What share certificate means
A share certificate says the company acknowledges that this person holds these shares.
It records the company's name and registration number, the shareholder's name, the number and class of shares, the certificate number, and it is executed by the company.
What it is not is the definitive record of ownership. That is the register of members. The certificate is prima facie evidence of title, meaning it is good evidence unless something better contradicts it, and the register is what actually determines who holds what.
That distinction matters when the two disagree, which happens more often in Nigerian private companies than anybody would like. Somebody holds a certificate issued years ago; the register has since been updated, or was never maintained at all. The register governs, and a certificate for shares that were subsequently transferred proves nothing.
How it is used
Certificates are issued at two moments.
After an allotment, when new shares are created and issued to somebody.
After a transfer, when existing shares change hands and the transferee is entered in the register.
CAMA requires a company to complete and have ready for delivery the certificates within the period the Act prescribes after allotment or after lodgement of a transfer, and companies that never issue them are in default of that obligation.
In practice the certificate is used as supporting evidence: in a sale of shares, in a due diligence exercise, in probate where a deceased held shares, and when a shareholder wants to demonstrate their position.
Where a certificate is lost, the company issues a replacement, usually against an indemnity from the shareholder covering any loss the company suffers if the original turns up in somebody else's hands. That is a routine process and it should be documented.
The more important document to keep is the evidence of how the shares were acquired: the allotment resolution or the stamped instrument of transfer.
Key features
- Issued by the company as evidence of a shareholding
- Prima facie evidence of title, not conclusive
- The register of members is the definitive record
- Must be issued within the period CAMA prescribes after allotment or transfer
- A replacement can be issued against an indemnity where one is lost
- Supported by the allotment resolution or the stamped transfer instrument
How this works in Nigeria
The recurring Nigerian problem is not lost certificates. It is companies that never issued any and never kept a register.
Two or three founders incorporate, agree a split verbally, and trade for years. No register of members is maintained, no certificates are issued, and the only record of who owns what is the CAC filing made at incorporation, which may no longer reflect what the parties later agreed.
When an investor arrives, or a founder leaves, or somebody dies, the position has to be reconstructed. That is slow, contentious, and it is exactly what stalls a funding round.
The fix is administrative and cheap. Keep a register of members. Issue certificates. Pass resolutions for allotments. Stamp transfer instruments. File what the CAC requires. A company that does those four things has a clean cap table that survives any question.
On a share purchase, a buyer should look at the register and the underlying documents rather than at certificates alone. A certificate proves the company once said somebody held shares. The register, the resolutions and the stamped transfers show how they got there and whether they still hold them.
For a deceased shareholder, the certificate supports the estate's claim, but the transfer to beneficiaries is effected through the grant and the company's register.
Share certificate vs register of members vs CAC filings
Three records of shareholding, with different authority.
The register of members is the company's own statutory record and it determines legal title. Entry in it is what makes somebody a shareholder.
The share certificate is the company's acknowledgement of that entry, issued to the shareholder. It is evidence of title but it does not create it, and it can be out of date.
CAC filings are what the public sees. Returns of allotment and the annual return update the position at the Commission, and the status report reflects it. A company that changed hands without filing shows the old position publicly.
All three should agree. Where they do not, the register governs as between the company and the member, and the discrepancy with the CAC record is a compliance failure that surfaces during due diligence.
Limits and risks
A certificate is not conclusive. Where the register shows something different, the register prevails, so possession of a certificate is not possession of the shares.
Certificates also go stale. A holder who sold their shares still physically holds the certificate unless it was surrendered, which is why transfers should require its surrender.
They prove nothing about encumbrances. Shares can be charged or held subject to a nominee arrangement, and the certificate says nothing about either.
And in many small Nigerian companies they simply do not exist, so a shareholder relying on one may find there is nothing to rely on.
Worth knowing
Keep the register of members up to date and issue certificates as allotments and transfers happen. Nigerian funding rounds stall on reconstructed cap tables more often than on valuation, and the reconstruction is always harder than the record keeping would have been.
Questions people ask
What is a share certificate?
A document issued by a company acknowledging that a named person holds a stated number and class of its shares. It is evidence of title but not the definitive record.
Is a share certificate proof that I own the shares?
It is prima facie evidence, meaning good evidence unless contradicted. The register of members is the definitive record, and where the two differ the register governs.
When must a company issue certificates?
Within the period CAMA prescribes after an allotment or after lodgement of a transfer. Companies that never issue them are in default of that obligation.
What if my share certificate is lost?
The company can issue a replacement, usually against an indemnity covering any loss if the original resurfaces in somebody else's hands. Keep the allotment resolution or stamped transfer, which matter more.
Our company never issued certificates or kept a register. What now?
Reconstruct it: pass the resolutions, prepare the register from the underlying documents, issue certificates and bring the CAC filings up to date. It is far easier done now than during a funding round.
What should a buyer of shares check?
The register of members, the allotment resolutions and the stamped instruments of transfer, not just certificates. Those show how the seller acquired the shares and whether they still hold them.