The need for a share certificate
A share certificate is issued to members of a business that sells shares in their business. This certificate certifies that a specific person is the rightful owner of the shares in the business. It entitles them to have a share in the profit and in some instances, even a share in the decision making process.
A share certificate is issued by the company that have sold some of their shares to the public. These certificates are offered free of charge to the buyers of the shares. It is one of the ways in which the company rewards the new shareholder for buying shares in the company and welcoming them as a part of the company.
There is some vital information that should be included on your share certificate. Without this information on it, the certificate can be vague in some instances. This information includes:
The name and surname of the shareholder
The ID number of the shareholder
The number of the shares that the shareholder have purchased
The type of share that the shareholder bought
The amount that the shareholder have paid for the shares
The Entrepreneur advises that there should not be more than one type of shares mentioned on a share certificate. A separate certificate should be issued for each type of different shares that a shareholder owns. In some instances, it can be possible that more than one person owns a share. In cases like this there can only be one certificate issued.
The share certificates should also be issued in such a way that the holder of the certificate will be able to easily identify the origin of the certificate. The logo of the company should be on the certificate and the rest of the certificate should be drawn up in accordance with the South African Companies Act of 2008.
In the instance that the shareholder loses their share certificate, they are entitled to have their certificate replaced. This is also applicable when the original share certificate has been damaged, stolen or destroyed is some other way.
When the company replaces the shareholders certificate, it is essential to provide sufficient proof of the reason that the certificate having to be replaced. When a certificate has been damaged in any way, then the certificate must be handed in to the company to be replaced. The company can provide certain conditions that the shareholders have to abide to when the shareholders certificate has been stolen or destroyed.
Even though the task of issuing a shareholders certificate can be delegated to another person, it still remains the director’s responsibility to issue the share certificates. Only once the shareholders certificate is signed, it becomes the original share certificate. These certificates may also not be duplicated, as it is fraudulent to copy these certificates.
The company should also keep a copy of the details of all their shareholders. This list of names and details of the shareholders will be kept in the company register. This is kept in accordance with the new shareholder certificates that are issued. This helps to make the controlling actions easier.
When all the predetermined shares of the company have been sold, the directors can collaborate to make more shares available to the public. This is a process that should be carefully considered, because it can have a long term effect on the value of the other shares that have already been sold.
To some people a shareholders certificate is just a certificate that they received for buying shares in a business. What they do not seem to realise is that these certificates are giving them proof of ownership. Always store your shareholders certificate in a safe place and remember that this certificate entitles you to a part of the business, no matter how small it may be.