This blog post delves into the significance of a share certificate, also referred to as a shareholder certificate. It stands as a tangible document that affirms an individual's ownership of a specific quantity of shares within a company, effectively representing their stake in the company's capital.
A share certificate, also known as a shareholder certificate, is a document that indicates someone's ownership of a specific number of shares in a company. The certificate serves as proof of ownership and represents a portion of the company's capital.
In the past, physical paper certificates were issued as evidence of share ownership. These certificates contained details about the number of shares the holder possesses, as well as the type of shares and other relevant information. However, with the rise of digital systems and the use of electronic share registers, physical certificates have become increasingly less common. Many countries have transitioned to electronic share systems, where shares are maintained in a central database and investors receive electronic accounts instead of physical certificates.
Fig. 1: Physical paper certificates
Why are Share Certificates important for companies?
Share certificates are typically utilized to separate economic rights from voting rights. Additionally, issuing share certificates is a significant aspect of the process of establishing an employee participation plan, such as an Employee Stock Ownership Plan (ESOP), Stock Appreciation Rights (SAR), or a STAK (Stichting Administratiekantoor), which is a foundation that holds and manages shares for the benefit of employees. This is where Share Council comes into play. Share Council provides a platform that enables companies to easily issue share certificates to employees as part of an employee participation plan.
With Share Council, companies can conveniently keep track of employee ownership, and employees can easily trade shares, enhancing their engagement through wallet and vesting features.
Share certificates are essential documents for both shareholders and companies. Understanding the significance of share certificates and having secure storage for these documents is crucial for business owners. Share Council allows companies to streamline and automate the process of issuing and managing share certificates as part of their employee participation plan. This can contribute to increased employee engagement and stimulate organizational stability and growth. Book your demo to see what Share Council can do for you.