What are Numbered Shares?
Numbered shares are company shares with a unique number, used as an identifier. In some countries, each company share needs to have a unique number assigned to it for the purpose of distinguishing between them. Share numbers are assigned when shares are issued, and noted when transferred.
Do Shares need to be Numbered?
In some coutries, shares still do need to be numbered. While numbered shares are considered a thing of the past in my places where they were widely used to certify who was the true owner of a share, they are still required in some jurisdictions. Tools like Capboard help company directors and lawyers with managing numbered shares. In some countries, companies use share certificates, others require numbered shares and make mandatory for companies to keep record of their shareholders in public records.
Example of Numbered Shares
If a company has 3,000 outstanding shares, there will be a share numbered as 1, another one as 2... until the 3,000th. If the company has 3 shareholders owning 33% of the company each (1,000 shares), share numbers will be as follow:
- Shareholder 1: 1 - 1,000
- Shareholder 2: 1,001 - 2000
- Shareholder 3: 2,001 - 3,000
Share Number Requirements
Numbered shares follow the same structure, wherever they are used:
- Share numbers are unique.
- Numbers are assigned by order when new shares are issued. So if a company already has 10,000 shares and issues 1,000 more, its numeration will be 10,001-11,000.
- When shares are transferred to another shareholder, the numbers are kept.
How to Automate Numbered Shares?
Capboard helps companies with managing numbered shares, share certificates, share registry and cap tables so you can stay legally compliant. The main features are:
- Share numbers are automatically generated, taking into account existing shares.
- Edit share numbers at will.
Numbered shares are set as optional for some countries on Capboard. If you wish to activate it, go to Company Settings > General.
Requirements for Numbering of Shares by Country
Numbered shares are not required as share certificates are used.
It is required unless all shares are paid up and rank "pari passu" or equally, as per Companies Act 2006 c. 46 s. 543 Numbering of shares:
- Each share in a company having a share capital must be distinguished by its appropriate number, except in the following circumstances.
- If at any time—
- all the issued shares in a company are fully paid up and rank pari passu for all purposes, or
- all the issued shares of a particular class in a company are fully paid up and rank pari passu for all purposes,
- none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.
Keeping unique share numbers is mandatory, as per Section 45 of the Companies Act, 2013: Numbering of shares:
Every share in a company having a share capital shall be distinguished by its distinctive number (provided that nothing in this section shall apply to a share held by a person whose name is entered as holder of beneficial interest in such share in the records of a depository).
Numbered shares are not required in Australia if the company issues share certificates which are uniquely distinguished by a number recorded in the register of members. As per CORPORATIONS ACT 2001 - SECT 1070B.
Numbered shares are required and widely used in cap tables and contracts. As per the Article 22 of the Capital Companies Law:
When incorporating a company, the contract must include "the amount each shareholder invests and the numbering of the shares issued in exchange."