Share Certificates

A share certificate under the common seal of the company s a prima facie evidence of the title of the member to such number of shares as mentioned therein. It is a declaration by the company the person named therein is the registered shareholder of the company and the shares are paid up to the extent mentioned therein. Thus a share certificate contains two important statements namely.: (i) the member was, at the date of the issue of the certificates, the holder of a certain number of shares and (ii) the extent to which they are paid up i.e., paid up amount of the shares. This makes the company liable in two ways: (a) estoppels as to title which means that company cannot deny as against an innocent purchaser of shares that the certificate was issued by mistake and (b) stopple as to payment which means that company cannot say as against an innocent purchaser of shares that the amount of payment shown on the certificate was entered by mistake. For example if the certificate satiates that the amount of shares is fully paid, the company is stopped form stating that shares are not fully paid. The benefit of estoppels from stating that shares are not fully paid. The benefit of estoppel is available only to bona fide transferee of shares.

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