Question

State, with reasons, whether the following statements are True or False 

A Share certificate is a bearer document.

Options

• True

• False

Answer 1

This statement is False. 

Reasons :

(i) A Share Ceritifcate is a registered document of title of shares issued by the company under its common seal, specifying the number of shares held by a member is a bonafide holder of the shares mentioned therein.

(ii) The particulars mentioned in the share certificate namely the name of the shareholder, the number of shares with their distinctive numbers, the amount paid on shares etc. are recorded in the Register of Members. Hence, a share certificate is a registered document of title of shares. It is not a Bearer Document.

(iii) A bearer document is the one on which the name of the owner is not stated and it can be transferred by mere delivery.

(iv) A share certificate is not such a bearer document. Being a registered document, it indicates the ownership of shares. A shareholder cannot transfer this document to another person without following the procedure of transfer laid down in Articles of Association of the company. Hence, a share certificate is not a bearer document.