ARTICLES OF AssociAnoN) provides : " Every person whose name is entered as a member in the register of mem bers shall, without payment, be entitled to a certificate under the common seal of the company specify ing the share or shares held by him and the amount paid up thereon, provided that in respect of a share or shares held jointly by several persons the company shall not be bound to issue more than one certifi cate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.• 1 certificate is pvi»ui Jar ic evidence of the title of the member to the shares or stock. (Section 23 of the abox e Act. See Sumo: Before an official quotation, on the London Stock Exchange, for stocks and shares can he obtained, the tommittee require that the certificates must conform to certain conditions. (See QUOTATION ON LONDON STOCK EXCHANGE.) With regard to the delivery of certificates and debentures by a company, Section 92 of the Companies (Consolidation) Act, 1908, provides that :— " (1) Every company shall, within two months after the allotment of any of its shares, debentures, or deben ture stock, and within two months after the registration of the transfer of any such shares, debentures, or debenture stock, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures, or debenture stock otherwise provide.
" (2) If default is made in complying with the requirements of this Section, the company, and every director, manager, secretary, and other officer of the company who is knowingly a party to the default, shall be liable to a fine not exceeding five pounds for every day during which the default continues." A certificate does not always show how much is paid up per share, and this is an important point when the question of security is being considered Where certificates are lodged as security. a blank transfer (q.v.) and qualifying agree ment (q.v.) are taken by some banks, but the most satisfactory way is to take a com pleted transfer and qualifying agreement and have the shares registered in the names of the nominees of the bank. (See TRANSFER OF SHARES.) If. however, a banker does not wish to register at once, he often takes a fully completed transfer with qualifying agreement and gives notice of his charge to the company. When that is done and he retains possession of the certificate, he has, as a rule, a good security. A simple deposit of certificates as security, even without a memorandum of deposit, c( nstitutes an equitable mortgage, and the banker can, when necessary, apply to the Court for power to sell. In nearly all cases, the certi ficate must be surrendered before a transfer of the shares can be effected. There are,
however, several exceptions, as certificates need not be produced when transferring National Bank shares, Provincial Bank of Ireland shares, and Royal Exchange Assur ance Corporation stock. It may be men tioned that the Grand Junction Canal Co. does not issue certificates at all.
It is to be remembered that even a foot note upon a certificate that no transfer of the shares will be registered without produc tion of the certificate is of no value in a case of fraud. In Rainford v. J. Keith and Blackman Co., Ltd. (1905, 1 Ch. 296), it was held that the footnote did not consti tute a contract and was not binding on the company. This case was followed and its principle approved by Mr. Justice Channell in Guy v. TV aterloo Brothers and Layton (1909, 25 T.L.R. 515).
A certificate does not requite a stamp. In cases where a simple memorandum of deposit of certificates is taken the stamp duty is sixpence. As to foreign and colonial share certificates, see MARKETABLE SECURITY.
When a certificate has been lost and the owner has obtained a duplicate, he should, in the event of the document being subse quently found, surrender it to the company. If the original certificate should, afterwards, be given to a banker as security, unless he registers it in his own name or gives notice to the company, he may eventually discover that the shares have been sold on surrender of the duplicate.
' It is also possible for a certificate to be apparently in order and yet, on inquiry, to be found to be of no value. on account of the shares having been forfeited ; and in some cases where shares have been converted the old certificate is sometimes, for one reason or another, not handed over to the company.
Loss of Stock Certificate. The Bank of England, before authorising the issue of a duplicate in the event of the loss or destruc tion of a stock certificate, may require : (a) Evidence to the satisfaction of the Bank of the loss or destruction and owner ship of the certificate ; and (b) a delay of not more than one year from the date of the loss or destruction ; and (c) the advertise ment of the loss or destruction in two or more London or Dublin daily papers (as the case requires) ; and (d) either the transfer of a sum of stock, of a description approved by the governor or deputy governor of the Bank, equivalent to the market value on the day of transfer of the lost or destroyed certificate, and at least six and a half years' dividends thereon, into the joint names of the governor and deputy governor, by way of security ; or the execution of a bond of indemnity in which the owner shall be joined by one or more responsible persons. (The National Debt (Stockholders' Relief) Act, 1892, Section 7, s.s. 1.) (See COMPANIES, SHARE CAPITAL.)