Introduction: Issuing duplicate share certificates is a crucial aspect of corporate governance governed by specific provisions of the Companies Act, 2013 and related rules. Understanding the legal framework, analysis of its provisions, and the precise process are vital for companies. This article delves into the intricacies, time limits, penalties, and steps involved in issuing duplicate share certificates.
Applicable Provisions: Under Section 46 of The Companies Act, 2013, and Rules 5 and 6 of The Companies (Share Capital and Debentures) Rules, 2014, issuing duplicate share certificates is outlined with precision.
Analysis of Provisions of law
1. Eligibility for Duplicate Certificates: A duplicate certificate can be issued only in following cases:
2. Conditions for Issue: A certificate cannot be issued in exchange for consolidated, torn, or where the transfers on the back of the certificate are duly utilised instead it has to be issued only in case where the original certificate has been surrendered to the company
Provided that the company may charge such fee as the Board thinks fit, not exceeding fifty rupees per certificate issued on splitting or consolidation of share certificate(s) or in replacement of share certificate(s)
3.Issuance Statement: Duplicate certificate issued shall state on the face –
“Issued in lieu of share certificate No….. sub-divided/replaced/on consolidation” and also that no fee shall be payable pursuant to scheme of arrangement sanctioned by the High Court or Central Government:
4. The company can issue share certificates in exchange upon sub-division or consolidation of shares or merger or demerger or any reconstitution without requiring old certificates to be surrendered subject to compliance with Rule 5 of The Companies (Share Capital and Debentures) Rules, 2014
Rule 5 of The Companies (Share Capital and Debentures) Rules, 2014 deals with Certificate of shares in case where shares are not held in dematerialised form A company shall not hold the share certificates except;
a) In pursuance of a board resolution being passed;
b) On surrender of share certificate to the company
Every share certificate shall be issued in Form SH-1 which shall be signed by at least two directors or by a director or company secretary wherever applicable
Provided One Person company (OPC) can issue share certificates with signature of one director or any person authorized by the board on their behalf
As per provisions of Section 88 of Companies Act, 2013 a Register of members needs to be maintained in Form MGT-.1
5. Time Limit to issue duplicate share certificate:
6. Maintaining Records: Maintain a register or renewed and duplicate share certificates in Form SH-2 which shall be authenticated and kept in custody of the Company secretary or any authorized person at the registered office of the company.
7. Penal provisions-
Process to issue duplicate share certificate
1. Approval from the Board: Commencing with a board meeting, a crucial resolution is passed to authorize the issuance of duplicate share certificates.
2. Document Submission: Companies receive various documents including indemnity bonds, certified true copies of the resolutions passed at a duly convened Board meeting, affidavits, and the application for duplicate share certificates.
3. Verification and Issuance: Following thorough document verification, the company proceeds to issue duplicate share certificates in adherence to prescribed timelines and protocols.
4. The share certificates shall state- “Issued in lieu of Share Certificate No…”
5. Record Update: Ensuring compliance with the requirements of Rule 6, companies maintain a comprehensive register of renewed and duplicate share certificates in Form SH-2.
Conclusion: The issuance of duplicate share certificates is an intricate legal process with stringent rules and time frames. Companies must ensure compliance with the Companies Act, 2013, and relevant rules. This ensures transparency, accountability, and effective corporate governance. By adhering to the outlined process, companies safeguard against fraudulent practices and maintain the integrity of their shareholding structure.