DUPLICATE SHARE CERTIFICATE

INTRODUCTION

People in the world find ways to generate income, and they invest their money in the share market. A share market is a market where trading is done on the price of shares. The prices of each share are shown on the Stock exchange. The companies that issue shares also share certificates. This serves as evidence that the shareholders are owners of the company. The Companies act, of 2013 mandates companies to issue such share certificates after the company incorporation. These are thus, very important documents that serve as primary evidence when an issue regarding holding certain shares arises. 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 loss to the shareholders and the company in which he/she held shares, thus to avoid an 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) to © of the companies (Share capital and Debentures) Rules, 2014. So, in this particular article, we will be discussing the issue of duplicate share certificates.  

SHARE CERTIFICATE

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 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. This is generally to avoid inconvenience. A company will issue a duplicate share certificate only under conditions that are proven to be lost or destroyed and have been mutilated, defaced, or torn and are surrendered to the company.

DUPLICATE SHARE CERTIFICATE

A duplicate share certificate means a certificate issued in lieu of the original shares certificate when such original 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.

STEPS SHOULD BE TAKEN BY THE SHAREHOLDERS AFTER A MISPLACED OF SHARE CERTIFICATE

  • The Shareholder should immediately inform about the lost or misplaced Share Certificate.
  • 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 SHOULD BE TAKEN BY THE COMPANY

·         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  

  • After completing the procedure of company registration, the entity should guide the Shareholder for the Issue of a Duplicate Share Certificate once the Shareholder’s identity is established.

DOCUMENT REQUIRED FOR ISSUE OF DUPLICATE SHARE CERTIFICATE

  • 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:
  1. Name on the Share Certificate
  2. Folio Number on Share Certificate
  3. Share the Certificate Number
  4. The Distinctive Number of Shares 
  • An advertisement should be published in the Newspaper about the fact of the lost Share Certificate.

PROCEDURE TO BE FOLLOWED FOR ISSUE OF DUPLICATE SHARE CERTIFICATE.

: An application for the Issue of a 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 start.
  • The Issue of Duplicate Certificates will be done with the consent of the Board of members of the Company.
  • While giving consent for the Issue of Duplicate Share Certificates, the Board should look into the following things:
  1. The fees should be taken as thought to be fit by the Board, but the fees should not exceed Rupees 50 per Share certificate.
  2. 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 Issuing a Duplicate Share Certificate by the Company.
  • The Board consent once received, the process for the Issue of Duplicate Share Certificates can be started.
  • The Company will scrutinize all the documents and will Issue the Share Certificate.
  • The Issue of Duplicating the Share Certificate should be completed within 4 to 6 weeks.
  • The Duplicate Share Certificate will be issued to the 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 Debe
  • res) Rules, 2014.
  • The Duplicate Share Certificate should include the following lines “Duplicate issued in lieu of Share Certificate No………” and the word “Duplicate” should be printed or stamped in block letters in the Share Certificate.
  • The Register should be kept in the registered office of the Company, or where the Register of members is kept by Company or can be preserved by the Company Secretary or any other as authorized by the 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 Issuing of Share Certificate is lengthy and long-lasting. It involves a very simple procedure to issue duplicate share certificates. So, to avoid this difficulty generally, duplicate share certificates are issued.

REFERENCES

Section 46 and rule 6(2) to © of Companies Act 2013

Share capital and debentures rules 2014

https://cleartax.in/s/share-certificate-loss-misplace

https://taxguru.in/corporate-law/procedure-duplicate-share-certificates.html

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