A share certificate is a document that indicates the ownership of company shares by its shareholder/beholder. It acts as prima facie evidence of the title of the individual holding the shares. When the beholder of the share certificate loses or misplaces the original document, the company will issue a duplicate share certificate.
When a person loses his/her share certificate, it can lead to a substantial financial loss to the shareholder and the company in which he/she held shares. Thus, to avoid any unnecessary loss to the company and its shareholders, the Companies Act, 2013, provides for the issue of duplicate share certificates under Section 46 and Rule 6(2)(a) to (c) of the Companies (Share Capital and Debentures) Rules, 2014.
Share certificates issued by the Company are sometimes lost or misplaced by the shareholders due to unforeseen circumstances. The loss of share certificates can lead to huge financial losses for both the shareholders and the company. To avoid unnecessary losses to shareholders and society, the remedy is provided by the central government. The Companies Act 2013 contains a provision for the procedure For Issue of Duplicate Share Certificate under section 46 read with rule 6 of the Companies (Share Capital and Debentures) Rules 2014 in the event of loss or misappropriation of the original share certificate Shareholder.
What is a share certificate?
The Company issues a Share Certificate to certify that, from the date, the certificate is issued to a person, that person is the registered owner of Company Shares. A share certificate issued by the Company is prima facie evidence of a member’s ownership of Company Shares. Share certificates proved a person’s ownership in the Company. The loss and misplacement of the Share Certificate will have a financial impact on the Shareholder as there will be no proof of its ownership. The company will issue a duplicate share certificate in case of loss or misappropriation of the original.
A company issues the share certificate to assure that a person is the registered owner of the company shares from the date the certificate is issued to that person. The share certificate issued by a company is the prima facie evidence that a person is the owner of the company’s shares. The misplacement and loss of share certificates will affect the shareholders financially, as there will be no proof of their ownership. Thus, the company will issue a duplicate share certificate if the original is misplaced or lost.
A company will issue a duplicate share certificate if the original certificate:
- Is proved to be lost or destroyed.
- Has been mutilated, defaced, or torn and is surrendered to the company.
Responsibility of Shareholder
- The Shareholder should immediately inform the Company of the loss or loss of the Share Certificate.
- Communication of information can be done by letter to the Company’s address or e-mail can be sent to the Company.
- Details of lost or misplaced share certificates such as name, address, folio number, and share certificate number.
Steps to Follow When a Share Certificate is Lost or Misplaced
The shareholders and a company must follow certain steps when a share certificate of a shareholder is lost or misplaced, as provided below.
The steps to be taken by shareholders when the share certificate is lost or misplaced are:
- The shareholder must immediately inform the company about the lost or misplaced share certificate.
- The communication of the information of the share certificate being lost or misplaced can be done by posting a letter to the company’s address or by emailing the company.
- The shareholder must provide the details of the lost or misplaced share certificate, like name, folio number, address and share certificate number.
The steps to be taken by a company when the share certificate is lost or misplaced are:
- When a company receives the information of the lost or misplaced share certificate, it must freeze the share transfer for at least 30 days to prevent any illegal proceeding of the transfer or fraudulent transfer.
- After completing the required procedure and establishing the shareholder’s identity, the company should guide the shareholder for the issuance of a duplicate share certificate.
Documents Required For Issuing the Duplicate Share Certificate
- Indemnity bond agreement on a non-judicial stamp paper.
- An affidavit on a non-judicial stamp paper, attested by the Notary Public/Special Executive Magistrate.
- F.I.R filed with the police containing the following information about the lost share certificate:
- Name on the share certificate.
- Share certificate number.
- Folio number on the share certificate.
- Distinctive number of shares.
- Advertisement published in a newspaper about the loss or misplacement of the share certificate.
- Proof of identity and residence of the shareholder.
Duplicate Share Certificate Issue Process
- The shareholder should make an application for the issue of a duplicate share certificate with the required documents to the company. The documents sent to the company should have the shareholder’s signature whose share certificate is lost or misplaced.
- When the company receives the application, it will start the process for the issue of a duplicate share certificate.
- The company must issue the duplicate share certificate with the consent of the company’s board of members.
- While giving the consent for the issue of a duplicate share certificate, the Board should look into the following matters:
- The Board should take the fees for the issue of a duplicate share certificate, but the fees should not exceed Rs.50 per share certificate.
- The out-of-pocket expenses that occurred while investigating the evidence produced by the shareholder should also be considered by the Board while issuing the duplicate share certificate.
- After the Board consents to issue a duplicate share certificate, the company will scrutinise all the documents and issue the share certificate to the shareholder.
- A listed company should issue the duplicate share certificate within 45 days of submitting the documents to the company.
- An unlisted company should issue a duplicate share certificate within three months of submitting the documents to the company.
- Once the company issues a duplicate share certificate, entries should be made in the ‘Register of Renewed and Duplicate Share Certificate’ kept in Form SH-2.
- The duplicate share certificate should contain the following line ‘Duplicate issued in lieu of Share Certificate No…’ and the word ‘Duplicate’ should be stamped or printed in block letters in the share certificate.
- The Register of Renewed and Duplicate Share Certificate should be kept in the company’s registered office or where the company keeps its Register of Members or can be preserved by the company secretary or any other person as authorised by the Board of Members for the purpose.
FAQs
Q: Why would I need a duplicate share certificate?
You may need a duplicate share certificate if your original certificate is lost, stolen, or damaged.
Q: Can I authorize someone else to collect the duplicate share certificate on my behalf?
Yes, you can authorize someone else to collect the duplicate share certificate on your behalf by providing a duly signed authorization letter along with necessary documents.
Q: What happens if I find the original share certificate after obtaining a duplicate?
If you find the original certificate after obtaining a duplicate, you should return it to the company for cancellation. The company may charge a fee for the cancellation process.
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