SHARE CERTIFICATE: Overview, Templates, Rates, Formats(+Quick Tool)

Share Certificate
Image Credit: Company Registration Online

It is vital that you obtain a share certificate when registering a new company. This certificate is an investment tool that helps you to earn higher dividends than a traditional savings account. The longer you save, the more you earn. This article is a quick tool highlighting its overview, templates, rates, format, as well as how a share certificate calculator works.

Overview

A Share certificate is a written document that is attested on behalf of a firm or corporation. It acts as legal proof for ownership stating its number of shares. Also, it can be called a ‘stock certificate’. Or you can equally refer it to a document issued by a company evidencing that the person’s name in such certificate is the owner of the shares of the Company as stated in the certificate.

Therefore, if a firm issues stocks in the market, investors who purchase them are given shares. Share certificates act as the receipt of purchase indicating the ownership of stocks in a particular company. However, the following companies can use these documents.

Private Company Limited by Shares

The phrase “Limited by shares” means that the liability of the shareholders to creditors of the company is limited to their original capital.  It refers to a company which liability of its members is limited to the amount (if any) unpaid on the shares held by them.

Conversely, it means that in the event of dissolving the company, the members are only responsible for paying unpaid shares (if any). Also, this type of company does not offer its shares to the members of the public. Its main advantage is the limited liability of shareholders.

Unlimited Liability Companies.

Consequently, this company allows its members or shareholders to have joint responsibilities in covering all depts (if any) irrespective of their capitals. Furthermore, an unlimited company presents ahigher risk than a limited company.  However, their finances of an unlimited remain private, and therefore, it may be a preferable business structure. 

Thus this means that an unlimited liability company has no restriction on the responsibility of the members of the company. In addition, its members are responsible for all the debts of the company until the debts are fully cleared.

Public Company Limited by Shares.

This is a limited liability company that offers shares to the general public and has limited liability. Besides, a PLC offers shares to the general public through trading on the stock market.

Likewise, It similar to the private company limited, but it can invite the members of the public to subscribe to its shares as stated above. In fact, there is no limit to the membership of the company.

Difference between private and public companies

There are some key differences between private and public companies in terms of their operation. Below are Some of the main differences between private limited companies and public limited companies.

  • Firstly, public companies offer their shares for sale to the general public
  • public companies appoint a suitably qualified secretary
  • They hold their annual general meeting is in public whereas this is generally not a requirement for private companies
  • Public companies require two(2) directors whereas a private company requires only one
  • For public companies, they have six months to file their annual accounts but private companies have nine months
  • public companies cannot accept an undertaking to do work or perform services as consideration for allotment of shares
  • Lastly, Public companies do not purchase their own shares out of capital

How to Earn Money With Share Certificates

Conversely, a share certificate money is the same as an annual percentage yield (APY). The dividend rate on a share certificate is a fixed rate that applies for the entire term of the certificate.

Besides, some certificates come with an adjustable rate. The adjustable rate benefits the certificate holder if the interest rates rise. However, they act to their detriment if interest rates fall. Also, a fixed-rate return is beneficial if interest rates decline, although investors lose out if it rises during the term of their certificate.

Howbeit, the return earned on a share certificate highly depends on the frequency of compounding. As a result, the compounding terms may also range from daily to yearly.

The compounding period that is equally important for investors is daily compounding. Thus, this provides the highest effective return accordingly.

Therefore, share certificate holders might also be able to withdraw dividend payments earned on their certificates without a penalty.

Share Certificate Calculator

Share Certificate calculator is an easy tool that helps you quickly determine what potential growth. Besides, share certificates are a good savings option as long as the investor does not need the money deposited in the certificate before the certificate’s maturity date.

Moreover, if an investor anticipates more flexible access to funds, an investment into a money market account seems a better option. In addition, this share certificate calculator below is an example of the future value of an amount invested today.

PRESENT DATE: 16/42022

FUTURE DATE16/4/2031

PRESENT VALUE: $200,000.00

RATE OF RETURN: 10.000 %

COMPOUNDING PERIOD: Annual

THE FUTURE VALUE IS $172,900.56.

Calculator disclaimer

The figures shown are hypothetical and should not be applicable to your individual situation. However, we do not guarantee its accuracy. Therefore, please do consult a financial professional prior to relying on these illustrations.

Details in a share certificate

A share certificate should contain the below informations.

  • Name of issuing Company
  • Folio number of member
  • CIN no. (Corporate Identification Number) of the Company
  • Address of the company
  • Name of owners of such shares
  • An amount paid on the shares
  • Distinct number of the shares

Share Certificate Format

A share certificate must bear the company’s name. Its registered office address is be printed at the top. Its face value of each share, the amount paid up and the name of shareholder is also be printed along with the number of shares issued.

Below is a sample of of a share certificate format.

Share Certificate Format
Image Credit: Inform Direct(Share Certificate Format)

Share Certificates Rates

You can take advantage of more yields by creating share certificates of different rates. This will enable you to manage your cash flow and ride the tide of rates as it increases. Therefore, It requires no monthly service charge, although early withdrawal penalties are applicable.

Importantly, the Share Certificate allows you to earn high-interest rates if you agree to leave in money for a given period of time. Thus, the share interest rate tends to be slightly higher than other forms of savings with a longer term of the share certificate.

  • TERM($1000 MIN)
    APY
  • 3 Months0.10%
  • 6 Months0.30%
  • 12 Months0.50%
  • 24 Months0.65%
  • 36 Months0.75%
  • 48 Months0.85%
  • 60 Months0.95%

Template of Share Certificate

A share certificate template is an important written document usually issued to shareholders of a company to attest their share in the business. Consequently, the certificate is signed on the behalf of the corporate. Here is a typical example of a share certificate template.

Template of Share Certificate
Image Credit: Pinterest(Template of Share Certificate)

Informations contained in this certificate incudes:

  • Name and address of the shareholder,
  • The number of shares, company information,
  • Face value of the share, par value of a share
  • Date of transfer of ownership.
  • Signature of shareholder and witness

The share certificate template is drafted with a company logo and signatures of the authorized persons.

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Summary

A share certificate has a great commercial value with legal importance. The legal document does not allow you to have any alteration in it. For instance, if they allow any alteration, it has no importance in the market. They are also used as a bond to give surety during business dealing. Investors who wish to manage their shares can use the share certificates as a necessary tool. They can also use this certificate in their portfolio to prove authenticity. Lastly, the share certificate formats provided above is a practical guide to preparing yours.

Disclaimer!

This article is solely for informational purposes. The interactive share certificate calculators are self-help tools for independent use. They are not intended to provide a bit of investment advice. Hence, we encourage you to seek advice from qualified professionals regarding your personal finance issues.

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