How Shares Work in a Company
Shares represent ownership in a company. When you register a company in South Africa, you must allocate a certain number of shares, even if you’re the only director or shareholder.
What is a Share?
A share is a unit of ownership. If your company has 100 shares, and you own all 100, then you own 100% of the company.
You can also split the shares among other people (called shareholders) if you have business partners or investors.
Understanding Share Splitting
Splitting shares doesn’t change the actual value of your company — it just changes how it’s divided.
| Total Shares | Ownership Breakdown | Notes |
|---|---|---|
| 100 shares | 50 to you, 50 to partner = 50% each | Easy for small companies |
| 1,000 shares | 600 to you, 400 to investor = 60% / 40% | More flexible |
| 1,000,000 shares | 1M shares = R1/share if company worth R1M | Used for big investments or complex divisions |
Why split more shares?
- Makes calculations easier when offering small percentages
- More professional when dealing with investors
- Easier to assign employee shares or bonuses
Example:
If someone wants 1% of your company, it’s easier to give them 10,000 shares out of 1,000,000 than 1 out of 100.
What Do You Get With a Share Certificate?
Once shares are allocated, you will be issued a Share Certificate, which is a legal document showing:
- Your name or company name
- Number of shares you own
- The company name and registration number
- The date shares were issued
- The signature of the company director or secretary
This is proof that you are a shareholder in the company and that you own a portion of it.
Types of Shares
Different types of shares exist, especially when companies grow and involve investors. Ordinary shares are used by most small private companies in South Africa.
| Share Type | Description |
|---|---|
| Ordinary Shares | Most common. Owners have voting rights and can receive dividends. |
| Preference Shares | Get paid before ordinary shareholders during profit distribution. May have limited or no voting rights. |
| Non-voting Shares | No voting power, but still receive profits. Sometimes used for silent partners. |
| Deferred Shares | Issued to founders or staff — dividends are delayed until other shareholders are paid. |
How Are Shares Calculated?
The total number of shares in a company is up to the owner when registering the business. You can allocate as many shares as you like, but the important part is:
The percentage ownership = (Number of shares owned ÷ Total shares) × 100
Example:
You issue 1,000 shares
You give 300 to your business partner
They now own: 300 ÷ 1,000 = 30%
So, even if you issue 100 or 100 million shares, it’s all about the percentages.
When Do You Need Share Certificates?
You need to issue share certificates when:
- The company is registered, and shareholders are added
- You sell or transfer shares to a new investor
- You change ownership structure (company amendment)
It becomes part of your official records and helps with:
- Getting funding or loans
- Registering for CSD, tenders, B-BBEE, etc.
- Legal proof of ownership
Important Notes
- Share certificates are not filed at CIPC — they are issued by the company.
- If you add or remove shareholders later, you’ll need to issue new updated certificates.
- All changes in shareholding must also be recorded in a Share Register.
What will Online Biz Makers do for you?
- Create official Share Certificates for each shareholder
- Ensuring correct details and formatting according to legal standards
- Issuing new certificates after share transfers or amendments