If the al 'bar -eri mate ted defa:.-d ortorrr themember concerned nuoN stirrer de :. m n:e con.p m an application for the issue of a fresh cert 'i cute He shout 7 also p.,y he requisite fee The secretary of the connpany is generally mthonsed to ar ange the issue of a fresh certificate On receipt of the application for duplicate eer.ificate along the mutilated, defaced or town original certificate, the original certificate is cancelled by pu a cancellation rnark' on it Then the secretary arranges to issue and despatch a duplicate after ma necessary entnes in the Register of Members and the Register of Renewed and Duplicate Certificates
When a share certificate IS lost or stolen or destroyed, the shareholder is required to give a statutorystating the facts. Further, he is required to give a letter of indemnity Bond' in favour of the company. and also a bank guarantee, in addition to the indenmitubond, if required The shareholder sends an application to the company for the issue of a duplicate certificate along with the affidavit and indemnity bond and the requisite fee. On receipt ofthe application, the company gives a public notice through newspaper advertisement reoortiuloss or des:mction of the certificate. The shareholder concerned may be asked to bear the cost of the ads ertisement as well as incidental expenses incurred for the purpose.
The above requirements having been fuh'illed issue of a duplicate certificate has to be sanctioned to the Board through a proper resolution. The secretary mav then arrange to deliver the duplicate certificate after ma necessary entries in the Register of Members. A separate Kegister of Renewed and Duplicate Centi Icates is often maintained for recording all particulars of such issues: Entries have to be made In that register before the fresh certificate is .
190 'S: SECRETARIAL PRACTICE
LEGAL EFFECTS OF SHARE CERTIFICATE
Under Sec. x 4(1) of the Cmnpanies Act. 1956, a share cen recognized as a doeunnent issued by the company under its corwhiclr ltcs a prima facie evidence of the title of the member t? shares specified t:hereirt. The legal of liis statutory provision may in stated as under:
(a) ENidence of title to shares. A share certificate is not a negotiable instniment and. therefore, the legal ownership of tile shares specified in it be transferred by mere deliverv of the certificate For this, an inst urnent oftranster has to be executed by the legal owner of the shares In favour ofthtransferee who becomes the new legal owner only when his name is registered as a shareholder in the books of the company on the basis of the instrument of transfer Tfie legal ownership or title to the sltares lies with the registered holder of the shares.
Thus. a share certii.cate does not constitute title to the shares an evidence to title. It arrounts to a statement or dc,claratimi made by the company that the person named in the certificate is Ills legal owner of the shares specif ed herein and that the shares are paid up to the extent stated in it. However, by ma this statement under its seal the co:mpanNbinds itself as to the title and prn:neiit on shares and is estoRed from denying these facts aftehvards.
(b) Estoppel a. to title to rhrii-esi Since a share certificate is prima facie evidence of title to the shares specified therein, he company is estopped from denying the title of Nhe person in whose name the certificate has been issued, provided that person has acquired the shares iri good faith and a genuine i ansfer for N stile (Re Bahia and San Francisco Rlyshare certificate being only apnrrra facie evidence, and not a conclusive one, the company can deny tile title of a person Alto has obtained the shares of a forged transfer, either hi good and refuse to register him as a sli.uelici.!.i But if that sluarc certificate is subsequent transferred to .niotiicr parson ulio acquires the shales m good faith and undo. a genuine tra.istcr lorvaluc. tire company cannot denvtiie title of th.it se.a transferee. if the company issues a share certificate to a person NN2i has acquired the shares umde! a forged or fraudulent transfer, the compa m
INCORPORATION OF A COMPANY 1S3