Share certificates issued by company are sometimes lost or misquoted by shareholders due to some unforeseen circumstances.
Sometimes due to some unexpected situations, Share certificates issued by the company get lost or misplaced by the shareholders. The loss can lead to huge financial losses to shareholders as well as the company. To avoid such unnecessary loss, the Government comes up with a solution.
If the original Share Certificate is lost or misplaced by the Shareholder, the Companies Act, 2013, features provisions for the Issuance of Duplicate Share Certificates under section 46 read with Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014.
Here we are providing detail of the procedure followed for the issuance of a Duplicate Share Certificate
The company issues a certificate from the date of issue of the certificate to a person, that the registered person owns the shares of the company. The share certificate issued by the company is the first proof of the title of the member for the shares of the company.
Share certificates confirm the ownership of the person in the company. Losing the share certificate can cause huge financial loss as it is the certificate of ownership, and that’s why the company issues the duplicate share certificate in case the original certificate is lost or misplaced.
A duplicate share certificate means a certificate issued in lieu of the original share certificate when such original share certificate is reported to be lost by a member along with proper evidence or is surrendered to the company if the same is defaced, mutilated, or torn out.
How to get a Duplicate Share Certificate
Some specific steps need to be followed by the shareholder as well as the company when a shareholder lost his/her Share Certificate.
Steps to be Taken by Shareholders
After the loss or displacement of the share certificate, shareholders should take the following steps:
- The shareholder should immediately inform the company about the loss or misplacement of the share certificate.
- Information can be communicated via a letter to the company’s address, or an email can be sent to the company.
- Along with the details of lost or misplaced share certificates such as name, address, folio number, and share certificate number.
Steps to be Taken by Company
Following the loss or misplacement of the share certificate, the company should take the following steps:
- Once the information of a lost or an incorrect share certificate is obtained, the company must stop the transfer for at least 30 days to prevent any fraudulent transfer or illegal proceedings.
- After completing the company registration process, once the shareholder’s identity is established, the entity must guide the shareholder for the issuance of a duplicate share certificate.
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The procedure that needs to be followed for the Issue of Duplicate Share Certificate?
The procedure for issuing duplicate share certificates is as follows:
An application will be submitted by the shareholder to issue duplicate share certificates along with the documents required by the company.
- Documents sent to the company must bear the signature of the shareholder whose share certificate is lost or misplaced.
- When the application is received by the company, the process of issuing duplicate share certificates can be initiated.
- The issuance of duplicate certificates shall be done with the consent of the board of members of the company.
- While agreeing to issue duplicate share certificates, the board should keep the following in mind:
#1. The fees should be considered reasonable by the board, but the fees should not exceed ₹ 50 per share certificate.
#2. The out-of-pocket expenses incurred while examining the evidence produced by the shareholder should also be taken into consideration by the board while issuing duplicate share certificates by the company.
- Once the Board’s approval is received, the process of issuing duplicate share certificates can be initiated.
- The company will examine all documents and issue share certificates.
- The process needs to be completed within 4 to 6 weeks.
- If the company is listed then the duplicate share certificate will be issued within 45 days from the date of submission of documents to the company.
- Duplicate Share certificates to the Companies that are not listed will be issued within 3 months from the date of submission of the documents to the Company.
- After the issue of duplicate share certificate, the form SH-2 should be renewed with details of duplicate share certificate and entries will be made in the register.
- The format of SH-2 is directed under the Companies (Share Capital and Debt) Rules, 2014.
- The Duplicate Share Certificate will be included in the following lines “Duplicate issued in lieu of Share Certificate No………” and the word “Duplicate” needs to be printed or stamped in block letters in the Share Certificate.
- The register must be kept in the registered office of the company, or where the members’ register is kept by the company or may be protected by the company secretary or any other, authorized by the members of the board for the purpose
A share certificate is proof of ownership of a shareholder. In case of loss or displacement of the share certificate, the company and the shareholders should issue a duplicate share certificate to avoid any financial loss. The process and document required are stated above.
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