Preparation and Issuance of Share Certificates in Singapore
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After incorporation, most companies in Singapore will have to issue and transfer shares. This activity involves an instrument called a share certificate. Generally, share certificates are issued by a secretary of a company to the company’s shareholders.
This article will help you understand more about share certificate issuance in Singapore.
What is a Share Certificate?
A share certificate is proof of member ownership of company shares. It certifies that a named in the certificate owns a certain number of shares issued by the company on a specific date. Paper share certificates can only be issued by private limited companies. Whereas public listed companies can only share electronic share certificates transferred into their shareholders’ Central Depository (CDP) account.
Information to include in a share certificate
Share certificates should contain the following information:
- The company’s name
- The company’s registration number
- The authority under which the company is constituted
- The company’s registered address
- The shareholder’s name
- Number of shares being issued
- The class of shares
- Whether the shares are fully or partly paid up and the amount (if any) unpaid on the shares
Classes of shares in Singapore
There are two classes generally used by companies; ordinary and preference, and a share certificate must include this information. Other less common share classes, such as redeemable shares, management shares, etc., may also be reflected on the share certificates if the company uses ones.
If a private company wishes to issue a different class of stock, they can usually do so by ordinary resolution (unless their constitution provides some other method). On the other hand, public companies are not allowed to issue different classes of shares unless the issue of those classes, as well as the rights attached to those classes, are regulated in the constitution.
Fully paid-up vs. partially paid-up shares
A shareholder can pay for the shares either fully or partially. If the shareholder has paid in full for the shares, it will become the full property of the shareholder.
Note that shareholders may choose to pay only a portion of the total shares but still receive a share certificate stating the total number of shares purchased. In such cases, the share certificate must show whether the shares have been paid in full to avoid miscommunication and legal consequences.
Who Prepares Share Certificates in a Company?
As custodian of registers and other legal documents, a company secretary will usually be the one who prepares the share certificate. They must also keep the original share certificates to prevent loss.
The company secretary will be responsible for administering the share certificates, including managing regulatory issues. They must also have a record of all the shareholders in the company register and how many shares each owns.
Share certificates are usually signed by two company directors. However, if your company has only one director, the company secretary can replace a second director to sign the certificate.
It can be challenging for startup entrepreneurs to find a reliable company secretary to handle their important documents. Therefore, Biz Atom provides company secretarial services to help businesses manage their administrative tasks and ensure their compliance so that they can focus on growing their companies.
When Should a Company Issue Its Share Certificates?
Share certificates are generally issued at the time of establishment and subsequently issued at the time of allotment of shares and transfer of shares.
Allotment of Shares
Allotment of shares happens when a company’s new shares are issued, resulting in an increase in the total number of issued and paid-up shares. According to the Companies Act, companies must issue share certificates no later than 60 days after allotment.
Upon issuance, the company secretary must prepare a Director’s Resolution in Writing (“DRIW”) to record the allotment. The secretary will then have to lodge this record with the Accounting and Corporate Regulatory Authority (ACRA) within 14 days.
Transfer of Shares
Transfer of shares occurs when one of the shareholders transfers or sells their ownership/shares in the company to another person or company. To effect the transfer, the company secretary shall prepare the following documents:
- DRIW noting the transfer of shares
- The instrument of transfer
- Stamp duty acknowledgment from the Inland Revenue Authority of Singapore (IRAS)
- Lodgement with the ACRA
- Cancellation of the original share certificates
- Preparation of the new share certificates
Note that the company secretary must issue the new share certificates within 30 days after the secretary has lodged the transfer of shares with ACRA.
What Happens If a Company’s Share Certificates is Lost?
If a share certificate is lost or destroyed, the owner can apply for a duplicate certificate to the company. While doing so, they need to provide the company with:
- A statutory declaration – to state that the certificate has been lost or destroyed and has not been pledged, sold, or otherwise disposed of; and
- A written undertaking – to state that if the owner finds the lost certificate, it will be returned to the company.
However, if the value of the shares exceeds $500, the company may require the shareholder to:
- insert a newspaper advertisement stating that the share certificate is lost or destroyed and the owner intends to request a copy within 14 days; and/or
- Provide a bond for an amount equal to the current market value of the shares to indemnify the company against losses suffered if the original share certificate is found by someone else.
If you need help with share certificate issuance or any other compliance matter, feel free to contact us. Our professional team will be more than happy to point you in the right direction.
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