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 :
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
|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|