Share Certificate
Definition – A Share Certificate is a registered evidence of title to the shares issued by a company under its common seal, duly stamped and signed by one or more directors or by the company secretary as per the Articles.
♦ It is an acknowledgment of the shares issued to the shareholder
♦ It contains the details about the class of shareholder, distinctive number of share and amount paid on the share.
A share certificate must be issued within 3 months after the allotment of the shares or 2 months after the application for the registration of the transfer. It contains the following details →
- Name of the company
- Name and address of shareholder
- Share certificate number
- Common seal
- Stamp and signature of two directors and counter signature of the company secretary
In case of loss a duplicate share certificate is issued. In case of fraud issue of certificate there is a fine up to Rs. 10,000 and imprisonment up to 6 months.
Format of a Share Certificate :
Share Warrant
Definition – A Share Warrant is a document issued under the common seal of the company stating that the bearer has the number of shares specified there in it is a negotiable instrument and it can be transferred by mere delivery.
♦ A Public Company limited by shares can issue share warrant if they are fully paid up.
♦ It can be only issued if there is a provision in articles of association for issuing share warrant.
♦ It requires approval of Central Government before it is issued.
♦ A private Company cannot issue a share warrant.
♦ The bearer of the Warrant is not a member of the company.
♦ It does not contribute towards qualification shares held by the directors.
♦ It can be transferred but it does not require any stamp duty.
Difference between Share Certificate and Share Warrant
Share Certificate |
Share Warrant |
| A bearer of Share Certificate is entered in the Register of Members of the Company. | Bearer of a Share warrant is not entered in the Register of Members of the Company. |
| A share Certificate requires certain procedures and stamp duty for transfer. | It Can be easily transferred by mere delivery |
| It takes time for such transfer | Mere delivery entitles spot transaction |
| It is not a negotiable instrument | It is a kind of interest and ownership of the company |
| No coupons shall be attached with Share Certificate. Dividend may be declared separately if profit arise. | Coupons of dividend may be attached to Share Warrant |
| It can contribute towards qualification shares held by a director | It cannot contribute towards qualification shares held by a director |
| A bearer of Share certificate has several rights like right to vote, to participate in a meeting and to be a director | A bearer of Share warrant has no such rights |
| It is a registered evidence of title | It is a bearer document of title |
| Both Private and Public companies can issue Share Certificate | Only Public Companies can issue share warrant |
| Issue of Share Certificate does not require approval of Central Government | It requires prior approval |
| It is issued in respect of partly or fully paid up shares | It is issued in respect of only fully paid up shares |
KINDLY TELL ME THE FORMAT OF SHARE CERTIFICATE IN PRIVATE COMPANY WHEN ONE DIRECTOR HAS RESIGNED AND OTHER REMAINING DIRECTOR ACCEPTED HIS SHARES