Issue of Duplicate Share Certificate: Complete Procedure

Share certificates have a growing importance in corporate governance as evidence of ownership in a company. In some cases of lost share certificates, they become important documents that can create difficulties to the holder. Fortunately, law provides an option where duplicate share certificates may be issued so that shareholders may not suffer difficulties in seeking to establish their ownership rights. Therefore, let us know about the procedure of issue of duplicate share certificate.

About Share Certificate

• A share certificate is a certificate to prove that the holder owns a specific number of shares in a company. It is proof of ownership that is issued to all the shareholders of the company.
• Share certificates show the name of the shareholder, the class and number of shares held, the date it was issued, and if there are any restrictions or special clauses relating to the shares.
• The seal of the company may also be fixed along with the signatures of the authorized signatories of the company.
• Share certificates are part of the whole corporate governance system in that it is an official and physical record of a shareholder's investment made in the company.

Reasons to Issue a Duplicate Share Certificate

Misplacement or Loss:

• Losing or misplacing one's original share certificate is one of the most common reasons why someone need a duplicate. Many things could cause change to this, and they may include change of address or relocation, losing the document while traveling, besides misplacing it during renovations. In order for the shareholder to continue exercising his or her rights, the shareholder should need a duplicate share certificate to be issued. 

Theft:

• If someone's original share certificate has been stolen, they will need a duplicate certificate.Every important and valuable document can be stolen and share certificates are no exception. It is to be issued if the share certificate has been stolen, preventing the thief from selling shares fraudulently.

Damage:

• Usually, a share certificate shall not be replaced because of its physical form, damage, or impossibility in reading. A complete shareholder must have a duplicate share certificate to continue exercising certain rights when the original certificate becomes completely or partially unreadable.

Change of Name:

• Occasionally, shareholders change names due to marriage, divorce, or other reasons. After a name change, a shareholder must apply for a duplicate share certificate in order to revise the name on a share certificate.

How to Apply for Issuance of a Duplicate Share Certificate?

• A lawyer or notary public should prepare a Letter of Indemnity allowing you to show that you own the shares and that you will hold the company free of any compensation if a new certificate is issued.
• Request a duplicate share certificate in writing. Your name, address, and the shares you are asking a duplicate certificate for should all be included in this request.
• Prove that you are the share's owner. It includes a number of forms like a copy of the original share certificate or a statement from a bank or broker certifying your ownership of the shares, in addition to or in combination with the demat account statement evidencing your current holdings of shares. 
• Ensure that you send the Letter of Indemnity and the documents along with the duplicate certificate fee to the transfer agent or registrar of the company. 
• Hold on until the company processes your request, get internal approvals, and issues the new certificate.

Documents Required to Issue a Duplicate Share Certificate

The required documents are as follows:

• A copy of the police complaint about the missing share certificates stating company and shareholder names, folio number, and number of shares held.
• A letter for a duplicate certificate stating your name, address, and how many shares you need.
• A Letter of Indemnity from a lawyer or Notary Public evidence of your ownership that you are a rightful owner with an agreement you will indemnify the company for any loss or damage for the issuance of the new certificate.
• A copy of the original share certificate or a declaration by the bank or broker about your ownership of shares can be evidence of ownership, or a demat-account statement detailing your shareholdings can be adduced.
• Copy of PAN card and Copy of a valid proof like Passport/Voter ID card. 
• Additionally, some companies may demand that you place an advertisement in a newspaper about the misplaced share certificate.

Process to Issue a Duplicate Share Certificate

The process for issuing a duplicate share certificate is as follows: 

• To get a duplicate share certificate, a business shareholder applies and provides the necessary documents. 

• The process for issuing a duplicate share certificate can be started only when the request for a duplicate share certificate has reached the company.
• The board need to approve the issuance of the duplicate shares certificate.
• The board need to follow the below rules before authorizing the issuance of a duplicate share certificate:

• The Board may impose fees as it sees fit, but no more than 50 rupees per share certificate may be charged.
• When issuing a duplicate share certificate by the company, the Board of Directors need to check the out-of-pocket costs involved in looking into the evidence given by the shareholder.

• Following approval by the board of directors, the process of creating a duplicate share certificate can start.
• After reviewing all the paperwork, the company will give the share certificate.
• Within four to six weeks, the duplicate share certificate should be issued.
• A duplicate share certificate will be issued to the listed company in 45 days of the paperwork being submitted.
• Within three months of the business documents being submitted, a duplicate share certificate will be given to an unlisted company.
• Entries should be entered on Form SH-2 in the register of duplicate and renewed shares after the duplicate share certificate has been issued.
• The SH-2 is outlined in the Companies (Share Capital and Debentures) Rules, 2014.
• The duplicate share certificate should include the following lines written or stamped under the words "Duplicate" in block letters: "Duplicate issued in the lieu of share certificate No.
• The company's registered office or another location where the company maintains a member registration should keep the register. The secretary of the company or another person designated by the board of directors can also keep the register.

Conclusion

Issuance of duplicate share certificates is very important to the balancing of interests and lowering pressure both on shareholders and on the company. Complying with the legal framework, maintaining transparency and following the process would ensure smooth handling of such matters for companies. Understanding the process and completing documentation are basics for a shareholder to protect his rights in getting a duplicate share certificate.