Shares Management
and Share Register
According to the Companies Act of 2008, your Pty Company should always have a Share Register on hand of its current shareholding and previous Share Transfers.
Our Share Management Experts will assist you with any shareholding questions you may have.
FAQ's on Share Management and Shareholder Registers in South Africa:
How do I create Shares for my Company and how would I change Shareholding in the future?
1. Share Allocation (Price: R0, Timeframe 24 hours as it is included in your Company Registration Documents).
Every company needs to initially make an amount of shares available to the current and future shareholders. This is done at no cost during the company registration process and is shown on the MOI Certificate (Registration Certificate) of a company. Normally the total Shareholding Allocation amounts to 1000. 
2. Share Certificates (Price: R590, Timeframe 48 hours).
Normally a company would issue about 100 of 1000 shares to shareholders. This is called ‘Issued Shares’. Depending on the growth plans of a new company, it is wise to issue a limited amount to the current shareholders / investors. This leaves space for future growth. For example, if the MOI allotted 1 000 shares, the Directors should authorise only a small percentage initially – say 100 shares (10% of the total). If the two shareholders each want 50% stakeholding, each will own 50 shares. This allows the company to take on new partners easily if required in the future. The Shareholding Certificate is the legal document that acts as legal evidence that a specific person owns a stake in a company. Get your Share Certificates here.
3. Transfer / Allotment Of Shareholding (Price: R790, Timeframe: 48 hours).
If a company wants to sell a stake to a new shareholder, you have to follow a legal process called a “Transfer of Shares”. If a company wants to take new shareholders/investors on board they need to process the “Allotment of Shares” which also constitutes a legal process. This process ensures the new owner that he / she legitimately owns a specific amount of shares in the applicable company, for example 250 of the 1000 authorized shares.
4. Authorised Shares (Our price: R990, Timeframe: From 48 hours up to 1 months in case the MOI needs to be changed).
In case a company needs to have more authorised shares for new investors / partners after initiation, it can be increased by the process of increasing the “Authorised Shares”. For example, according to the Company’s MOI it can only authorise up to 1000. If that amount is reached and the company wants to allot another 1000, they need to increase the “Authorised Shares”.
5. Shareholders Agreement .
A Shareholders Agreement is setup to protect the shareholders of a Company. It sets out the duties and rights of the shareholders and also regulates the sale of shares within the Company. If there is more than one Shareholder in a Company, it is imperative to have a Shareholders Agreement. Get your Shareholders Agreement here.
How do I keep track of Shares?
1. Electronic Share Register Setup (Price: R490 – Timeframe: 48 hours).
You need to keep record of the Company Directors and Shareholders from the date of registration of the Company by using a Company Register. A PDF printout form an Electronic Share Register is viewed as a legal document in court. It is the responsibility of Directors of the company to ensure the Register is always kept up to date of all changes within a company. To ensure your Register stays up to date, you can make use of our Electronic Share Register Update Product. Apply below.
To view an example of an Electronic Share Register – click here.
2. Share Register Setup & Update (Price: R650 for up to 2x Amendments – Timeframe: 48 hours).
Every company should have a professional (such as a lawyer, company secretary or compliance officer) update their Register to make sure it meets all legal standards. In case yours is behind or you have not setup a Share Register before, we can assist with the setup and update of your Electronic Share Register. You will pay this once-off fee and then again each time you want to update the Share Registry in the future.
For assistance regarding your Registration of Shares, please apply below or call us toll free on 0800 007 269.
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More about Shares: A Comprehensive Overview for Small Business Owners
What is it?
- Definition: Legally, stake in a company are considered an incorporeal movable property. The Companies Act defines it as “one of the units into which the proprietary interest in a profit company is divided.” Essentially, a stake is an interest of a shareholder in the company, measured by a sum of money for the purpose of liability initially and interest subsequently. It also encompasses a series of mutual covenants among all shareholders.
Types of Shareholding
- Equity and Debt: A key consideration in corporate finance is the balance between debt and equity. Debt refers to money or assets obtained through debt instruments, loans, or overdraft facilities from a bank. Equity, on the other hand, is composed of shares and retained income. Companies fund their operations through a mix of these two elements.
- Capital Requirements: It’s vital for a company to have adequate capital. Over-capitalisation, where a company’s capital exceeds its needs, and under-capitalisation, where the company is short of funds, can both hinder business growth and sustainability.
Ownership and Rights
- Shareholder: A shareholder is the holder of a stake issued by a company and is recorded as such in the company’s securities register, which can be certificated or uncertificated.
- Rights and Obligations: Owning shares in a company involves a set of rights and obligations, defined by common law, company law, and the company’s Memorandum of Incorporation (MoI). These can include voting rights, dividend entitlements, and responsibilities regarding company decisions.
Importance of Shares for Business Funding
- Raising Capital: Shares are a crucial means for companies to raise capital. By issuing shares, a company can generate funds for its various business activities without the need to take on debt.
- Shareholder Value: The value and performance of shares can significantly impact the overall value of a business, influencing its ability to grow, invest, and attract further investment.
Key Takeaways for Small Business Owners
- Understanding Share Types: Recognize the different types of shares (ordinary, preference, deferred) and their respective characteristics.
- Balancing Capital: Maintain a balance between equity (shares) and debt to ensure sustainable growth and financial health.
- Rights and Responsibilities: Be aware of the rights and responsibilities that come with being a shareholder.
- Capital Raising Strategy: Use shares as a strategic tool for raising capital, considering the implications on ownership and control.
What are the Different Types of Shares Available to a Small Business Owner?
Shares can typically be classified into three categories:
- Ordinary Shares: These are the most common type of shares and usually form the largest proportion of a company’s share capital. They may not have a maturity date and continue to exist indefinitely unless the company goes into liquidation. Ordinary shareholders may have the right to purchase more shares, and their liability is limited to the amount of capital invested.
- Preference Shares: These shares usually have priority over ordinary shares for dividend purposes and may have features similar to debt securities. However, they are not considered debt securities. Preference shares might not carry voting rights in general meetings unless specific conditions apply.
- Deferred Shares: These are special types of shares like founders’ shares, vendors’ shares, or management shares, often used to reward the founding members or management of a company.
How Does Shareholding Work in Terms of Equity and Liability?
Shares represent a portion of the equity in a company and are considered an incorporeal movable property. The ownership of shares involves rights and obligations, and the shareholder’s liability is generally limited to their investment in the shares. Shares also constitute a way for companies to raise funding through equity, as opposed to debt like loans or overdraft facilities.
Are There Legal Requirements for Shareholding Certificates in South Africa?
Yes, share certificates must now record the restrictions on the transferability of the shares on the certificate itself. This is a requirement under the Companies Act. Additionally, the conversion of shares from par value to no par value must be considered, with the company secretary ensuring that the Memorandum of Incorporation (MoI) records the classes of shares and the number of authorised shares along with their rights and limitations.
How is Shareholding Transferred in a Private Company?
In private companies, the transfer of shares is often restricted and must adhere to the stipulations in the company’s MoI. For example, a common restriction is the right of pre-emption, which requires a shareholder wishing to sell their shares to first offer them to other existing shareholders. Additionally, transfers of shares in South African companies are subject to a Securities Transfer Tax (STT) at a rate of 0.25%.
Are shares and Beneficial Ownership linked somehow?
