A share certificate is a document that certifies the possession of shares in a company limited by shares.
Share certificates are sent out when shares are granted and made available to new shareholders at the time of incorporation and/or after incorporation, or when ownership of existing shares is transferred from one individual to another after company formation. Shareholders are required to receive a share certificate right after they buy at least one share. A copy of all issued share certificates must be kept by businesses for their records.
What does a share certificate look like?
A typical share certificate is a rectangular document set out in landscape orientation. It states the date of issue and all relevant details that pertain to the shares that have been taken on a certain date by a particular shareholder. Share certificates can be issued in electronic format as a PDF file; however several individuals prefer to receive traditional printed certificates. Both formats can be requested upon company formation.
What information is shown on a share certificate?
Share certificates have the following information:
- Certificate number – 1, 2, 3, etc.
- Company name and registration number
- Registered office of company
- Name and address of shareholder
- Quantity, nominal value and type of share issued – for instance 1 x £1 Ordinary Share
- If the shares are partly paid, fully paid or unpaid
- Authorising signatures – two executives, an executive and a witness or an executive and the company secretary
Where do I get share certificates from?
On registering your company, you will receive your share certificates from Companies House or your company formation agent along with the memorandum, articles of association as well as your certificate of incorporation. Collectively, these documents are known as your ‘incorporation documents’.
If you choose to set up your company online with a formation agent, you will receive your incorporation documents in a PDF file via email as soon as your company registration is approved. Most company formation agents will provide the option of printed certificates as well – which is convenient if you need to show them to other people for any reason – banks and lenders, for example.
If you choose to send your incorporation application by post, Companies House will provide you with printed share certificates, which will be delivered to your registered office address with the rest of your incorporation documents.
You can obtain standard share certificate templates online if you need to issue more certificates to new shareholders after company formation. You will need to do this if you create new shares or sell any of your existing shares to someone else.
If you have a company seal, you can use it to stamp your share certificates to add a professional touch.
Do I have to issue one certificate per share?
Regardless of the number of shares a shareholder takes, only one certificate needs to be issued per shareholder for each class of share taken on a particular date. There is no need to create separate certificates for each and every share of the same class if they are issued on the same date.
If a shareholder takes more than one class of share, a separate certificate should be issued to the shareholder for that class of share, even if these shares are taken on the same date as other shares.
You must issue a separate certificate when any new shares are taken by an existing or new shareholder at a later date, or when existing shares are transferred (sold) from one shareholder to another.
Is there a time limit for issuing certificates?
Unless your company’s articles of association states otherwise, share certificates must be issued to shareholders within 2 months of business formation, or within 2 months of issuing new shares or switching available shares after incorporation.
How do I issue certificates to joint shareholders?
In a situation where more than one person owns the same share, only one certificate needs to be issued. However the shareholders on their own may duplicate the certificate for their own records if desired.
The name of each joint shareholder should be shown on the certificate, but you need only include the address of the first named shareholder.
Do I have to send copies of certificates to Companies House?
No, companies do not have to provide duplicates of certificates for HMRC or Companies House. Conversely, you will need to notify Companies House in the event you assign or reassign shares after incorporation.
Should my company retain duplicates of certificates?
Indeed, your company must keep duplicates of every issued share certificates at its authorised office or alternatively, the inspection location. They must be kept together with the statutory members register containing the information of your company’s past and present shareholders.
Old share certificates that are no longer legitimate – that is, when the suggested shares have been transferred to somebody else – need to still be kept by the company, however it is in your best interest to write ‘Cancelled’ on the front.
What are the consequences in the event that my certificate is damaged or lost?
If a shareholder loses their share certificate, or it is significantly damaged, the company can grant another. Damaged certificates must be returned to the company to be destroyed. In large companies, the shareholder may be required to prove his or her identity before receiving a replacement certificate.
Can I request a new certificate if I change my name or address?
There is no need to obtain a new certificate if you change your address – you will just need to update the statutory register of members. However, a new certificate should be obtained if you change your name. Again, in large companies, the shareholder may need to provide ID and a proof of name change before a new certificate can be issued.
The worn-out certificate must be given to the company to be destroyed. On the company’s copy of the worn-out certificate, ‘Cancelled’ must be written on the face. A copy of the new certificate must be retained by the company. The members’ statutory register must be up-to-date to reveal the change of name.