Share Certificates for Companies in Singapore

In the realm of business ownership, share certificates play a pivotal role in establishing ownership and proving a stake in a company. For companies in Singapore, understanding the intricacies of share certificates is essential. In this comprehensive guide, we delve into the world of share certificates, shedding light on their purpose, contents, issuance, and more.

What are Share Certificates?

Share certificates are legal documents that serve as tangible proof of ownership (title) to shares within a company. They are pivotal in establishing who holds the rights to the company’s shares. Depending on the type of company and its registration status, share certificates can be handled differently.

For private companies, paper share certificates are typically issued and physically delivered to shareholders. In contrast, public companies dealing with high-volume trading opt for electronic deposits into the Central Depository accounts of shareholders.

A standard share certificate should contain the following information:

1. The company’s name.
2. The company’s registration number.
3. The authority under which the company is constituted.
4. The company’s registered address.
5. The shareholder’s name.
6. Number of shares being issued.
7. The class of shares (e.g., ordinary or preference).
8. Indication of whether the shares are fully paid up or partly paid up, including any outstanding amounts.

Different Share Classes

Companies in Singapore generally issue two primary classes of shares: ordinary and preference shares. However, share certificates may also reflect other share classes such as redeemable shares or management shares, depending on the company’s constitution.

Private companies can typically issue different share classes through an ordinary resolution, unless their constitution prescribes an alternative method. Public companies, on the other hand, must adhere to the constitution’s provisions regarding share classes and associated rights.

Fully Paid-Up vs. Partially Paid-Up Shares

Share certificates should clearly specify whether the shares being issued are fully paid up or partially paid up. Fully paid-up shares indicate that the shareholder has already paid the full share value to the company. In contrast, partially paid-up shares mean that the shareholder has not yet paid the full share value, and there is an outstanding amount due to the company.

It’s important to note that companies can issue shares, along with their respective certificates, even if the shares are not fully paid up.

Preparation and Custody of Share Certificates

Typically, the company secretary is responsible for preparing share certificates and maintaining the related records. While the original share certificates are often held by the company secretary to prevent loss, shareholders are provided with copies of these certificates.

While shareholders may request to keep the original certificates, it is not recommended. Instead, the company should maintain the originals and provide shareholders with copies. This ensures that the company can easily manage and update the records.

Issuance of Share Certificates

Share certificates are issued on various occasions, including:

1. Transfer of Shares: When shareholders transfer shares, the company secretary plays a crucial role. This process involves checking the company’s constitution for any transfer-related processes, preparing necessary documents like the Instrument of Transfer, and lodging the transfer notice with the Accounting and Regulatory Authority (ACRA). The original share certificate held by the transferor is canceled, and new share certificates are issued to both the seller and buyer.
2. Issuance of New Shares: Before a company can issue new shares, approval must be obtained from shareholders through a general meeting. The company secretary assists in preparing the return of allotment of shares and notifying ACRA of the new shareholders’ details. Once approved, new share certificates are issued to the shareholders.
3. Loss or Destruction of Share Certificate: In cases where a share certificate is lost or destroyed, shareholders can apply for a duplicate certificate. The shareholder must provide a statutory declaration affirming the loss or destruction of the certificate, along with a written undertaking to return the original if found. The company secretary assists in canceling the original certificate, preparing a duplicate share certificate, and updating the company’s registers.

Execution of Share Certificates

Every share certificate must bear the company’s common seal unless the certificate is signed on behalf of the company by:

• A director and a company secretary.
• At least two directors.
• A director in the presence of a witness who attests the signature.

Conclusion

Share certificates are not just pieces of paper; they are legal instruments that establish ownership in a company. Understanding the intricacies of share certificates is essential for businesses in Singapore, as they play a crucial role in ownership, transfers, and compliance with regulatory requirements. Proper handling and issuance of share certificates ensure transparency and legal compliance within the company’s structure.