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When a person acquires shares in a company, they may be issued with a share certificate. This certificate is legal proof of ownership of the shares in question and must contain specific information.
Keep reading to find out when and why share certificates are issued and what details they must include.
What is a share certificate?
A share certificate is a legal document that represents proof of ownership of the number of shares indicated. It's issued by the company and contains a range of important details including the shareholder's name and address, the number of shares they hold and the price paid.
Download this template at Lawpath
When should I use a share certificate?
A share certificate is issued when you acquire shares in a company. In most cases, companies are required to issue a share certificate to a new shareholder within two months.
Share certificate vs deed of accession
A share certificate is a different document to a deed of accession. The latter is a document a new shareholder may be required to sign in order to indicate that they are happy to adhere to the terms and conditions of an existing shareholders agreement.
This eliminates the need to create a new shareholders agreement and ensures that all shareholders have the same rights and responsibilities. Find out more in our deed of accession guide.
What does a share certificate include and not include?
The information required to be included in a share certificate is outlined in the Corporations Act.
- The name of the company and the fact that it is registered under the Corporations Act
- The name and address of the shareholder
- The number of shares they own
- The class of shares
- The amount paid per share
- Any amount that is still unpaid (if applicable)
- The signatures of two company directors, or a director and a secretary, or a sole director (if the company only has one director)
How important is a share certificate?
A share certificate is a very important document for both companies and shareholders. It provides proof that the shareholder legally owns the shares in question, and contains key details about the number of shares owned and the price paid.
Issuing a share certificate is also a requirement under Section 1071H of the Corporations Act.
Do I need a lawyer for a share certificate?
A share certificate has to satisfy specific requirements that outline the information it must contain. If you're unsure of those requirements or need help determining what details to include, seek legal advice.
Get access to customisable share certificate templates online
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How do I write a share certificate?
There are a couple of options available when preparing a share certificate. The first option is to do it yourself using an online template. You can use these sites to customise a certificate for your company — some templates are available for free while others will cost you.
However, you'll need to do your research to make sure that you only use templates from reputable websites and that the certificate you create complies with all relevant regulations. If you're unsure about this, seek legal advice for clarification.
The second option is to get a lawyer to draft the certificate on behalf of your company. That way you can be sure that the document satisfies all essential requirements.
Where to get free legal documents and templates like a share certificate
There are several websites where you can access a wide range of legal document templates, including share certificates. Some of the available options include:
- Lawpath. Lawpath allows you to customise a share certificate for your company. However, you'll need to sign up for a free online account before you can create a certificate.
- Wonder.Legal. The share certificate template available from Wonder.Legal can be filled out online, and is then delivered in Word and PDF format.
Does ASIC issue share certificates?
No, it is the company's responsibility to issue share certificates.
How long does a company have to prepare a share certificate for a new shareholder?
Under Section 1071H of the Corporations Act, a company has up to two months to issue a share certificate in most circumstances.
What happens if I lose my share certificate?
Under the Corporations Act, the company is required to issue a new certificate if yours is lost or destroyed. However, you'll need to supply a written statement to the company outlining that the certificate has been lost or destroyed, that you've made proper searches to find it, and that you'll return it to the company if you ever find it.
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