Share Certificates
Companies not belonging to the book-entry system can provide a document called a share certificate as evidence of ownership in the company. If the company has incorporated in the book-entry system, there are no share certificates. Instead shares and their owning are listed on the date base held by the Finnish Central Securities Depository Ltd. See further, [Book-Entry System and Book-Entry Shares].
There is no general obligation to issue share certificates. Especially in small companies, where there is limited share trading and possible use of collateral, there is often no practical need for share certificates. It is possible to state in the articles of association that no share certificates are to be issued. A physical share certificate may also entail risks, for example if it is stolen or lost. In such cases, an outsider may claim to have the rights associated to the shares. Disputes over unclear share ownership are often costly and time-consuming, and in addition the outcome is uncertain.
However, the Board of Directors is obliged under the Limited Liability Companies Act to issue the share certificate(s) if a shareholder so requires. Share certificates can only be issued upon request if the following general conditions are met: the company's shares are not included in a book-entry system, the company and the shares in question are registered and the requesting shareholder is a shareholder entered in the shareholders' register (and the articles of association do not provide for the non-issuance of share certificates).
A share certificate is practical mainly in companies where it is essential to transfer and pledge shares. A share certificate may govern one or several shares. It may be issued only after full payment for the relevant share has been made. An interim certificate may be issued prior to this.
The company’s share certificates shall include following contents:
the name of the company and its business and company identification number
the serial numbers of the shares or the number of shares and the serial number of the share certificate;
the share class, if the company may have several share classes;
where applicable, include a reference to the shareholder's obligation to make special payments to the company, a conversion clause, a redemption and consent clause and an acquisition or redemption condition, if any of these are provided for in the articles of association. In the absence of such reference, the members of the board of directors may become liable for damages in the event the transferee of the shares suffers a loss due to the absence of the reference. Damages to be compensated might include, e.g., such resulting from the absence of a consent clause in accordance with the articles of association where the company does not give its consent to the transfer of shares.
The share certificate must be dated and signed by the Board of Directors or a person duly authorized by the Board of Directors. The signature may be printed or reproduced in a comparable manner.
The share certificate shall without delay be marked in an appropriate manner, when:
the share is cancelled;
assets are distributed or shares issued against the presentation of the share certificate; or
a certificate is issued against the presentation of the share certificate.
The company may not automatically issue a new share certificate in case the old one has been lost or damaged. The old share certificate must first be cancelled. By cancelling is meant that the document is declared invalid. The district court may on petition cancel a document according to Act on Cancellation of Documents whereupon all the rights relating to the document are removed.
If the share certificate is issued as a replacement for a cancelled share certificate, this shall be mentioned in the share certificate.