In short: A share certificate is a document a company gives each shareholder as evidence of the shares they hold. Under the Companies Act 2006, a company must usually issue certificates within two months of allotting shares or registering a transfer. The certificate is evidence of ownership, but the register of members is the legal record.
What is a share certificate?
A share certificate is a document issued by a limited company to a shareholder. It confirms that the person named on it holds a certain number of shares of a certain class in the company. It is sometimes called a stock certificate.
The certificate is important evidence, but it is not the whole story. The legal record of who owns shares is the company's register of members. If the certificate and the register disagree, the register is the starting point, so both must be kept up to date.
When must a company issue one?
Under section 769 of the Companies Act 2006, a company must generally complete and have ready share certificates within two months after allotting shares. Section 776 sets a similar two-month deadline after a share transfer is lodged with the company. There are limited exceptions, for example where the terms of issue say otherwise.
In practice this means you need certificates:
- when the company is formed and the first shares are issued to the founders
- when new shares are issued later, for example to an investor
- when existing shares are transferred from one person to another
What should a share certificate show?
There is no single official template, but a share certificate normally includes:
- the company's full name and registered number
- the shareholder's name (and address, if you choose to include it)
- the number of shares held
- the class of shares (for example ordinary, preference, A or B shares)
- the nominal (par) value of each share, such as £1
- the amount paid up on each share
- a unique certificate number
- the date of issue
- signatures, in line with the company's articles
For a company with articles based on the model articles, a certificate is usually sealed with the company seal or signed in a way permitted by the Companies Act, such as by two directors, or one director in the presence of a witness.
Share classes and why they matter
Many small companies only have ordinary shares. Others create different classes so that shareholders can have different rights, such as voting rights, dividend rights or rights to capital on a sale. The certificate should state the class clearly, because it affects what the holder is entitled to. If you plan to use different share classes, check that your articles of association allow them.
Issuing new shares
When a company issues (allots) new shares, it normally needs to:
- Check the directors have authority to allot shares, under the articles or a shareholder resolution.
- Deal with any pre-emption rights (existing shareholders' right to be offered new shares first).
- Pass the necessary board and shareholder resolutions.
- File a return of allotment (form SH01) with Companies House within one month.
- Update the register of members.
- Issue a share certificate to the new shareholder.
Transferring shares
When a shareholder sells or gives shares to someone else, they usually sign a stock transfer form. Stamp duty may be due on the transfer if the price is over £1,000, at 0.5% of the price, rounded up to the nearest £5. Gifts are usually exempt, but the form may still need a certificate. The company then:
- Approves the transfer, if the articles require it.
- Updates the register of members.
- Cancels the old certificate.
- Issues a new certificate to the new holder (and a balance certificate to the seller if they keep some shares).
Transfers are reported to Companies House on the next confirmation statement, not straight away. If the transfer changes who has significant control, the PSC register and Companies House must be updated sooner.
Lost or damaged certificates
If a certificate is lost, the shareholder can ask the company for a replacement. Companies often ask the shareholder to sign an indemnity confirming the original is lost and protecting the company if it turns up. The new certificate should be marked as a replacement or duplicate.
Common mistakes
- Never issuing certificates after formation.
- Forgetting to cancel the old certificate after a transfer.
- Showing the wrong share class or nominal value.
- Updating the certificate but not the register of members.
How Form My Company can help
Every formation package includes share certificates for the first shareholders. Need certificates later? Our Share Certificates service prepares them correctly for £80. For new shares or transfers, our Share Issue and Transfer service handles the resolutions, forms, registers and filings for £150.
Frequently asked questions
Is a share certificate legally required in the UK?
Yes, in most cases. A company must generally prepare share certificates within two months of allotting shares or registering a transfer, unless an exception applies.
Is a share certificate proof of ownership?
It is evidence of ownership, but the company's register of members is the legal record. Both should match.
Who signs a share certificate?
It depends on the articles. Commonly two directors sign, or one director signs in front of a witness, or the company seal is used.
What happens if I lose my share certificate?
Ask the company for a replacement. The company may ask you to sign an indemnity before it issues a duplicate.
Do I send share certificates to Companies House?
No. Certificates are kept by the shareholder. Companies House receives a return of allotment for new shares, and share transfers are reported on the confirmation statement.