12.6.2 (Share vs Share Certificate)

A common man uses 'share' and 'share certificate' to mean the same. It is, therefore, important to note the exact differences between the two. Section 82, in this regard describes a share as a moveable property transferable in the manner provided by the articles of the company and s.84, on the other hand, describes a 'Share certificate' to mean a certificate, under the common seal of the company, specifying any shares held by any member' Section 84 further suggests that a share certificate shall be prima facie evidence of title of the member to such shares. Thus, whereas 'share' represents Property, 'share certificate' is an evidence of the title of the member to such property.

Each share bears a distinctive number and it is not the same as share certificate number, the two are different. In fact, a share certificate may be an evidence of many shares, say 50, 100 or even 1 lakh. Thus, whereas there will be only one number as the share certificate number for one certificate, there will be as many distinctive numbers in respect of shares as are evidenced by the share certificate.

Thus, the share certificate being prima facie evidence of title, it gives the shareholder

the facility of dealing more easily with his shares in the market. It enables him to sell his shares by showing at once marketable title.

Also, a share certificate serves as an estoppel as to payment against a bona fide purchaser of the shares from alleging that the amount stated as being paid on shares has not been paid. However, a Person who knows that statements in a certificate are not true cannot claim an estoppel against the company [Crickmer Case (1875) 46 L.J. C. 870].