Your Guide to Share Certificates in Singapore: Usage and How to Prepare
It is not uncommon for companies to be involved in issuing shares and transferring shares – both of which require an instrument called a share certificate.
What are Share Certificates?
Share certificates are legal documents proving title (i.e. ownership) to shares. Paper share certificates are usually used by private companies and are delivered to the shareholder.
On the other hand, to facilitate the high volume of scripless trading, share certificates of public companies are issued and deposited electronically to the shareholder’s Central Depository account instead of given to those companies’ shareholders in hardcopy format.
Share certificates should contain the following information:
- The company’s name
- The company’s registration number
- The authority under which the company is constituted
- The company’s registered address
- The shareholder’s name
- Number of shares being issued
- The class of shares
- Whether the shares are fully or partly paid up and the amount (if any) unpaid on the shares
Class of shares
Companies generally issue two classes of shares, ordinary and preference, and the class would be indicated in the share certificate.
Other share classes such as redeemable shares, management shares etc may also be reflected on the share certificates, depending on whether the company issues such shares in the first place.
Public companies, however, are not allowed to issue different classes of shares unless the issue of those classes, as well as the rights attached to those classes, were provided for in the constitution.
Fully paid-up vs partially paid-up shares
Fully paid-up shares refer to shares which the shareholder has already paid for, in full, prior to the company issuing the shares. Partially paid-up shares are where shareholders have not paid the share value in full and the unpaid portion remains due to the company.
Shares do not need to be fully paid-up before companies can issue shares (and the certificates for these). The share certificate should therefore indicate whether the shares have been fully paid-up or not.
Who Prepares and Keeps the Share Certificates?
As the keeper of the registers and other statutory documents, the company secretary will usually be the person preparing the share certificates.
The original share certificates (new or old) are often also kept with the company secretary to prevent them from getting lost, and the shareholders will be given copies of the certificates.
If the shareholders insist on holding on to the original certificates and the company believes that it will stay in touch with its shareholders, then the shareholders may do so, with the company keeping copies of the same. However, this is not recommended.
When and How to Issue Share Certificates
Share certificates are generally issued on 3 occasions:
- The shareholders transfer shares between themselves or to outsiders
- The company decides to issue new shares
- A shareholder loses their share certificate, or the certificate is destroyed.
1) Share certificate required for the transfer of shares
If the share certificate is prepared for the purpose of transferring shares, the company secretary will first need to check if there are any processes in the company’s constitution to be followed before transferring any shares.
For example, a transfer of shares by an existing shareholder with pre-emption rights (i.e. the first opportunity to acquire any shares being transferred) requires a notice of transfer of shares to be sent to all shareholders.
These shareholders would then have to sign a Consent for Waiver of Pre-Emptive Rights before the share transfer can proceed.
The company secretary will assist in preparing the following documents for a share certificate involving the transfer of shares:
- Instrument of Transfer, such as an agreement between the seller (transferor) and buyer (transferee)
- Lodgement of notice of the transfer in the prescribed form with the Accounting and Regulatory Authority (ACRA)
The transferor of the shares would have to deliver their share certificate to the company’s registered office for the company secretary to cancel before the company secretary can issue a new share certificate to the transferee.
If the transferor only transferred a portion of his original shares, the company secretary will issue 2 new share certificates. One to the seller, reflecting the new balance, and another to the buyer.
Note that within 30 days of the lodgement of the notice of transfer with ACRA, the new share certificate(s) need to be completed and ready for delivery to their owners.
Once new shares certificates are issued, the company secretary will update the company’s register of transfers and register of shareholders.
Read our other article for more information on transferring shares in a Singapore private company.
2) Share certificate required for the Issuance of shares
The directors of the company must get the shareholders’ approval in a general meeting before they can issue new shares.
If such approval is not properly obtained, the issuance of shares would be considered void and what has been paid for the shares would be recoverable accordingly. There is no point in issuing a share certificate for void shares, so this step is crucial.
The company secretary will assist in preparing the return of allotment of shares with ACRA for a share certificate involving the issuance of new shares. ACRA needs to be notified of the new shareholders’ details as well as the increase in issued and paid up shares.
Note that within 60 days after the lodgement of the return of allotment with ACRA, the share certificates need to be complete and ready for delivery to their owners.
Once new shares certificates are issued, the company secretary will update the company’s register of allotments and register of shareholders.
Read our other article for more information on issuing shares in a Singapore private company.
3) Loss/destruction of share certificate
If a share certificate is lost or destroyed, the owner can apply to the company for a duplicate certificate. When doing so, they will need to provide to the company a:
- Statutory declaration that the certificate has been lost or destroyed, and that the share certificate has not been pledged, sold or disposed of, and proper searches have been made (if the certificate was lost); and
- Written undertaking that if the owner finds the lost certificate, it will be returned to the company.
The company secretary will then assist in cancelling the original share certificate, preparing the duplicate share certificate on payment of a fee up to $2, and updating the register of members and register of allotments.
If the value of the shares is greater than $500, the company may require the shareholder to:
- Insert a newspaper advertisement stating that the share certificate has been lost or destroyed and the owner intends to apply for a duplicate in 14 days’ time; and/or
- Furnish a bond for an amount equal to the shares’ current market value (or more) to indemnify the company against any loss suffered if the original share certificate is found by others.
Execution of Share Certificates
As evidence of the title to the shares, every share certificate must be executed under the common seal of the company. This is unless, the share certificate is signed on behalf of the company by:
- A director of the company and a company secretary;
- At least 2 directors of the company; or
- A director of the company in the presence of a witness who attests the signature.
If you need to have share certificates cancelled or issued in any of the 3 scenarios mentioned above (transfer of shares, issuance of new shares and lost share certificates), you are advised to check with your company secretary on the procedure and the documents needed, to ensure a smooth process.
Template for Resolution to Issue Share Certificates
If you need a template for resolutions to issue share certificates, you can get one here.
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