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Capital Management: Transferring Of Shares And Shares Certificates

There are a number of ways by which a company can modify its share capital, which it uses for everyday business. These ways, stipulated by the Companies Act of Singapore, require strict compliance every single time. Any act committed that is not within the limits defined by the Companies Act on Capital Management are deemed unofficial, ineffectual, and may be subject to penalties.

Two of the ways by which a company can modify its share capital are share transfers and via shares certificates.

Transfer of Shares

A company’s shareholder has the right to transfer his or her shares to anyone so long as the transfer coincides with the rules set by the company’s Articles of Association, as stipulated by Section 18(1)(a) of the Companies Act of Singapore. Shares, after all, are considered a personal property of the shareholder.

There are, however, certain restrictions that must be observed when transferring shares. One is to first secure an approval from the Board of Directors, who will have to pass a board resolution during a board meeting to do so. Second is to have a pre-emption clause in the Articles specifying that any member with the intention to transfer shares must offer these first to current members. According to Articles 20 to 23 of Table A, a company’s Articles must provide the necessary provisions regarding the procedure.

In certain cases, a company’s board of directors could also refuse such transfer provided certain circumstances. These include the sale of not yet fully paid-up shares to someone they do not approve of. The board could also refuse the transfer of shares on which the company has a legal right to claim according to Article 22 of Table A.

Furthermore, the refusal of the registration of share transfer is also possible. In such cases, the company is required to furnish the seller and recipient with a notice of refusal up to a month following the date of the lodgement of shares transfer.

Shares Certificates

Each shareholder is entitled to a certificate of the shares he or she owns in a company. This certificate, which represents formal ownership of the shares, bears the common seal of the company.

Each certificate must also bear the following details: date of issue, company name, authority under which the company is constituted, registered address of the company, class of shares, extent to which shares are paid up, name of registered member, number of shares, and certificate number.