allotment;
- Amount (if any) paid or deemed to be paid and the amount unpaid on the allotment of each share;
- the class of the shares, whether the shares are fully or partly paid up and the amount (if any) unpaid on the shares.
- Full name, identification, nationality and address of, and number and class of shares held by each of the company’s members.
After issuance and lodgement with ACRA, there is a time limit within which the new Share Certificates need to be issued.
Transfer of Shares
Transfer of shares happens when one shareholder transfers or sells his title/share of ownership in the company to another individual or a company. Such transfers happen for several reasons, for instance, a minority shareholder may transfer his share to realise the value of his investment, the founders may exit the company by selling their shares to new investors, or raise new capital by selling a part of their stake in the company. The company secretary shall prepare the following documents to effect the transfer:
- Directors’ Resolutions in Writing (“DRIW”) noting the Transfer of Shares
- The instrument of Transfer
- Stamp duty acknowledgement from the Inland Revenue Authority of Singapore (“IRAS”)
- Lodgement with the ACRA
- Cancellation of original Share Certificate
- Preparation of new Share Certificate(s)
The shareholder may partly or wholly transfer his share. Regardless of the type of transfer, the company secretary will call for and cancel the original Share Certificate, and in case of a partial transfer, new Share Certificates will be issued to the transferor and transferee to reflect the new distribution of shares. In case the shareholder has wholly transferred the shares, the transferee or the new shareholder will be issued with a Share Certificate as evidence of his title in the company. After lodgement with ACRA, there is a time limit within which the new Share Certificates need to be issued. The Company Secretary shall also update the register of transfers and register of members.
What is the time limit for issuance of Share Certificate?
Every private company should ensure that all necessary Share Certificates are issued and delivered promptly. According to the Companies Act, every company is required to have the Share Certificates complete and ready for delivery
- Within 60 days after the allotment of shares
- Within 30 days after the date of notice of transfer of shares is lodged with the Registrar
Non-compliance with this requirement is an offence and the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000 and also to a default penalty.
What happens if the Share Certificate is lost or destroyed?
The Secretary of the company can issue a duplicate Share Certificate in place of the lost certificate in accordance with the Company’s Articles of Association. Such duplicate certificate is issued after securing a statutory declaration that the certificate has been lost or destroyed and has not been pledged, sold or otherwise disposed of. If the certificate is lost, an undertaking in writing is obtained from the shareholder stating that if it is found or received later, it will be returned to the company.
However, if the value represented by the Share Certificate exceeds $500, then before accepting an application for issue of duplicate certificate the directors of the company may require the applicant to place an advertisement in the newspaper stating that the certificate has been lost or destroyed and the owner intends to apply for a duplicate certificate after the expiration of 14 days after the publication of the advertisement. In addition, the director may also require the applicant to furnish a bond for an amount equal to the current market value of the shares indemnifying the company against loss if the original certificate is produced.
A Share Certificate in lieu of the lost certificate is issued by the company secretary who must also prepare a DRIW noting the loss of Share Certificate and declaring the previous one void before issuing a duplicate.
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