Share certificates serve as formal proof of share ownership within a company. Issued to shareholders, these documents confirm the holder’s entitlement to a specified number of shares, and typically include key details such as the shareholder’s name, share class, and any specific terms attached to the shares. Often printed on special paper to prevent forgery, share certificates underscore a shareholder's stake in the company.
What is a share certificate?
A share certificate, or stock certificate, is an official document issued by a company, either physically or electronically, to confirm ownership of a specific number of its shares. This certificate, signed by an authorised representative, legally establishes the shareholder’s ownership from the issue date. While it displays essential details like the shareholder's name and share count, it represents proof of ownership rather than the stock itself. Companies issue these certificates within two months of a share issue or transfer, and they may provide one certificate per shareholder or multiple certificates if shares span different asset classes.
Components required in share certificates
It is important to note that a stock certificate simply contains information about the shareholder and the number of shares they hold; the certificate is not the stock itself. In India, share ownership certificates provide the following details about the transacting parties:
- Issuing company name
- Corporate Identification Number (CIN) - This is an alpha-numeric allotted to each company once it registers with the Registrar of Companies (ROC), which works under the aegis of the Ministry of Corporate Affairs (MCA).
- The registered address of the company
- Legal name of the shareholder
- Share certificate number - This is a unique code that the company assigns to each certificate.
- Number of shares purchased by the investor
- Quantum of money spent by the investor to purchase the shares
