Company Share Transfer

How to Recover Lost Share Certificate

A share certificate is a legal document that is duly signed and attested by the company, signifying the shares held by the individual in that company or entity. It prima facie acts as evidence of the individual’s title on the amount invested by such individual or entity in that country’s capital. There are chances where the shareholder has misplaced or lost the share certificate. In that case, under Section 46 of the Companies Act 2013^[1] and Rule 6(2) of the Companies (Share Capital and Debenture) Rules, 2014, the company can reissue duplicate share certificates to the shareholder.

Initial steps in case of a Lost Share Certificate

The following steps shall be taken by the shareholder in case the share certificate is lost:

• Inform the company: The first step of the holder of a share certificate is to inform the issuing company about the fact of lost certificates.
• Communication: The holder of the share certificate shall communicate by any means to the company. The means can be E-mail, speed post, phone or any other fast means of communication.
• Disclosure of Information: The holder of a share certificate shall state all the information pertaining to shares, such as certificate no., name and address, folio number etc.

Procedure for re-issuance of Lost Share Certificate

The SEBI, via circular dated 25^thMay 2022, has simplified the procedure and standardised the format of documents for the issuance of lost share certificate:

1. Filing of Complaint: The holder of the lost share certificate has to file a complaint that would act as documentary evidence signifying the loss of the certificate. The details shall include the folio, distinctive, and certificate numbers. It will include:
2. E-FIR
3. Police Complaint
4. Court Injunction order
5. Copy of plaint (in case the suit is accepted and suit no. is being provided)
6. Publish Advertisement: The holder of the share certificate shall be required to publish an advertisement in a widely circulated newspaper. The advertisement will state the loss of share certificate, including all the relevant information (such as folio number, certificate no., company’s name etc.)
7. Submission of Affidavit: The holder of the lost share certificate is then required to submit an affidavit and indemnity bond with the RTA / Issuer Company as per the prescribed format stated by the board.
8. Non- Requirement of Surety Bond: The holder of the share certificate does not require any surety bond in case of issuance of duplicate shares.
9. Value of the Securities: The holder of the lost share certificate will be required to determine the value of his share. The valuation of the share will take place based on the closing price of a such share in any one of the RSE (Recognised Stock Exchange). The value will be taken prior to the submission of documents.
10. Non-availability of Certificate Numbers: In case the holder of the lost share certificate forgets the certificate numbers or folio numbers. The RTA (registrar and Transfer agents) can provide the details to the holder on the request made by him, provided that before stating the number, the RTA shall verify the signature and the address of the holder with the company’s records. If the signature and address do not match, the holder must comply with the KYC procedure.
11. Issuance in DEMAT Form: After all the examination by the company and the RTA of the document submitted by the holder, the duplicate securities shall be issued in DEMAT Form, keeping in view the SEBI circular date of 25^th January 2022.

Note: If the securities held are for less than Rs 5, 00,000, then the requirement of points (1) and (2) are not mandatory.

Steps to be followed with the company to recover the Lost Share Certificate

Rule-6(2) of the Companies (Share Capital and Debenture Rules), 2014 determines the provision for issuance of duplicate shares in case the share certificate gets lost or destroyed.

• Prior Consent: Rule 6(2) (a) states that the prior consent of the board of the company is needed before issuing duplicate shares. The application for issuance of duplicate shares shall be submitted with the payment of an amount not exceeding Rs 50 per certificate.
• Payment of Expenses: The application shall comprise all the documents evidencing the title to the shares and an indemnity bond. The certificate holder will be required to bear all the out-of-pocket expenses incurred by the company in the process of investigating the supporting documents.
• A share certificate issued: The certificate issued under this rule shall be recorded in the register maintained for this particular purpose. The certificate shall include “duplicate issued in lieu of share certificate no. …………………………...” on its face, and it shall bear the stamp “duplicate” stamped prominently on the share certificate.
• Time Limit: According to the rule, the duplicate share certificate of an unlisted company shall be issued within three months, and for listed companies, it shall be issued within 15 days of submitting the application.

Registration of Share certificate

According to Rule 6(3) of Companies (Share Capital and Debenture Rules), 2014, the share certificatere issued shall be required to be registered in the register maintained by the company at its office.

• Form: The Company shall, after issuing a duplicate share certificate in pursuance of the lost share certificate, must register all the necessary information against the person to whom such shares were issued earlier. It should contain the date and number of a share certificate issued. The company will enter all the information in the Register of Renewed and Duplicate certificate maintained in Form No. SH.2.
• Registered Office: The register shall be placed at the registered place of the company, and it shall be preserved permanently. The company secretary or any member authorised by the board on this behalf will have custody of this register.
• Authentication: Any changes made in the Register of Renewed and Duplicate certificate shall be authenticated by the Company Secretary to sign and seal the share certificate.

What are the documents required to be submitted?

According to SEBI circular dated 25^th May 2022, the following documents are required to be submitted:

1. Duly Not arised Affidavit from the holder of share certificate signifying the title to the share certificate. It shall include the number of shares, company name, folio no., certificate number, and signature.
2. A letter of Complaint
3. An indemnity Bond
4. An investor Service Request Form-4 (ISR4)

Conclusion

The shareholders with physical share certificates have often faced problems related to misplacement or losing the share certificate, which may result in heavy financial loss to the Shareholder. The Security Exchange Board of India has made the process of retrieving the lost share certificate seamless and convenient for the public. It is essential that proper documentation and process are followed by the aggrieved. There is a turnaround time of 15 days for obtaining a duplicate share certificate from the company; for more information and legal troubles with regard to Shares Recovery, contact experts at Enterslice.

Read our Article: Procedure for Issuance of Duplicate Share Certificate