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Share certificates - Coggle Diagram
Share certificates
Lost share certificates
Due to the enduring nature of share certificates and the prohibition on the company from denying the holders title to the shares represented by the crtificate, indemnities are usually sought for the issue of a duplicate certificate to protect against the original share certificate being subsequently found and being used fraudulently to support a transfer of shares
This indemnity should be joined in by a bank, insurance or trust company, for which a fee is usually charged
If a share certificate is reported lost a note should be made in the register that a particular certificate is reported missing.
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On receipt of the duly completed indemnity, a duplicate certificate clearly marked as a duplicate is prepared and issued on payment of any fee required under the Articles
The register is amended to note that the original certificate has been lost and a duplicate issued in its place,
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Certification
When members are transferring only part of their holding, the may be unwilling to forward their share certificate to the pruchaser
Even when provided with a share certificate, the purchaser may want verification that the certificate is valid before paying over the purchase monies which delays the tanker process
To resolve this issue, the transferor should forward the certificate and stock transfer form to the company for certifying
The company will then stamp the transfer form noting that the certificate representing the shares on the transfer form has been lodged with the company
This process can be undertaken in advance before the identify of the transferee is known and accordingly avoid any delays once a purchaser has been found
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Proof that a person is or is not a member of the company is obtained by examination of the register of members
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The company is prohibited from denying the title of the person named in the certificate to the shares specified in it or that shares are fully paid if the share certificate states that they are
For security reasons, it is recommended that the number of shares should be shown twice on the certificates of listed companies ideally once in figures and once in words
It is not necessary to show addresses of shareholders on share certificates and this may eb preferable since this information is rarely kept up to date
Companies whose shares are traded on a public market will also have their shares admitted to CREST to enable the holding of shares electronically without the need for a physical share certficate