What share certificates mean in practice
In practice, the share certificate serves as proof that the holder owns a certain number of shares. When shares are transferred, the share certificate may need to be handed over to the buyer as part of the transaction.
At the same time, it is important to distinguish between the share certificate and the share register. It is always the share register that determines who is formally a shareholder, regardless of who holds the share certificate.
Important features of share certificates
Share certificates have a number of characteristics that affect how they are used and handled.
- Physical document representing a shareholding
- Issued by the company to the shareholder
- May need to be handed over on transfer
- Often replaced by digital registration in modern companies
- Has no independent legal effect without registration in the share register
Once these aspects are understood, it becomes clear what role share certificates play and what limitations apply.
When share certificates are still used
Worth bearing in mind
Share certificates mainly occur in companies that are not connected to an electronic securities system. In many older limited companies, share certificates have been issued historically and may still be in circulation if they have not been cancelled.
In modern structures, share certificates are less common, but they can still play a role in transfers, generational handovers or in companies where ownership has not been digitised.
Frequently asked questions
Are share certificates mandatory in limited companies?
No, share certificates are not mandatory and are used less and less in modern companies.
Do share certificates apply in listed companies?
No, listed companies use electronic registration instead of physical share certificates.
What happens if a share certificate is lost?
Special measures may be required to declare the certificate invalid and issue a new one.
Is a share certificate the same as a share register?
No, the share register is the legally decisive list of owners.
Can share certificates be cancelled?
Yes, when the company moves to digital registration, share certificates can be cancelled by formal decision.