Share Certificates issued to the Companies are sometimes due to some unforeseen circumstances are lost or misplaced by the Shareholders. The loss of Share Certificates can lead to huge financial loss to Shareholders as well as the Company. To avoid any unnecessary loss to the Shareholders and the Company, the remedy is provided by the Central Government. The Companies Act, 2013[1], provides for the provisions for Issue of Duplicate Share Certificate under section 46 read with Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014 in case the original Share Certificate is lost or misplaced by the Shareholder. In this article, the procedure followed for the Issue of Duplicate Share Certificate will be discussed.
What is a Share Certificate?
Company issues Share Certificate to certify that from the date on which a certificate is issued to a person, the person is registered owner of the Shares of Company. Share Certificate issued by Company is the prima facie evidence of title of the member to the Shares of the Company. The Share Certificates proved ownership of the person in the Company. The loss and misplacement of Share Certificate will affect the Shareholder financially, as there will be no proof of his/her ownership. The Company issues the Duplicate Share Certificate in case the original is lost or misplaced.
Share Certificate if lost or misplaced, what are the steps which should be followed for the Issue of Duplicate Share Certificate?
Certain steps should be followed by the shareholders and Company when Share Certificate of a shareholder is lost or misplaced:
Steps to be taken by Shareholders
Shareholders should take the following steps after the loss or misplacement of Share Certificate:
- The Shareholder should immediately inform about the lost or misplaced Share Certificate to the Company.
- The communication of the information can be done through a letter to the address of the Company, or an email can be sent to the Company.
- The details of the lost or misplaced Share Certificate like Name, Address, Folio Number, and Share Certificate Number.
Steps to be taken by Company
The Company should take the following steps after loss or misplacement of Share Certificate:
- Once the information is received of the lost or misplaced Share Certificate, the Company should freeze the transfer for at least 30 days to prevent any fraudulent transfer or illegal proceeding of the transfer.
- After completing the procedure of Company Registration, the entity should guide the Shareholder for the Issue of Duplicate Share Certificate once the Shareholder’s identity is established.
Read our article:Right Issue of Shares: Step by Step Procedure
What are the Documents Required for the Issue of Duplicate Share Certificate?
The Documents required for the Issue of Duplicate Share Certificate are as follows:
- Prepare an Indemnity Bond Agreement on Non-Judicial Stamp Paper.
- An affidavit is prepared on a Non-Judicial Stamp Paper of Rs.100.
- F.I.R should be filed with the police with full information on the lost 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
- An advertisement should be published in the Newspaper about the fact of the lost Share Certificate.
What is the procedure followed for Issue of Duplicate Share Certificate?
The procedure followed for Issue of Duplicate Share Certificate is as follows: An application for the Issue of Duplicate Share Certificate will be made by the Shareholder with the required documents to the Company
- The application, when received by the Company, the process for the Issue of Duplicate Share Certificate, can be started.
- The Issue of Duplicate Certificate will be done with the consent of the Board of members of the Company.
- While giving the consent for the Issue of Duplicate Share Certificate, the Board should look into the following things:
- The fees should be taken as think to be fit by the Board, but the fees should not exceed Rupees 50 per Share certificate.
- The out of pocket expenses which occurred while investigating the evidence produced by the Shareholder should also be taken into consideration by the Board while Issue of Duplicate Share Certificate by the Company.
- The Board consent once received, the process for the Issue of Duplicate Share Certificate can be started.
- The Company will scrutinize all the documents and will Issue the Share Certificate.
- The Issue of Duplicate Share Certificate should be completed within 4 to 6 weeks.
- The Duplicate Share Certificate will be issued to Listed Company within 45 days from the date of submission of the documents to the Company.
- The Unlisted Company will be issued with the Duplicate Share certificate within 3 months from the date of submission of the documents to the Company.
- Once Issue of the Duplicate Share Certificate is done, entries should be made in the Register of Renewed and Duplicate Share Certificate in Form SH-2.
- The format of SH-2 is prescribed under Companies (Share Capital and Debentures) Rules, 2014.
- The Duplicate Share Certificate should include the following lines “Duplicate issued in lieu of Share Certificate No………” and word “Duplicate” should be printed or stamped in block letters in the Share Certificate.
- The Register should be kept in the registered office of Company, or where Register of members is kept by Company or can be preserved by Company Secretary or any other as authorized by Board of members for the purpose.
Conclusion
The Share Certificate is the evidence of Shareholder ownership of the Share. In case of loss or misplacement of Share Certificate, to avoid any financial loss to the Company and Shareholders, the Issue of Duplicate Share Certificate should be done. The process of Issue of Share Certificate is lengthy and long-lasting. We at Corpbiz have experts who can help you with the process and will assure the completion of work within the prescribed time.
Read our article:Issue of Shares through Private Placement
