A Guide to Share Certificates for Companies in Singapore

In the world of business, certain documents hold significant weight in ensuring smooth operations and legal compliance. For companies in Singapore, share certificates are one such document that plays a pivotal role in corporate governance.

Understanding these certificates is important for both business owners and shareholders to maintain transparency and security.

What are Share Certificates?

Share certificates are official documents issued by companies to certify that a named individual or entity holds shares in the company’s capital. These certificates along with the register of members serve as legal proof of share ownership and are used in various corporate activities, including voting at meetings, receiving dividends, and facilitating the transfer of shares.

Essentially, a share certificate  reflects the record of investment, confirming the committment made by the shareholder to the corporate entity and entitling them to a proportionate stake in the company’s profits, subject to the entitlements of the share class.

For anyone involved in a business, these documents are fundamental in establishing and exercising their rights as shareholders.

What Information is Shown on a Share Certificate?

A share certificate issued in Singapore typically includes several key details that confirm and clarify the shareholding details. Here’s what you can generally expect to find in the document:

• Company Name
• Company’s Registered Address
• Company’s Registration Number
• Share Quantity
• Shareholder Details
• Class of Shares
• Certificate Number
• Date of Issue
• Authorised Signatures
• Transfer Restrictions

Previously, companies in Singapore were required to use a common seal to authenticate documents like share certificates. However, this requirement was removed under the Companies (Amendment) Act 2017, which took effect on 31 March 2017.

Now, share certificates can be executed by authorised signatories without the need for a common seal. Nevertheless, despite this change, companies and Limited Liability Partnerships (LLPs) can continue using a common seal.

What are the Two Types of Share Certificates?

Share certificates come in two types: registered and bearer. Registered share certificates are the standard form used by companies in Singapore. These certificates are issued in the name of a specific shareholder, with their details recorded in the company’s share register. This provides a clear and traceable record of ownership.

On the other hand, bearer share certificates are not tied to a specific individual and do not specify the owner’s name. Instead, whoever holds the physical certificate is considered the owner. However, Section 66 of Singapore’s Companies Act explicitly prohibits locally incorporated companies from issuing bearer shares. Thus, they are not used in Singapore. This ensures greater accountability and security in shared ownership.

Additionally, share certificates can be issued in two forms: physical and electronic. The choice between using a physical or electronic share certificate depends on the company’s and its shareholders’ preferences and needs.

Both forms are legally recognised in Singapore, provided they comply with the relevant regulations, ensuring flexibility and convenience for all parties involved.

What are the Types of Share Classes?

Companies in Singapore generally issue two main types of share classes:

• Ordinary shares: These are the most frequently issued shares by companies. Holders of ordinary shares typically have voting rights, allowing them to participate in key decisions during general meetings. They are also entitled to dividends, but the amount depends on the company’s profitability and board decisions. However, ordinary shareholders take on more risk as they are the last to be paid if the company shuts down.
• Preference shares: Typically favoured by investors looking for less risk and more stable returns. Holders of preference shares generally receive dividends before ordinary shareholders, which are often paid at a fixed rate. While preference shares usually do not provide voting rights, they offer greater security during company liquidation, as preference shareholders are prioritised over ordinary shareholders in the distribution of assets.

These share classes enable companies to attract a diverse range of investors by offering different levels of risk and control.

What is the Difference Between Fully Paid Up and Partly Paid Up Shares?

Fully paid up shares are those where the shareholder has paid the full value of the shares before they are issued. On the other hand, partly paid up shares require only partial payment at the time of issuance, with the remaining amount to be paid later as per the company’s terms.

Shares are not required to be fully paid upon issuance. However, the share certificate must indicate whether the shares are fully or partly paid up, ensuring transparency for both the shareholder and the company.

How to Get a Share Certificate in Singapore?

A company secretary is usually responsible for preparing share certificates in Singapore. Initially, they collect necessary documents, such as the shareholder details and company constitution, to verify ownership and ensure the accuracy of the certificates.

Subsequently, the company secretary completes a form for the transfer of shares, which includes critical details like the shareholder’s name and the number of shares issued. This form must then be submitted to ACRA within 14 days.

Following this submission, ACRA reviews and approves the forms, leading to the issuance of an electronic share certificate. Finally, physical copies are printed for distribution to shareholders or for archival purposes in company records.

When Should You Issue a Share Certificate?

There are different situations wherein companies in Singapore may issue a share certificate to formalise the share ownership changes.

Allotment of shares

Companies often issue new shares to raise capital, either by attracting new investors or offering more shares to existing ones. Once the board of directors approves this share allocation, the company secretary must prepare the necessary documents, register the record with ACRA within 14 days, and create the new share certificate with the details of the allocated shares.

Transfer of shares

Shareholders can transfer or sell their shares fully or partially to others or back to the company. A full transfer results in losing shareholder status, while a partial transfer reduces the number of shares held.

The company secretary drafts a board resolution and an Instrument of Transfer and secures stamp duty confirmation from the Inland Revenue Authority of Singapore (IRAS). These documents must then be filed with ACRA. Subsequently, the original share certificate is cancelled, and new certificates are issued for both the transferor and the transferee to reflect share ownership changes accurately.

Lost share certificate

If a shareholder loses their share certificate, they must submit a statutory declaration to the company and apply for a duplicate within 14 days. Upon notification, the company secretary initiates a board resolution to cancel the original and issue a replacement certificate.

For shares valued over S$500, additional safeguards are sometimes required. The directors may place a newspaper advertisement about the loss and the intent to seek a duplicate after 14 days. Additionally, they must provide a bond worth at least the current market value of the shares, indemnifying the company against any loss that might occur if the original certificate surfaces.

Partner with Segovia for Comprehensive Corporate Solutions

Will you be issuing a share certificate soon? At Segovia, we offer expert secretarial services to ensure seamless management and compliance with Singapore’s regulatory requirements. Whether you’re setting up new shares, handling transfers, or needing to replace a lost certificate, our professionals are ready to assist.

And if you’re still in the process of setting up a new company, our incorporation services in Singapore integrate seamlessly to prepare your business for successful operations right from the start. Trust Segovia for comprehensive support in all your corporate needs.