Share Certificates issued by Company is an acknowledgment that the holder of the certificate has contributed to the capital of the Company. Thus, share certificate is a form of property that one holds.
However, it often happens that these certificates got lost or misplaced or torn out. In such situation shareholder must apply to Company to issue duplicate share certificate or renew old share certificate in lieu of original share certificate.
Shareholders apply for issue of duplicate or renewed share in various cases like:
- Share certificate belongs to elderly member of family, misplaced long ago or family is unaware of the fact.
- Applicant wants duplicate certificate for process of transmission.
- In case of theft of share certificates shareholder applies for duplicate share certificate.
- In case of torn or mutilation of old share certificate.
- In case of split and consolidation of shares etc.
In all such cases Company has to take utmost care to prevent any kind of fraud in issue of duplicate shares.
Legal Provisions for Renewal of Certificate.
Renewal of Certificate in general terms means to get new certificate in exchange of the existing certificate.
Sub rule 1 and 3 of Rule 6 of Companies (Share Capital and Debenture) Rules 2014 states provision of Issue of Renewed Certificate.
It states that Company can renew shares in below case:
- Replacement of those which are defaced, mutilated, torn or old, decrepit, worn out,
- Where the pages on the reverse for recording transfers have been duly utilised,
- Company can also charge fees as Board thinks fit but it should not exceed fifty rupees per certificate. However also that no fee shall be payable pursuant to scheme of arrangement sanctioned by the High Court or Central Government.
- When a certificate is issued in any of the above cases, it shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is“Issued in lieu of share certificate No….. sub-divided/replaced/on consolidation”
- Company may replace all the existing certificates by new certificates upon sub-division or consolidation of shares or merger or demerger or any reconstitution without requiring old certificates to be surrendered if proper board resolution is passed and issues as per the provisions of Companies Act 2013.
Legal Provisions for Issue of Duplicate Certificate.
Duplicate share Certificate in general terms means to get new certificate when the existing certificate is lost or destroyed, and applicant is not in possession of certificate.
Sub rule 2 and 3 of Rule 6 of Companies (Share Capital and Debenture) Rules 2014 states provision of Issue of Duplicate Certificate.
- Company can issue duplicate certificate with the prior consent of Board and it may charge fees as the Board thinks fit, not exceeding rupees fifty per certificate.
- Company can ask for supporting documents like affidavit, indemnity bond, copy of FIR etc.
- When a certificate is issued in above case, it shall be stated prominently on the face of it and be recorded in the Register maintained for the purpose, that it is “duplicate issued in lieu of share certificate No……”. and the word “duplicate” shall be stamped or printed prominently on the face of the share certificate.
Register of Duplicate Shares
Sub 3 of Rule 6 of Companies (Share Capital and Debenture) Rules 2014 states for maintenance of register of duplicate shares.
- Register of Renewed and Duplicate Share Certificates maintained in Form No.SH.2.
- The register shall be kept at the registered office of the company or at such other place where the Register of Members is kept.
- It shall be preserved permanently.
- It shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for the purpose.
- All entries made in the Register of Renewed and Duplicate Share Certificates shall be authenticated by the company secretary or such other person as may be authorised by the Board for the purposes of sealing and signing the share certificate
Process of Issue of Renewed and Duplicate Share Certificate
Below given is a summarised procedure for Issue of Renewed and Duplicate Share Certificate.
- Any director or person authorised by the Board will dispatch a notice to call for Board Meeting after receiving request for issue of duplicate and renewed shares.
- Notice shall be given as per section 173 of Companies Act, 2013 read with secretarial standard 1 on Board Meetings.
- Conduct Board Meeting to consider the request of the applicant.
- Scrutinise all documents submitted by the applicant and if require call for additional documents.
- After receipt of full documents and after Boards satisfaction, Board will issue duplicate or renewed certificate in line with rule 6 of Companies (Share Capital and Debenture) Rules 2014.
It is important to note that Listed Companies have to follow different process to issue duplicate shares in accordance with SEBI regulations. To read for duplicate issue by listed companies click here.
Further the above process is applicable where shares are in physical mode and Registrar and share transfer agent and Depository participant are not involved.
Whether listed or unlisted company, it is very crucial to take decision of renewed and duplicates issue of shares as it involves interest of stakeholders. Therefore it is necessary for companies to duly follow to process specifies under Companies Act, 2013 and relevant rules.