Share Certificate and Share Warrant

Share Certificate and Share Warrant

A share certificate is an instrument in writing, that is a legal proof of the ownership of the number of shares stated in it. Every company, limited by shares, whether it is public or private must issue the share certificate to its shareholders except in case, where shares are held in dematerialization system.

According to Section 45 of the Companies Act, 2013 each share of the share capital of the company shall be distinguished with a distinct number for its individual identification. However, such distinction shall not be required, if the shares are held by a person whose name is entered as holder of beneficial interest as per the records of a company.

The share certificate contains the following details in it, they are:

(i) Company name

(ii) Date of issue

(iii) Details of the member

(iv) Shares held

(v) Nominal value

(vi) Paid up value

(vii) Definite number

The share certificate is issued by the company within three months of the allotment of shares to the applicants, which is issued under the common seal of the company. Normally, the holder of the share certificate is regarded as the member of the company.

Share Warrant

A share warrant is a negotiable instrument, issued by the public limited company only against fully paid up shares. It is also termed as a document of title because the holder of the share warrant is entitled to the number of shares mentioned in it. There is no compulsion of the issue of share warrants by the company. Although if the public company wants to issue share warrants, then prior approval of the Central Government (CG) is required. Further the issue of a share warrant must be authorized in the articles of association of the company.

The holder of the share warrant can take a share certificate only if holder surrenders the share warrant and pays the required fee for the issue of share certificate. Thereafter, the company will cancel the warrant and issue a new share certificate to him as well as the company will enter his name as the member of the company in the register of members, after which he will become a member of the company.

Generally, the holder of the share warrant is not the member of the company, but if the articles of association of the company provide it, then the bearer is deemed to be the member of the company.