Company share certificates are an important part of any business when you start a company. These certificates document the ownership of a company, and they can be used as security in case of a loan. If you’re planning on starting a business, it’s important to learn everything you need to know about company share certificates. In this blog post, we’ll discuss what company share certificates are, how they work, and and why you might need them. Keep reading to learn more! We have put together this easy to follow guide to make sure the process is as painless and informative as possible.
- What Are Share Certificates?
- How Many Shares Should You Issue When You Start Your Company?
- Are Share Certificates Mandatory?
- When Are Share Certificates Needed?
- How Do You Get A Share Certificate?
- Can You Get Share Certificates From CIPC?
- What Happens If You Lose Your Share Certificate?
- Important Points To Note
What Are Share Certificates?
A certain number of shares must be made accessible to present and prospective owners at the start of the business. A share certificate or stock certificate is a written document signed by a Company’s Directors that acts as legal proof of each Director’s shareholding / ownership in the company.
How Many Shares Should You Issue When You Start Your Company?
Share allocation for new companies is normally 1000 shares but this is to your discretion although a minimum of 100 is advised. This is done for free during the business registration procedure and is displayed on the firm’s MOI Certificate.
Are Share Certificates Mandatory?
Yes, share certificates are required by law for all companies in South Africa. Without a share certificate, even if you are the Company’s Director, you will have no legal proof that you own any shares in the company.
When Is A Share Certificate Needed?
- By banks – When opening a bank account, most banks require new businesses to have a valid share certificate.
- Changes in shareholding – A share register is also required to track shareholding changes in your organization. This is a formal electronic record showing when and between which shareholders shares have changed hands. The original share certificates will be required if shareholders are added or withdrawn.
- Court proceedings – Share certificates can be the difference between a shareholder’s success or failure if there is ever a disagreement that goes to court as it provides the ability to prove ownership.
Can You Get Share Certificates From CIPC?
CIPC does not yet issue share certificates or keep track of company ownership. CIPC keeps track of directors, which are persons who are legally accountable for the business and are chosen by the shareholders.
How Do You Get A Share Certificate?
In compliance with the Companies Act of 2008, a Company Secretary is needed to prepare these certificates and they will be considered invalid in court if the process is not followed precisely. The Certificates must contain:
- A unique certificate number The company name
- The company registration number
- The complete name, ID number and residential address of the person who will receive the share certificate
- The total number of shares that have been issued
What Happens If You Lose Your Share Certificate?
- You should never reprint a lost share certificate. If the certificate is lost or there are spelling errors, a new certificate must be issued with a signed affidavit and indemnity protecting the person or firm that will redo the certificate.
- The wording on the replacement certificate must be specific and differ from the wording used on the lost certificate.
- A second person must be selected if there is only one director as the certificate will be validated by the signatures.
Important Points To Note
- Directors should sign the share certificates, which should be printed on good quality paper and preferably in colour.
- Share certificates must be numbered in order and numbers cannot be repeated.
- The certificate must include the exact number of shares. It is not possible to own a partial share, but it is possible to own a joint share.
- The certificate should be recorded in the company registration and stored at the registered address in a fireproof safe.
- If all the shares aren’t transferred, a “balance” certificate must be issued.
- When transferring shares the old certificate must be cancelled. The new certificate must be recorded with the next highest certificate number and documented in the company register.
- Having multiple signed share certificates is illegal. If you accidentally printed several copies of the certificates, you must delete the duplicates since each shareholder should only have one signed certificate.
- To help you keep track of the business record, we recommend hiring a trained company secretary or accountant. These stringent measures are in place to safeguard both the company’s directors and shareholders against fraud and fines.
- Non-compliance can lead to imprisonment or fines.
- Within 30 days of becoming the owner of shares, non-resident shareholders must have the certificate marked ‘non-resident by an authorised dealer to regulate share trading at non-market prices.
Feel free to get in touch if you would like to get more information or discuss how getStarted can help you with your company share certificates.
*Please note all the above information is best to be discussed with one of our qualified accountants to verify all information is accurate, correct and up to date.