When individuals or entities invest in a company by purchasing shares, they acquire a portion of ownership in that company. But how is this ownership formally recognised and proven? In Singapore, as in many jurisdictions, the share certificate plays a crucial role. 

Understanding what a share certificate is, the information it contains, and its legal significance is essential for both companies and shareholders operating within Singapore’s corporate framework.   

Defining the Share Certificate

A share certificate is a formal, legal document issued by a company to a shareholder. Its primary purpose is to certify that the person or entity named on the certificate owns a specific number of shares of a particular class in the company as of the date of issuance.   

These certificates can be:

  • Physical Documents: Traditionally printed on paper, often with security features. This format remains common for private limited companies in Singapore. 
  • Electronic Records: For companies listed on the Singapore Exchange (SGX), share ownership is typically recorded electronically in the shareholder’s Central Depository (CDP) account under a scripless system. Digital share certificates are also an emerging option for private companies, offering secure and convenient management. 

The Legal Standing of a Share Certificate

The share certificate holds significant legal weight. According to Section 123 of the Companies Act 1967 (“Companies Act”), a share certificate issued by a company is prima facie evidence of the title of the member to the shares specified within it. 

This means that, on the face of it, the certificate is accepted as proof of ownership unless proven otherwise. It serves as the primary documentary evidence a shareholder holds to demonstrate their stake in the company, reflecting the details recorded in the company’s official Register of Members. 

 

Key Information on a Share Certificate

To be valid, a share certificate typically contains the following essential details:

  • Company’s Name, Unique Entity Number (UEN), and Registered Office Address. 
  • Shareholder’s Full Name and Address.
  • The number of shares held by the shareholder.
  • The class of shares (e.g., Ordinary Shares, Preference Shares). 
  • A unique Certificate Number.
  • The Date of Issue.
  • An indication of whether the shares are fully paid-up or partly paid-up. 
  • Authorised Signatures: While previously requiring the company’s common seal, share certificates can now be validly executed by authorised signatories, typically including directors and/or the company secretary, as per the company’s constitution or board resolutions. 

Issuance Requirements

Companies in Singapore have a statutory duty to issue share certificates promptly after shares are allotted or a transfer is registered. Generally: 

  • After Allotment: Certificates should be ready for delivery within 60 days of the allotment of new shares.
  • After Transfer: Certificates should be ready within 30 days after the date on which a transfer of shares is lodged with the company.

These timelines relate to the duties imposed on companies, often linked to Section 130AE Companies Act. The company secretary usually manages the preparation and issuance process, ensuring compliance with these deadlines. 

Why Share Certificates Matter

Share certificates are more than just pieces of paper or digital records; they serve several critical functions:

  1. Concrete Proof of Ownership: It is the shareholder’s tangible or verifiable evidence of their investment and ownership stake in the company.
  2. Facilitating Transactions: Essential for the transfer of shares, especially in private companies where the physical certificate may need to be surrendered along with a signed transfer form for the transfer to be registered.
  3. Basis for Shareholder Rights: Helps verify a shareholder’s entitlement to receive dividends, attend and vote at general meetings, and exercise other rights associated with their shareholding. 
  4. Corporate Governance & Record Keeping: Forms a crucial part of the company’s statutory records, contributing to transparency and proper corporate administration. The details align with the Register of Members, which is the definitive record of share ownership. 
  5. Potential Collateral: Historically, physical share certificates were sometimes used as security for loans, although this is less common with modern electronic systems. 

Physical vs. Digital: The Evolving Landscape

While traditional paper certificates remain standard practice for many private Singapore companies, the landscape is evolving. Publicly listed companies operate under the efficient scripless system managed by CDP. Furthermore, digital share certificate solutions are becoming available for private companies, offering benefits like enhanced security (e.g., QR code verification), easier management, and reduced risk of loss or damage compared to physical documents. 

Dealing with Lost or Damaged Certificates

If a physical share certificate is lost or destroyed, the company’s constitution usually outlines a procedure for issuing a duplicate. This typically involves the shareholder providing a statutory declaration explaining the loss, an indemnity (and possibly a bond) to protect the company against potential claims if the original certificate resurfaces, and obtaining board approval for the replacement. 

Conclusion

Share certificates are fundamental documents in Singapore’s corporate environment, serving as primary evidence of share ownership. They are vital for shareholders to assert their rights and for companies to maintain accurate records and facilitate share transactions. Whether physical or digital, understanding their content, issuance requirements, and legal importance under the Companies Act is crucial for effective corporate governance. 

Managing share issuances, transfers, and maintaining accurate records, including share certificates, is a key function of corporate compliance. If your company needs assistance with corporate secretarial services, including the proper handling of share certificates and shareholder registers, the team at Raffles Corporate Services Pte Ltd offers expert support. 

 

For further assistance or inquiries, you can contact the Raffles Corporate Services team via email at hello@rafflescorporateservices.com.

Yours sincerely,

The editorial team at Raffles Corporate Services