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Difference between certificate of participation and purchase order

A share certificate a written document prepared by the company under its common seal and sent to the members, containing the number of shares held by him / her and the amount paid on it. The document functions as proof of ownership of the shares of the shareholder. Not exactly the same as an equity mandate.

Technically, the equity warrants, an instrument, which means that the holder of the instrument is entitled to the shares mentioned in it. a bearer document, which can be transferred by simple delivery.

Many think that these two documents are the same thing, which is not true, there is a subtle difference between the share certificate and the share mandate that we discussed in this article.

Comparative chart

Basis for comparisonShare the certificateShare Warrant
Sense A legal document indicating ownership of the shareholder on the specified number of shares known as a share certificate. A document indicating that the holder of the share is entitled to the specified number of shares an equity mandate.
obligatory s No
Released by All companies are limited by actions regardless of public or private. Only public limited companies have the right to issue an equity mandate.
Negotiable security No s
Transfer The transfer of the share certificate can be performed by performing a valid transfer deed. The transfer of the share mandate can be done by simple hand delivery.
Original number s No
Amount paid Issued against fully or partially paid share. Issued only against fully paid shares
Central government approval for release Not required at all Central government prior approval required for issuance of an equity mandate.
Time horizon for problem Within 3 months from the assignment of the shares. No time limit prescribed.
Statutory provision Not required necessary

Definition of the certificate of participation

A share certificate a written instrument, that is, a legal proof of ownership of the number of shares declared in it. Each company, limited by shares, public or private, must issue the share certificate to the shareholders, unless the shares are held in a dematerialized system. The sharing certificate contains the following details in it, they are:

  • Company Name
  • Issuing date
  • Member details
  • Shares held
  • Nominal value
  • Value paid
  • Defined number

The share certificate issued by the company within 3 months from the assignment of the shares to the applicants, which is issued under the common seal of the company. Normally, the share certificate holder considered to be a member of the company.

Definition of Share Warrant

An equity security is a negotiable instrument, issued by the joint-stock company only against fully paid-up shares. also referred to as a proprietary document because the holder of the equity mandate is entitled to the number of shares mentioned in it. There is no constraint on the issue of equity warrants by the company. Even if the public company wishes to issue share warrants, the prior approval of the central government (CG) is required, together with the fact that the issue of an equity mandate must be authorized in the company statute.

The share mandate holder can only obtain a share certificate if he renounces the share mandate and pays the commission required for the issue of the share certificate. Subsequently, the company cancels the mandate and issues a new share certificate, just as the company will enter its name as a member of the company, in the register of members, after which it will become a member of the company.

Generally, the holder of the share mandate is not the member of the company, but if the company statute provides it, then the bearer is considered a member of the company.

Key differences between the share certificate and the share mandate

The main differences between the share certificate and the share mandate are listed below:

  1. A stock certificate documentary evidence demonstrating ownership of the shares. An equity title is the ownership document stating that the owner of the instrument is entitled to the shares.
  2. The issue of the mandatory share certificate for each limited liability company, but the issue of a non-mandatory share mandate for all companies.
  3. An equity certificate is issued against the shares, regardless of whether the shares are fully paid or partially paid. Conversely, the share warrant is issued by the public company only in respect of fully paid-up shares.
  4. The share certificate can be issued by both public and private companies, while the share warrant issued only by the limited liability company.
  5. The share certificate must be issued within 3 months of the assignment of the shares, but there is no time limit specified in the Companies Act for the issue of the Share Warrant.
  6. An equity certificate not a negotiable instrument. Unlike the sharing mandate, a negotiable tool.
  7. Central government prior approval is required for the issue of an equity mandate. On the other hand, the sharing certificate does not require this type of approval.
  8. An equity certificate may be originally issued, but an equity mandate cannot be originally issued.


After an in-depth discussion of the two, it can be said that the share certificate is more important than an equity mandate, as it indicates the ownership of the members on the indicated number of shares in the company, but an equity mandate shows only the right on the shares of the company. .