A share certificate is a certificate issued by the company under its common seal specifying the shares held by any member and the amount paid on each Share. A share certificate is evidence of title of the allottee or transferee to the shares. It is a declaration that the person in whose name the certificate is made out ant to whom it is given, is a shareholder in the company. Share certificate is not a negotiable instrument. Thus, the share certificate is a statement by the company that the moment when it was issued, the person named in it was the legal owner of the shares specified in it, and those shares were paid-up to the extent stated. Share certificate is an important document and it is a duty of shareholder to keep his share certificates in a safe and secure place so to avoid damages to the share certificates. But there are possibilities that the certificate may get torn, mutilated, or defaced, accidentally or otherwise. It may also be lost, misplaced or stolen. In such situation, question of the issue of duplicate share certificate arises.
Duplicate Share Certificate:
Duplicate share certificate(s) are issued in lieu of defaced/damaged share certificates. The defaced/damaged share certificates may be sent with a request letter along with relevant information to facilitate issue of duplicate certificate(s).
Section 46(2) of the Act, lays down that a duplicate certificate of shares may be issued, if such certificate- (a) is proved to have been lost or destroyed; or (b) has been defaced, mutilated or torn and is surrendered to the company. The fact of being a duplicate share certificate must be mentioned on the certificate.
In Inter Sales v. Reliance Industries Ltd., (2002) 108 Co Cases 60 case, the Calcutta High Court held that civil courts do have jurisdiction to determine matters relating to the ownership of shares and can order a company to issue a duplicate share certificate to the bonafide shareholder.
Section 46(5) of the Act, lays down that if a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who is in default shall be liable for action under section 447.
Procedure for Issue of Duplicate Share Certificate:
A request letter from the shareholder(s) is mandatory.
- True copy of FIR or acknowledgement of police complaint with rubber seal of the police station (to be furnished in English for out of Maharashtra shareholders) Certificate details to be mentioned like Name of the company, Certificate number, Distinctive number, Name of the shareholder(s) and Folio number.
- Indemnity bond & affidavit executed and notarized on stamp papers of Rs. 500/- and Rs. 100/- respectively with photograph of applicant, the draft of which is enclosed. (Witness should be other than family member).
- An advertisement to be published in a national daily (English newspaper) as per the attached format. The full sheet of the particular page in which the advertisement is printed also be attached. (If the market value of shares is more than Rs. 10,000/-)
- Self-attested copy of pan card (compulsory) along with Aadhar and voter id
- Self-attested copy of telephone bill / electricity bill (not older than 3 months).
- Signature attestation by bank manager under his / her official stamp & seal with complete bank address & telephone number.
- Self-attested copy of pan and Aadhar card of witness mentioned in Indemnity Bond.
- Original cancelled cheque leaf with name of the shareholder(s) printed of the same bank from where the above Signature attestation obtained.
- Notarised copy of registered rent agreement (if applicable)
- Notarised copy of death certificate (if applicable) Instruction for Issue of Duplicate Share Certificate
Affidavit:
- It must be executed on Rs.100/- non-judicial stamp paper / franked for the equivalent amount/ affix special adhesive stamps of Rs.100/-. (For Companies whose registered office is situated in Maharashtra)
- For Companies outside Maharashtra, affidavit must be executed on Rs.100/- non-judicial stamp paper/ franked for the equivalent amount/ affix special adhesive stamps of Rs.100/-.
- Kindly mention the name and registered office of the Company whose shares have been lost.
- It must be duly completed in all respects i.e. Name of all shareholders, address, folio number, certificate number, distinctive number and number of shares lost.
- Affidavit must be signed by all the shareholders registered under the folio.
- The signature(s) of the holder(s) on the affidavit must be affirmed before the Notary Public/ Magistrate. 7. Date of execution and attestation should be present on the document.
Conclusion:
There are possibilities that the certificate may get torn, mutilated, or defaced, accidentally or otherwise. It may also be lost, misplaced or stolen. In such situation, question of the issue of duplicate certificate arises. Under Section 46(2) of the Companies Act, 2013 Duplicate share certificate(s) are issued in lieu of defaced/damaged share certificates. The defaced/damaged share certificates may be sent with a request letter along with relevant information to facilitate issue of duplicate certificate(s). Under Section 46(5) of the Act, if a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who is in default shall be liable for action under section 447.