A Guide to Singapore Share Certificates

The Share Certificate for Singapore Companies

A Share Certificate is proof of a member’s ownership of a company’s share. It is a document issued by the company to its shareholders, and the document certifies registered ownership of shares starting from a particular date.

The selection between physical and electronic share certificates is contingent upon the company’s and its shareholders’ preferences and needs. Both options are legally binding in Singapore, adhering to the applicable regulations and guidelines governing corporate transactions within the country.

For shareholders, a crucial step is assigning shares, and once that’s completed, each participant should receive a share certificate. In Singapore, the legal process for issuing share certificates is regulated by Company Law.

What Details Does a Share Certificate Have?

As of March 2017, companies are no longer required to stamp share certificates with a common seal. Instead, certificates must be signed by two directors, or by one director and a company secretary and will include the following:

• The name of the company and the authority under which the company is constituted;
• The address of the registered office of the company in Singapore, or, where a branch office issues the certificate, the address of that branch office; and
• The class of the shares, whether the shares are wholly or partly paid up, and the amount (if any) unpaid on the shares.
• Shareholders name, address and identification number.
• The number of shares, share certificate number and date of issue.

What Kind of Shares Can Be Issued?

Companies usually issue 2 types of shares, ordinary and preference shares, which will be indicated in the share certificate.

Other less commonly issued shares are redeemable and management shares may also be reflected if the company issues such shares.

Related Read: What Types of Shares Can a Singapore Company Have?

Share Payment

Shares do not need to be fully paid-up before they are issued. Shareholders can choose to pay for them fully or partially. If the shareholder obtains fully paid-up shares, the shares will completely belong to them.

On the other hand, shareholders of partially paid-up shares will still obtain a share certificate that typically indicates the total number of shares bought and whether they have been fully paid for.

How is it Issued?

1. Certificate Preparation: The company meticulously prepares the share certificate, incorporating all the essential details mentioned earlier. The certificate must accurately reflect the shareholder’s ownership status and the class of shares held.
2. Shareholder Information Verification: Prior to issuing the share certificate, it’s crucial to verify the shareholder’s information. This entails confirming their identity, address, and the precise number of shares they own.
3. Obtaining Signatures and Seals: Once the share certificate is prepared and the shareholder’s information is validated, authorized company representatives affix their signatures to the document. The company seal is also impressed upon the certificate to reinforce its authenticity.
4. Share Certificate Issuance: The completed share certificate is then officially issued to the shareholder. For physical share certificates, they are printed and delivered to the shareholder in person. Electronic share certificates are typically transmitted via secure email or online platforms.
5. Compliance with ACRA Regulations: By meticulously following these steps, companies can guarantee that share certificates are issued accurately and in compliance with the regulations established by ACRA (Accounting and Corporate Regulatory Authority).

When is a Share Certificate Issued?

Share certificates are generally issued at the time of incorporation and thereafter issued during the allotment and transfer of shares.

Allotment of Shares

Allotment of shares happens when new shares are issued by a company, resulting in an increase in the total number of issued and paid-up shares. The issuance of shares is normally done to raise more share capital by selling new shares to existing or new shareholders.

The issuance of shares is proposed by the board of directors, but the board requires the existing shareholders’ approval to issue new shares as per section 161 of the Companies Act.

The board must secure a mandate for this purpose from the shareholders and may need to convene an Extraordinary General Meeting (EGM). The board should follow any procedure stipulated in the company’s constitution in this regard.

Following the issuance and subscription of shares by new or existing shareholders, the company secretary must prepare the following documents:

1. A Director’s Resolution in Writing (DRIW) recording the allotment of shares;
2. Lodgement with Accounting and Corporate Regulatory Authority (ACRA) a “return of allotment” within 14 days; and
3. Preparation of new share certificate(s)

The “return of allotment” form contains the following information:

1. Number of shares in the allotment;
2. Amount (if any) paid or deemed to be paid and the amount unpaid on the allotment of each share;
3. The class of the shares, whether the shares are fully or partly paid-up and the amount (if any) unpaid on the shares.
4. Full name, identification, nationality and address of, and number and class of shares held by each of the company’s members.

After issuance and lodgement with ACRA, there is a time limit within which the new share certificates need to be issued.

Transfer of Shares

Transfer of shares happens when one shareholder transfers or sells his title/share of ownership in the company to another individual or a company.

Such transfers happen for several reasons, such as:

1. A minority shareholder may transfer his share to realize the value of his investment
2. The founders may exit the company by selling their shares to new investors
3. Raise new capital by selling a part of their stake in the company

The company secretary shall prepare the following documents to effect the transfer:

• Directors’ Resolutions in Writing (“DRIW”) noting the Transfer of Shares
• The Instrument of Transfer
• Stamp duty payment must be acknowledged via the IRAS e-Stamping portal, a requirement for transferring shares in Singapore.
• Lodgment with ACRA
• Cancellation of original share certificate
• Preparation of new share certificate(s)

The shareholder may partly or wholly transfer his share. Regardless of the type of transfer, the company secretary will call for and cancel the original share certificate.

In the case of a partial transfer, new share certificates will be issued to the transferor and transferee to reflect the new distribution of shares.

In case the shareholder has wholly transferred the shares, the transferee or the new shareholder will be issued with a share certificate as evidence of his title in the company.

After lodgment with ACRA, there is a time limit within which the new share certificates need to be issued. The company secretary shall also update the register of transfers and register of members.

What is the Time Limit for the Issuance of a Share Certificate?

Private limited companies should ensure that all necessary share certificates are issued and delivered promptly. They can issue only 1 certificate for all shares issued or transferred at any one time unless a shareholder requests separate certificates.

As per the Companies Act, share certificates must be issued within 60 days after the allotment of shares and 30 days of the secretary lodging the notice of transfer of shares with ACRA. Failure to meet these deadlines can result in fines up to S$1,000 or other default penalties.

Non-compliance with this requirement is an offence, and the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$1,000 and also to a default penalty.

What Happens if the Share Certificate is Lost or Destroyed?

If a share certificate is damaged or destroyed, the company must pay up to S$2 to obtain a duplicate certificate from the owner, together with the following:

• A statutory declaration that the certificate has been damaged or destroyed, that it was not pledged, sold, or thrown away, and that reasonable searches were made if lost.
• An undertaking in writing obtained from the shareholder stating that if it is found or received later, it will be returned to the company.

If the value represented by the share certificate exceeds S$500, then the company directors may require the applicant to place an advertisement in the newspaper.

This advertisement should state that the certificate has been lost or destroyed and that the owner will apply for a duplicate certificate after the expiration of 14 days after the advertisement’s publication.

In addition, the director may also require the applicant to provide a bond for an amount equal to the current market value of the shares, indemnifying the company against loss if the original certificate is produced.

A share certificate in lieu of the lost certificate is issued by the company secretary who must also prepare a DRIW noting the loss of the share certificate and declaring the previous one void before issuing a duplicate.

Executing Share Certificates

As of March 2017, companies are no longer required to stamp share certificates with a common seal. Instead, certificates must be signed by two directors, or by one director and a company secretary.

Getting the Right Guidance is Key

Companies should ensure that they issue share certificates properly and accurately, as it is a legal document. With the right guidance, companies can easily understand the process of issuing share certificates in Singapore and ensure that their shareholders are protected.

Manage your share certificates properly and promptly with InCorp’s team of experts today!

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