A share certificate is a signed document that proves that one has legal ownership to the number of shares indicated on the document, and it signed on behalf of the legal entity. A share certificate can also be called a stock certificate.
A share certificate acts as a proper receipt for ownership and purchase of shares from a specific company. The document should have a particular date of ownership of the shares.
A legal share certificate should have the following essential information, shareholder name and address, number of shares, company name, shareholder registration number, class of shares, certificate number, the amount paid and the particular date when the shares were issued.
The specimen of share certificate refers to the examples or types of shares. The specimen of share certificate include;
Ordinary sharesThese are the most common types of shares. They act as a representation of the voting rights of the company. They only carry one vote per share. The shareholder has the right to participate in the dividends of the company equally. In cases where the company is winding up, the holder has a reason to be given the company assets.
There are many types of shares that a share certificate can represent including:
The shareholder has alternatives when it comes to company dividends payment or when the company is winding up. The holder has voting rights but they are restricted to particular situations or resolutions, and this majorly depends on the terms of the shares.
Partially paid shares
The holder of these kinds of shares has the same privileges as that of an ordinary shareholder, such as voting, winding uprights, and dividends. One can be a shareholder before completely paying the issue price.
Non-voting ordinary shares
These kinds of shares do not give the shareholder any voting rights. The holder is not allowed to be part of the company’s general meeting. The only thing the holder is entitled to is a particular amount of the company’s capital. They are mostly given to employees or principal shareholders family members.
Deferred ordinary shares
These type of shares have fewer rights compared to the ordinary shares. Some of their rights include, right to dividends paid after a particular date, stocks to profits that can only be paid after the payment of all classes of shares.
These kinds of shares cannot be repurchased by the company in the future. The date of redemption can be fixed by the company, or the company can have that as a secret. Sometimes the company can buy back the shares for profit gain.
Redeemable preference sharesThese shares have both the characteristics of redeemable and preference shares. The holder has dividends preferential rights that can either be non-cumulative or cumulative. The company can redeem or retain the shares in the future.
Cumulative Preference Shares
The shareholder has the right to cumulative dividends that have not been fully paid or missed. This right does not apply to all the shareholders since for the ordinary shareholders will only receive dividends when all the profits in cumulative preference shares have been fully paid.
It is a subtype of ordinary shares. The shares have shareholder rights that vary. Alphabetical letters are used to represent classes of shares that have different rights such as dividends, voting, and capital rights.
The shareholders have extra voting rights, and they take part in the company’s general meetings, it has a significant advantage to the shareholders especially if the company issues shares to the outside investors.
In conclusion, shares certificate are always in the form of shares. It plays a significant role in an individual or corporate asset management. It can also be used to claim ownership of shares from a particular company.