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A Guide to Issuing Share Certificates for Singapore Companies

A Guide to Issuing Share Certificates for Singapore Companies

When you first complete the incorporation of your company, you will have to issue share certificates. As your company grows, you might also want to raise more capital to run your business by selling parts of your company via shares.

To understand more about shares, this article will go through what a share certificate is, when and why they are issued, and what it means for companies issuing these share certificates.

What is a Share Certificate?

To put it simply, a share certificate is a verification that proves you own shares of a company, and that you are a certified shareholder of that company. As an investor, you will realise that these certificates are now electronically deposited into your Central Depository (CDP) accounts instead of receiving a hardcopy document. Note that paper share certificates are only issued by private limited companies. If the company that you have bought in is publicly listed, you will be issued the electronic version instead.

If you are starting a new company, you will first need to issue a share certificate when your company is being incorporated. After that, share certificates will be issued when you give out, transfer or sell shares of your company.

ABC Pte Ltd Sample Share Certificate
Sample of a Share Certificate in Singapore

What Information Do You Need To Include in a Share Certificate?

  1. The company’s name
  2. The company’s registration number
  3. The authority under which the company is constituted
  4. The date the certificate was issued
  5. The company’s registered address
  6. The shareholder’s name and address
  7. Number of shares being issued
  8. The class of shares
  9. Whether the shares are fully or partly paid up
  10. The amount (if any) unpaid on the shares

Something to note: Before March 2017, every share certificate must be stamped with the company’s official or common seal. Since 2017, companies and limited liability partnerships (LLPs) will not have to use a seal. Instead, the signature of 2 Directors, 1 Director and 1 Secretary OR 1 Director and 1 Authorised Person is enough to ensure that the share certificate is confirmed and valid.

What Kind of Shares Can Be Issued by Companies?

Companies usually issue either ordinary or preference shares, and the class name will be included in the share certificate as well. Of course, there are other classes of shares that are less common such as redeemable shares and management shares, if the company does issue such shares.

Do Shareholders Need To Fully Pay for the Shares Bought Upfront?

Not necessarily.

A shareholder can pay for shares either fully or partially. If the shareholder has fully paid for the shares, it will belong fully to the shareholder. Note that shareholders can choose to pay for only a portion of the total shares but still receive a share certificate that states the total amount of shares bought. In these cases, the share certificate should indicate whether the shares have been fully paid for, to minimize any miscommunications and legal consequences.

Who Prepares the Share Certificates in a Company?

A company secretary prepares the share certificates in a company. Therefore, it is very important to ensure you have a professional company secretary that is capable of preparing and issuing the certificates. The original copy of a share certificate can be kept with the company by the company secretary as well.

The company secretary will be in charge of managing the shares certificates, which also means this person will be responsible for the regulatory matters that come with this responsibility. The person should also have a clear record of all the shareholders in the company’s registry and how much shares each of them hold.

Share certificates are usually signed by any 2 directors of the company. Nonetheless, if your company only has one director, the company secretary can take the place of the second director to sign the certificate.

We understand that it can be difficult to find a trusted company secretary to handle all your company’s important documents, more so if you are a new entrepreneur. At Osome, we assign a dedicated and experienced secretary catered to your needs, so that you will not have to worry about compliance issues but focus on managing your company.

When Do You Need To Issue Share Certificates?

Apart from when you first complete the incorporation of your company, these are the times when share certificates are issued:

  1. When shareholders transfer shares amongst themselves.
  2. When shareholders transfer shares to people outside the company.
  3. When the company decides to issue new shares.
  4. When a shareholder loses their share certificate.
  5. When a shareholder accidentally destroys the share certificate.

What Should You Do in the Allotment of Shares to Raise Capital?

According to the Singapore Companies Act, all directors listed in the company’s board of directors must approve before shares can be allotted. Companies allot shares generally to raise its share capital. This means that the company issues shares, shareholders pay to own shares in the company, thus creating cash flow for the company.

When the board of directors decides and approves the decision to issue new shares, the company secretary will have to do the following:

  1. Prepare a Director’s Resolution in Writing (DRIW) to provide proof that a share has been allotted to the shareholder in question.
  2. Lodge the record with the Accounting and Corporate Regulatory Authority (ACRA) with a return of allotment within 14 days of issuance.
  3. Prepare the new share certificates.

This return of allotment form will include all the details regarding the share issuance. This includes:

  • Full name, proof of identification, nationality and address of each of the company’s members who own shares
  • How many shares are to be allotted to the shareholder
  • Amount to be paid for the shares, if the shares are to be paid for
  • The amount that was unpaid or partially paid for the shares
  • The class of shares
  • Date of share issuance

What To Do to Transfer Shares to Another Person or Company

This happens if a shareholder sells or transfers their shares to another person or back into the company.

Similarly, the company secretary will have to:

  1. Prepare the Director’s Resolution in Writing (DRIW) recording the share transfer.
  2. Prepare the Instrument of Transfer which states both the transferor and transferee’s consent in transferring and accepting the shares.
  3. Obtain a stamp duty acknowledgement from the Inland Revenue Authority of Singapore (IRAS).
  4. Record this with ACRA.
  5. Cancel the original share certificates.
  6. Prepare the updated certificates with new details.

Shares can be fully or partially transferred. In any case, the company secretary will have to cancel the original certificate and issue a new updated version stating details of the new shares.

Is There a Deadline To Issue Your Share Certificates?

Yes, according to the Companies Act.

Make sure that you issue and deliver all share certificates to shareholders on time.

These are the deadlines:

  • Within 60 days after shares are allotted
  • Within 30 days after the secretary has lodged the transfer of shares with ACRA

Note these deadlines as it is an offence to not comply with the deadlines under the Companies Act. Affected companies and employees in question are considered to be guilty, facing a fine not exceeding $1,000 or a default penalty.

Always remember that the company secretary is the person solely in charge of issuing and keeping a track record of where each share is allotted or transferred to. Therefore, a company secretary is of utmost importance to any company, regardless of big or small.

If you are unsure of the process of issuing shares or are unable to find a trustworthy and experienced company secretary in Singapore, feel free to contact our professional experts who can certainly point you in the right direction! It does not matter if you have a current secretary and wish to switch your secretary for whatever reason, as the transition is seamless as well. All you need is to contact us at Osome, and we handle the rest. By the way, we also provide bookkeeping and accounting services in Singapore to support entrepreneurs with all the paperwork 24/7 letting you, the entrepreneur concentrate on growing your business.

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