Online Reporter
Godknows Hofisi
Business Law
I have previously written articles on shares, including on disputes involving share ownership.
In this article, I am narrowing down the evidence of title to shares based on section 153 of the Companies and Other Business Entities Act (Chapter 24:31), or “the COBE Act”.
Section 153 of the COBE Act on title to shares: Issue of shares within two months
According to section 153(1) of the COBE Act, every company shall, within two months after the allotment of any of its shares, and within two months after the date on which a transfer of any such shares is complete, have ready for delivery the certificates of all shares, unless the conditions of issue of the shares otherwise provide.
In other words, a company is required to issue share certificates to its shareholders within two months of allotment or transfer of shares.
For the purpose of section 153(1), the expression “transfer” means a transfer duly stamped and otherwise valid and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.
Details on share certificates
In terms of section 153(2) of the COBE Act, a certificate evidencing any certificated share of a company must state on its face:
The name of the issuing company.
The name of the person to whom the share was issued.
The number and class of share and the designation of the series, if any, evidenced by that certificate.
Any restriction on the transfer of the share.
Share certificate as prima facie evidence of title
According to section 153(3), a certificate, whether or not under the seal of the company, shall be signed by one of its directors and counter-signed by another director or the secretary, specifying any shares held by any member in that company, shall be prima facie evidence of the title of the member to such shares or stock.
Signing of share certificate
According to section 153(3), a share certificate shall be signed by one of its directors and counter-signed by another director or secretary. In terms of section 153(4) the signature of a director and secretary for the purpose of section 153(3) may be affixed to the certificate by autographic, electronic or manual means.
Uncertificated shares
Section 153(5) provides that if a company is a registered user of the electronic Registry, it may issue uncertificated shares, subject to the conditions of the issuance of such shares in section 289 (Use of electronic registry otherwise than for business entity registration), in which event the provisions of this section shall not apply to such company with respect to the transfer of shares.
According to section 153(6) of the COBE Act, any holder of any uncertificated shares may demand proof of title to his or her shares in the form of a material certificate endorsed in accordance with section 153(5), and the company concerned shall issue such certificates to the shareholder no later than 14 days after such request is received in writing.
Provided that if there is any restriction on the transfer of such shares by virtue of the shares in question being warehoused in pursuance of an employee share ownership trust or scheme or for any other reason, such certificate shall be clearly endorsed to that effect.
Conclusion
It is a requirement for companies to issue share certificates to their shareholders. A share certificate is prima facie evidence of title to shares.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), ACCA (Business Valuations) MBA (EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, commercial arbitrator, registered tax accountant and advises on deals and transactions. He has extensive experience in industry and commerce and is a former World Bank staffer in the Resource Management Unit. He sits on the Board of the Council of Estate Administrators in Zimbabwe./He writes in his personal capacity. He can be contacted on +263 772 246 900 or ghofisi@ hofisilaw.com or gohofisi@ gmail.com. Visit www.hofisilaw.com for more articles.
