Share Certificates given to companies are often lost or misplaced by Shareholders due to unexpected circumstances. The loss of share certificates will result in significant financial losses for both Shareholders and the Company. The remedy is given by the Central Government to prevent any undue damage to the Shareholders and the Company. In the event that the original Share Certificate is lost or misplaced by the Shareholder, the Companies Act, 2013, provides for the issue of a duplicate Share Certificate under section 46 read with Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014. The process for issuing duplicate share certificates will be addressed in this article.
What is a Share Certificate?
The purpose of a share certificate is to certify that an individual is the registered owner of the Company’s shares as of the date the certificate is issued. The company’s share certificate serves as prima facie proof of the member’s ownership of the company’s shares. The share certificates provides the proof of the person’s ownership of the business. The loss or misplacement of a share certificate would have a financial impact on the shareholder and there will be no evidence of ownership. In the event that the initial share certificate is lost or misplaced, the company issues a duplicate share certificate.
What steps should be taken if a share certificate is lost or misplaced in order to obtain a duplicate share certificate?
When a shareholder’s share certificate is lost or misplaced, the owners and the company should take some action:
Steps to be taken by Shareholders
Following are the steps that shareholders can take if their Share Certificate is lost or misplaced:
- The Shareholder can notify the Company as soon as possible if the Share Certificate is lost or misplaced.
- The details can be communicated by sending a letter to the Company’s address or sending an email to the Company.
- Name, Address, Folio Number, and Share Certificate Number of the missing or misplaced Share Certificate.
Steps to be taken by Company
Following are the steps that the company can take if a share certificate is lost or misplaced:
- The Company should freeze the transfer for at least 30 days after obtaining information about the missing or misplaced share certificate to avoid any fraudulent transfer or unlawful proceeding of the transfer.
- Once the organisation has completed the Company Registration process, the Shareholder should be directed to the Issue of Duplicate Share Certificate once the Shareholder’s identity has been identified.
What are the documents required for the Issue of Duplicate Share Certificate?
The following documents are required for the issuance of a duplicate share certificate:
- On non-judicial stamp paper, draft an Indemnity Bond Agreement.
- Affidavits are drafted on Rs.100 Non-Judicial Stamp Paper.
- A police report should be submitted with all relevant details about the missing Share Certificate.
- The details required of the Share Certificate are as follows:
- Name on the Share Certificate
- Folio Number on Share Certificate
- Share Certificate Number
- The Distinctive Number of Shares
- The fact that the Share Certificate has been lost should be published in the newspaper.
What is the procedure followed for Issue of Duplicate Share Certificate?
The following is the procedure for obtaining a duplicate share certificate: The Shareholder will submit an application to the Company for the issuance of a duplicate share certificate, along with the necessary documentation.
- When the Company receives the application, the process for issuing duplicate share certificates will begin.
- With the approval of the Company’s Board of Directors, a duplicate certificate will be given.
- When approving the issuance of duplicate share certificates, the Board should consider the following factors:
- The Board should set the fees as it sees fit, but they should not exceed Rupees 50 per share certificate.
- The out-of-pocket costs incurred by the Board in reviewing the facts presented by the Shareholder should also be considered by the Board when the Company issues a duplicate share certificate.
- If the Board’s approval is issued, the process for issuing duplicate share certificates will begin.
- The company will review all of the records before issuing the stock certificate.
- Within 4 to 6 weeks, the issue of duplicate share certificates should be completed.
- The Listed Company will receive the Duplicate Share Certificate within 45 days of the documents being sent to the Company.
- The Duplicate Share certificate will be given to the Unlisted Company within 3 months of the documents being sent to the Company.
- After the Duplicate Share Certificate has been issued, entries in the Register of Renewed and Duplicate Share Certificate in Form SH-2 should be made.
- Companies (Share Capital and Debentures) Rules, 2014 provides the format of SH-2.
- The words “Duplicate issued in place of Share Certificate No………” should be written or stamped in block letters on the Duplicate Share Certificate.
- The Register should be held at the Company’s registered office, or wherever the Company’s members’ register is kept, or maintained by the Company Secretary or any other person appointed by the Board of Directors for that purpose.
The Share Certificate is proof that the share is owned by the shareholder. To prevent financial loss to the Company and Shareholders in the event of a lost or misplaced Share Certificate, a duplicate Share Certificate should be issued. The issue of a share certificate is a lengthy and time-consuming process.