CHAPTER X

SHARE WARRANTS

A Share Warrant is a document under the seal of the
company to the effect that the bearer is entitled to the
number of fully paid shares of the company stated therein,
the distinguishing numbers being specified (Appendix F,
Form 40). A share warrant is by mercantile usage and
by virtue of s. 70 (3) of the Companies Act, 1929, a negotiable
instrument transferable by mere delivery, that is to say,
it may be passed from hand to hand, and a bond fide holder
for value for the time being is entitled to the benefit of it,
notwithstanding some defect in title, e.g. theft by a previous
holder. The statutory law relating to share warrants is
contained in ss. 70, 97, 141 (2) of the Act.

Share warrants may be issued in respect of any fully paid
up shares or stock by any public company limited by shares
which is authorised so to do by its articles. A private com-
pany’s articles of association must not take power to issue
share warrants, as otherwise it cannot limit its membership
in accordance with the requirements of s. 26.

Conditions of Lhe conditions governing the issue of share warrants are

Issue. settled either by the company’s articles of association or by
resolution of the board of directors, passed pursuant to some
provision in the articles.

Sometimes the conditions are printed on the back of the
warrant, but it is more usual to print them separately and
to issue them on application. The holder can then keep his
conditions of issue by him, while he will probably lodge his
warrant with his bank for safe custody. This course also
enables the company more easily to vary the conditions
subsequently, if it should become desirable to do so.

It is highly important to guard against forgery, and the
warrants should therefore be printed on paper bearing a
distinctive water mark. It is desirable that the printing
should be done direct from a steel plate which cannot easily
he imitated.
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