If you own or purchase shares, then you’ll want proof of it with a certificate, but just what is a share certificate? Find out with our simple guide.
How do you get a share certificate?
Shares aren’t tangible goods, so you’ll need a share certificate to prove your ownership, that is, a piece of paper that clearly states you are the owner. It’s also known as a stock certificate. If a company sells shares in the market, then it will need to be ready to issue share certificates.
If you buy a share, or have a company that sells shares, then you must supply, or can expect to be supplied with, a share certificate within two months of the purchase, issue, or transfer. This deadline is outlined in the Companies Act 2006.
What does a share certificate look like?
A share certificate is a relatively straightforward document and it is perfectly acceptable to use a share certificate template. UK companies can then insert the required information. This includes:
Company registration number
Company registered office
Name and address of shareholder
Quantity of shares issued
Nominal value of shares
Type of shares
Shares paid status, i.e., paid/fully paid/unpaid
To complete a share certificate template, UK businesses need to add two signatures, at least one of which must be from an executive. The second can be from another executive, a witness, or the company secretary.
A share certificate can feature the company logo and seal if you have one. There is a large variety of share certificate designs, and while the aesthetics do not impact the importance of the document, you might want to create one that aligns with the rest of your brand’s identity.
How many share certificates do I need?
You can have just one share certificate per type of share that you own, unless you choose to request for a certificate for every individual share. If you are certifying the purchase of multiple share types (e.g., ordinary shares and redeemable shares), you will need a separate certificate for each type, though not for each individual share within each category.
Are there lost share certificate penalties?
There are no penalties for losing your share certificate, but you will need to undergo an authorisation process before the company will issue you a lost share certificate replacement. Similarly, you should request a new certificate if you have damaged your current copy, and you will be required to send it back to the company before you receive a new version, so they can ensure it is destroyed.
Do all share certificates have to be a physical document?
No, a share document doesn’t have to be a hard copy that you can physically hold. In fact, as of 2023, there will be no more physical share certificates issued within the EU, as part of the CDDR (European Central Securities Depositories Regulation). At the moment, it’s unknown whether Britain will follow this rule following Brexit.
Selling share certificates
Shareholders may choose to sell their shares at any time, and in doing so are no longer in ownership of them, which makes their certificates invalid. When shares are sold, the share certificate originally presented to the initial owner is no longer accurate. However, companies should still keep these on record, marking them as “cancelled”. To be clear, the selling of shares is for the share itself, not for the certificate, which holds no value by itself.
That said, selling share certificates is an established hobby when it comes to particularly historic documents, as they used to be far more ornate. There is unlikely to be a demand for your modern day, disused certificate, however.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.