What is the Difference Between Share Certificate and Share Warrant?
🆚 Go to Comparative Table 🆚The main differences between a share certificate and a share warrant are as follows:
- Meaning: A share certificate is a legal document that indicates the possession of the shareholder on the specified number of shares, while a share warrant is a document that indicates the bearer is entitled to the specified number of shares in the future.
- Issue: Share certificates can be issued by both public and private companies, whereas share warrants are issued only by public limited companies.
- Compulsory: Issuing a share certificate is compulsory, while issuing a share warrant is not.
- Time of Issue: A share certificate should be issued within three months after the allotment of shares, while there is no such time limit specified for the issue of a share warrant.
- Nature of Shares: A share certificate can be issued against partly or fully paid-up shares, while a share warrant is only issued against fully paid-up shares.
- Sanction of Government: Share certificates do not require approval from the Central Government, while share warrants do.
- Provision in the Articles of Association: A share certificate does not require any provision in the Articles of Association, while a share warrant does.
- Stamp Duty: The stamp duty on issuing a share certificate is nominal, while a heavy stamp duty is to be paid on the issue of a share warrant.
- Negotiability: A share certificate is not a negotiable (transferable) document, while a share warrant is a negotiable document.
- Rights: A member in possession of a share certificate has the right to vote and participate in meetings, while a share warrant holder does not have these rights.
In summary, a share certificate is proof of current ownership and represents the shareholder's stake in the company, while a share warrant grants the right to purchase shares at a predetermined price in the future.
On this pageWhat is the Difference Between Share Certificate and Share Warrant? Comparative Table: Share Certificate vs Share Warrant
Comparative Table: Share Certificate vs Share Warrant
Here is a table highlighting the differences between a share certificate and a share warrant:
Feature | Share Certificate | Share Warrant |
---|---|---|
Meaning | A legal document indicating the possession of the shareholder on the specified number of shares. | A document indicating that the bearer of the share warrant is entitled to the specified number of shares. |
Compulsory | Yes, it is compulsory for every company limited by shares. | No, it is not compulsory. |
Issued by | Both public and private companies can issue share certificates. | Only public limited companies can issue share warrants. |
Nature of Shares | Issued against partly or fully paid-up shares. | Issued only on fully paid-up shares. |
Time of Issue | A company must issue a share certificate within three months after the allotment of shares. | Share warrants can be issued after the collection of the shareholder's payment if the shareholder wishes. |
Proof of Ownership | Serves as proof of current ownership for shareholders. | Grants the right to purchase shares in the future. |
Voting and Meeting Participation | A member in possession of a share certificate has the right to vote and participate in meetings. | The bearer of a share warrant is not necessarily a member of the company. |
Stamp Duty | Nominal stamp duty is paid on the issuance of a share certificate. | Heavy stamp duty is paid on the issuance of a share warrant. |
Transferability | Share certificates are not negotiable (transferable) documents. | Share warrants are negotiable documents, and anyone holding the instrument can get the ownership of shares. |
Government Sanction | Central Government's sanction is not required to issue share certificates. | Central Government's sanction is required to issue share warrants. |
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