Share Certificate, Share Warrant and their key differences

A Share Certificate is issued against the shares, regardless of the fact that the shares are fully paid up or partly paid up. Conversely, Share Warrant is issued by the public company only against fully paid up shares.

Definition of Share Certificate :-

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 the case where the shares are held in dematerialisation system. The share certificate contains the following details in it, they are:

• Company name
• Date of issue
• Details of the member
• Shares held
• Nominal value
• Paid up value
• Definite number.

The share certificate is issued by the company within 3 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.

Definition of 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 previous approval of the Central Government (CG) is required, along with that the issue of a share warrant must be authorized in the articles of association 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.

Key Differences Between Share Certificate and Share Warrant :-

The following are the major differences between Share Certificate and Share Warrant:

1. A share certificate is the documentary evidence which proves the possession of the shares. A share warrant is the document of title which states that the holder of the instrument is entitled to the shares.
2. The issue of share certificate is compulsory for every company limited by shares but the issue of a share warrant is not compulsory for every company.
3. A Share Certificate is issued against the shares, regardless of the fact that the shares are fully paid up or partly paid up. Conversely, Share Warrant is issued by the public company only against fully paid up shares.
4. Share Certificate can be issued by both public and private companies, whereas Share Warrant is issued only by the public limited company.
5. Share Certificate is to be issued within 3 months of the allotment of shares, but there is no such time limit specified in the Companies Act for the issue of Share Warrant.
6. A share certificate is not a negotiable instrument. As opposed to share warrant, is a negotiable instrument.
7. For the issue of a share warrant, prior approval of Central Government is a must. On the other hand, Share Certificate does not require such type of approval.
8. A share certificate can be originally issued, but a share warrant cannot be issued originally.