What makes you the owner of shares?

sharesOften a company’s shareholding is not clear to a layman and even though you might be in possession of a share certificate, you might not necessarily be the valid owner of any shares. What a misconception to be held under. These types of situations arise especially in the BBBEE spectrum where someone is made to believe that shares are held, but behind the curtain the share register has no such record and that same person has no right to vote.

At the end of the day, a share certificate is not a share in itself.  It is merely proof of a share. In terms of Section 1 of the Companies Act 71 of 2008 (“the Act”), a share is defined as “one of the units into which the proprietary interest in a profit company is divided”. In other words, a share is regarded as intangible property and has been described by South African courts as a bundle of rights which the shareholder owns.

The Act as well as the company’s Memorandum of Incorporation (“MOI”) sets outs the rights afforded to shareholders. Further, the company’s Shareholders Agreement sets out the specific rules governing the shareholders. These rights normally include, amongst others, the right to vote and the right to receive dividends.

So how can you ascertain that you are the owner of shares in a company?

If you are the holder of a share certificate and/or paid for your shares in a company, but are now not recognised as a shareholder based on your exclusion from the share register, there are options.

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