sebi

Understanding Duplicate Share Certificates: A Complete Guide to Procedures and Compliance

Understanding Duplicate Share Certificates

A duplicate share certificate is a legal document issued by a company to replace an original share certificate that has been lost, damaged, or destroyed. This certificate acts as valid proof of ownership, allowing shareholders to exercise their rights, such as voting, receiving dividends, and participating in corporate actions.

Key Regulatory Framework

The process for issuing duplicate share certificates is governed by several critical regulations, including:

  • Section 46 of the Companies Act, 2013
  • Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014

SEBI Circulars:

  • SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2021/655 dated November 3, 2021

  • SEBI Circular dated May 25, 2022

  • Indian Stamp Act, 1899

Updated Procedure for Issuance of Duplicate Share Certificates

Step 1: Notify the Company or Registrar and Transfer Agent (RTA)

  • Inform the company or RTA about the loss or damage of the share certificate via email or formal letter.
  • Include the following information:
    • Folio number
    • Certificate number
    • Distinctive number range
    • Number of shares held

Step 2: File an FIR or e-FIR

  • Report the loss by filing an FIR or e-FIR at the local police station.
  • Ensure the FIR contains details such as folio number, certificate number, and distinctive numbers.

Step 3: Submit Required Documents

Shareholders must prepare and submit the following documents to the company or RTA:

  • Copy of the FIR/e-FIR
  • Indemnity Bond on non-judicial stamp paper (₹100)
  • Affidavit affirming ownership and loss of certificates
  • ISR-4 form (as prescribed by SEBI), duly filled and signed
  • Self-attested copies of PAN card and proof of address

Step 4: Special Guidelines for Overseas Shareholders

Individuals residing abroad should:

  • Submit a notarized or apostilled self-declaration, attested by the Indian Consulate/Embassy.
  • Include self-attested copies of a valid passport and proof of overseas address.

Step 5: Approval from Board of Directors

Before issuing duplicate certificates, the company must secure approval from its Board of Directors. A board resolution should authorize the issuance and ensure compliance with regulatory requirements.

Step 6: Issuance in Dematerialized Form

In compliance with SEBI’s directive (January 25, 2022), duplicate securities must be issued solely in dematerialized form. Shareholders without a Demat account will need to open one for this process.

Step 7: Record Keeping

Details of all duplicate certificates must be recorded in Form SH-2 (Register of Renewed and Duplicate Share Certificates). This register should be maintained at the company's registered office or any location approved by the Board.

Simplified Framework for Small-Value Securities

For securities valued up to ₹5 lakh, the process is streamlined:

  • No requirement for public newspaper advertisements.
  • Surety forms are no longer necessary.
  • Shareholders can submit a self-declaration alongside other documents directly to the company or RTA.

Timelines for Issuance

  • For Listed Companies: Duplicate share certificates must be issued within 45 days from the submission date of all required documents.
  • For Unlisted Companies: Issuance must occur within three months.

Additional Safeguards Against Fraud

  • In cases of fake or forged certificates, RTA or listed companies must seize and deface them.
  • Companies should have contingency insurance policies in place to manage risks related to fraudulent claims of duplicate certificates.

Dematerialization Process

If physical shares are lost, damaged, or inherited:

  • Submit a Dematerialization Request Form (DRF) along with required documents, such as original share certificates and a PAN card copy.
  • Send verified documents via courier to your broker (e.g., Zerodha) for processing with RTA.
  • The dematerialization process typically takes up to 25 days.

Challenges in Issuing Duplicate Certificates

  • Administrative Burden: Document preparation, approvals, and compliance can be lengthy.
  • Cost Implications: Although printing costs for physical certificates are eliminated due to mandatory dematerialization, courier charges still apply.
  • Security Risks: Robust cybersecurity measures are vital to protect digital ownership records from hacking or unauthorized access.

Recent Amendments

In May 2022, SEBI revised the requirements for small-value securities:

  • The mandate for dematerialized issuance reduces the risks associated with physical certificates.
  • Overseas shareholders can now utilize notarized declarations instead of FIRs.
  • Enhanced fraud prevention includes mandated insurance policies and stricter documentation protocols.

Conclusion

The updated procedure reflects India's transition towards digital securities management, simplifying the process for shareholders obtaining duplicate share certificates. This transition promotes greater transparency, reduces administrative burdens, and enhances security, in accordance with SEBI’s regulatory framework.

For further assistance, shareholders are encouraged to contact their company’s RTA or review SEBI’s official circulars available on their website.