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Company share certificates are proof of ownership of a specific number of shares (also called stock in US corporations) in a limited liability company or corporation. A share certificate is a document that a company issues to certify the ownership of a specific number of a specific class of shares in that company. The owner of a share certificate can be a person or any registered legal entity. In the UK, as set out in the Companies Act 2006, it is considered prima facie evidence of the ownership of those shares in that company.
All shares issued by the company must be recorded in the company’s Share Registry, also called the Stockholder list in the USA. Although a certificate may be in the possession of a person or company, it is the entry in the register of shareholders that provides legal proof of ownership of shares in the company. For this reason, consistency between share certificates and the register of members is essential.
Transfer of ownership occurs by the entry in the register, not by physical movement of the share certificate. Most companies imprint this fact on the share certificate, requiring the new owner of the shares to register their purchase with the share register managers.
In general, shareholder registries should record information such as:
- Name and registered address of owners of the shares
- A unique shareholder certificate number which is imprinted on the certificate
- Number of shares which is represented by this share certificate, also imprinted on the share certificate
- Nominal and paid-up value of these shares and the class of the shares.
The share certificate must display the following information at a minimum:
- Name of issuing company
- Address of the company’s registered office
- Name of the registered owners of these shares
- Any more identifying information that may be required by law
- An identifying number unique to this share certificate
- Number of shares which is represented by this share certificate
- The nominal amount which is paid on such shares
- The number of the shares represented by this certificate
- A seal of the company and signatures of authorised officers.
“Membership certificate” is a terminology used mainly in the USA equivalent to a shareholder certificate in the UK and other Commonwealth companies. Limited liability corporations issue membership certificates (LLC membership certificates) in the same way as Ltd. private companies and Limited public companies do in the UK, Australia, New Zealand, Cyprus and many African countries.
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