Legal advice: Putting a seal on share certificates

By Rebecca Caws of thePublican.com's team of legal experts from London solicitors Joelson Wilson.​

Considering investing in the stock market? Probably not, given the prescribed fees (only just) published by the government in relation to applications under the new licensing regime. Bearing in mind the huge hike in the rates from those originally proposed, buying shares may not be high on the agenda.

But if like many licensees before you, you do go ahead and invest, remember that shares are an intangible asset only materially represented through the share certificate. We all have expectations of how that certificate should look, with a common seal of the company impressed on red wax in one corner together with impressive signatures by the director and secretary of the company. But that is no longer the case.

In fact, the obligation for a company to have a common sealwas removed by the Companies Act 1989 but the misconception remains, largely because many companies which have a seal continue to use it. As the position stands today, any company document may now simply be signed by a director and company secretary or by two directors. Providing the document expressly states that it has been executed by the company, it will have the same effect as if it had been executed under the company seal.

There are advantages for a company to continue to use the seal - the signatories on sealed documents do not have to be directors and/or the secretary, for example. The board of directors may decide upon alternative permitted signatories.

It is still recommended to include a seal in any corporation pack to remove any doubts about the validity of the document, but if you do receive a share certificate without one do not automatically assume that the certificate is a phoney.