The directors are empowered to issue new duplicate share certificate in place of original certificate if such certificate:
(a) is proved to have been lost or destroyed, or
(b) having been defaced or mutilated or torn is surrendered to the company [Sec. 84 (2)].
When the original certificate is lost or destroyed, the procedure for the issue of duplicate certificate is a lengthy one. The articles generally prescribe some terms and conditions for the issue of a duplicate share certificate, as to evidence and indemnity etc., in such a case. Usually the shareholder concerned is required to give an Affidavit (statutory declaration) in which he states the fact of loss or destruction of the certificate under oath.
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He is also required to sign me Indemnity Bond in which the shareholder will agree to indemnify the company against any claim that maybe made by any person on the original certificate. Further, a public notice regarding the loss or destruction of the certificate is given in some leading newspaper at the cost of the shareholder. A fee of not more than Rs 2 per certificate issued is also charged for the duplicate certificate.
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The specimen forms of (i) ‘Letter asking for affidavit and indemnity bond’, (ii) the ‘Affidavit’, (iii) the ‘Indemnity Bond’, and (iv) the Newspaper advertisement regarding lost certificate
After all the above requirements arc complied with, the application for the issue of a duplicate certificate along with the above papers will be placed before the Board, which, if satisfied, will pass a resolution for the issue of duplicate certificate. This certificate shall also be duly sealed and signed and the word ‘DUPLICATE’ shall appear across the face of such share certificate. The secretary will then arrange to dispatch the duplicate certificate after making the necessary entries in the Register of Members. A separate Register of Renewed and Duplicate Certificates is often maintained for recording all particulars of such issues.
In case the duplicate certificate is required because the original share certificate is defaced or mutilated, the procedure is simple. The shareholder along with his application sends the original certificate. The secretary on receipt of the same issues a ‘Lodgement Receipt’ to the shareholder. The matter is then placed before the Board of Directors, which, if satisfied, passes a resolution and the secretary is directed to issue a new share certificate after cancelling the old one.
The work of preparation of new share certificate, its dispatch and entry on the Register of Members shall now be undertaken just like the first case (when original share certificate is lost or destroyed). Note that in this case, since the old certificate is available for cancellation, there is no need for giving advertisement in newspaper or obtaining Indemnity Bond from the shareholder.
Penalty for fraudulent renewal :
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If a company with intent to defraud renews a certificate or issues a duplicate thereof, the company shall be punishable with fine which may extend to ten thousand rupees and every defaulting officer shall be punishable with imprisonment up to six months or fine up to Rs 10,000 or with both [Sec. 84(3)].
Penalty for personation of shareholder (Sec. 116) :
If any person falsely and deceitfully personates a shareholder or the owner of a share warrant, and thereby obtains or attempts to obtain any such share certificate or any such share warrant or receives or attempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term up to three years and shall also be liable to fine.