Share Certificates and the Securities Register: The Paperwork That Actually Proves Who Owns a Company

Ask most first-time company owners who owns their business and they will answer confidently — "my co-founder and I, 50/50" — without ever having seen the document that is legally supposed to prove it. The securities register and the share certificates behind it are exactly that document, and neglecting them is one of the more common gaps in small company administration.

The securities register: what it is and why it matters

Section 50 of the Companies Act requires every company to establish and maintain a register of its issued securities, in a prescribed form and to prescribed standards. For a typical private company, this means recording, for every class of share issued: the names and addresses of who holds them, how many shares each holder has, the certificate numbers and dates of issue, and the status of any transfer restrictions attached to the shares. It is kept at the company's registered office, or at another location within South Africa the company has properly designated.

This register is the company's own authoritative record of who owns it — not a shareholders' agreement filed in a drawer, not an email exchange between founders, and not simply "what everyone remembers agreeing to". If a dispute ever arises about who owns what percentage of a company, the securities register is where that question is legally answered, which is exactly why letting it lapse or never properly starting one is a bigger risk than it feels like on a Tuesday when everyone still gets along.

Share certificates: the individual proof

Where the securities register is the company's master record, a share certificate is the individual document issued to each shareholder confirming their specific holding. The Companies Act sets real requirements around these, not just convention:

• Issued within 20 business days of the shares being allotted — the company cannot simply issue shares and get around to the paperwork whenever convenient; there is a statutory clock.
• Signed by two authorised representatives of the company — this can be two directors, or a director together with an authorised manager, but it must be two people properly authorised to sign on the company's behalf, not one director acting alone.
• Transfer restrictions recorded on the certificate itself — if the shares are subject to restrictions on being sold or transferred (common in owner-managed companies, often set out in a shareholders' agreement), the certificate must reflect that, not leave it as an unwritten side understanding.

A share certificate issued properly, with these elements in place, is the piece of paper (or increasingly, its uncertificated electronic equivalent) a shareholder can point to as proof of their stake — useful well beyond disputes, including when a shareholder wants to sell their stake, use it as security for a loan, or simply prove ownership to a bank or investor doing due diligence.

Where this commonly goes wrong in small companies

Two patterns account for most of the gaps we see in owner-managed companies:

The register was never properly started. The company registered at CIPC, the founders agreed verbally on percentages, and nobody ever formally issued certificates or opened the register — everyone simply assumes the CIPC filing itself records shareholding (it largely doesn't, in the ongoing operational sense the securities register is meant to serve). This is easiest to fix at the very start, before there is any disagreement to fix it around.

The register exists but was never updated. A new investor came in, a founder sold part of their stake, or shares were bought back — and the actual paperwork never caught up with what everyone agrees happened informally. This is where real problems surface, usually years later: a bank, investor or buyer doing due diligence expects the securities register to match reality, and a stale register raises exactly the kind of question that stalls or kills a deal at the worst possible moment.

How this connects to the rest of a company's compliance

The securities register sits alongside, but is legally distinct from, the beneficial-ownership filing covered elsewhere in this series. Beneficial ownership is filed with CIPC and looks through to the natural persons who ultimately own or control the company, however many layers of structure sit in between. The securities register is the company's own internal record of its immediate shareholders — which may themselves be other companies or trusts rather than individuals. A well-run company keeps both consistent with each other: the securities register showing who holds shares directly, and the beneficial-ownership filing correctly tracing that through to the humans behind it. A mismatch between the two is a red flag worth investigating, not a paperwork inconsistency to shrug off.

The register is also directly relevant to the SBC tax relief covered elsewhere in this series: proving every shareholder is a natural person, which SBC eligibility depends on absolutely, is exactly what a properly maintained securities register makes straightforward to demonstrate — and what a neglected one makes needlessly difficult to prove when it matters at tax return time.

Getting it right from the start

• Open the securities register the moment shares are first issued — as part of incorporation, not as an afterthought once the company is already trading.
• Issue proper certificates, signed by two authorised people, within the statutory window, rather than treating this as optional paperwork nobody will ever check.
• Update it immediately when anything changes — a new shareholder, a transfer, a buyback — with the same discipline this series has recommended for changing directors and company details generally: the cost of updating a record the week something happens is trivial compared to reconstructing it accurately years later from memory and old emails.
• Keep it consistent with your beneficial-ownership filing — review both together, not as two unrelated compliance tasks handled by different people who never compare notes.

Sources: section 50 of the Companies Act 71 of 2008 (securities register requirements: prescribed form, shareholder names and addresses, certificate numbers and issue dates, transfer-restriction status, location of the register) and the Act's share certificate requirements (issue within 20 business days of allotment, signature by two authorised representatives, disclosure of transfer restrictions on the certificate). This is general information, not legal advice — a company with a genuinely disputed or unclear shareholding history should get a company secretary or attorney to reconstruct and formalise the record properly rather than attempt it informally.

A worked scenario

Two friends register a company together, each intending to hold 50% — but at incorporation, only one of them is listed as the initial subscriber on the CIPC filing, with the understanding that the second founder’s shares would be “sorted out properly later.” Eighteen months later the business is doing well, and the second founder wants to raise financing against their stake, or bring in an outside investor who insists on seeing a clean shareholding history before committing anything. At that point, “later” has arrived, and there is no securities register properly reflecting a 50/50 split — only a CIPC filing showing one subscriber and a verbal understanding nobody wrote down. Untangling this properly, months or years after the fact, with tax and legal implications for how the second founder’s stake is formally created, is considerably harder and more expensive than issuing the second share certificate correctly in the first place would have been.

Frequently asked

Do I need a securities register if I’m the sole shareholder of my own company? Yes — the requirement applies regardless of how many shareholders a company has. A sole-shareholder company still needs its register properly opened and its own share certificate issued, even though there is only one entry to make.

Can shares be uncertificated instead of having a physical certificate? Yes — the Act specifically contemplates uncertificated shares, recorded in the register without a physical certificate document, which is common for shares held through certain electronic settlement systems. For most small, owner-managed private companies, however, straightforward certificated shares with a proper paper (or PDF) certificate remain the norm and the simplest to administer.

Who is responsible for maintaining the securities register — the company or an outside party? The company itself is responsible, though many smaller companies use a company secretarial service or their accountant to actually maintain it on their behalf. Responsibility for it being correct ultimately sits with the company and its directors, regardless of who does the administrative work.

What happens if a share certificate is lost? A lost certificate does not mean the shareholding itself is lost — the securities register remains the authoritative record. Companies typically have a process for issuing a replacement certificate, often requiring a signed declaration about the loss, precisely because the certificate is evidence of the holding recorded in the register, not the holding itself.

Does a shareholders’ agreement replace the need for a securities register? No — they serve different purposes. A shareholders’ agreement sets out the rules shareholders have agreed to govern their relationship (voting, exit terms, restrictions); the securities register is the statutory record of who actually holds the shares. A company can and often should have both, but one does not substitute for the other.