What happens if a share certificate is missing? 6 top FAQs answered by experts

In this guide, we answer six key FAQs about missing share certificates, including how to obtain a duplicate certificate, why an indemnity is important, and what to do if you find the original certificate after a replacement has been issued. Read on to learn how to navigate the process smoothly and ensure your shareholding remains secure.

1. What happens if a share certificate is lost?

A share certificate is a paper or digital document that confirms a shareholder's ownership of a certain number of shares in a company. It typically includes the shareholder's details, the date of issue, and the number, class, and nominal value of the shares held. A share certificate serves as evidence of ownership - so for many, losing one can be concerning, especially if you plan to sell your shares in the future. However, the good news is that a lost share certificate can usually be replaced with a duplicate, provided the company’s articles of association allow it. The legal owner of a company's shares is recorded in the register of members, and is not determined by possession of the physical certificate.

2. How can the loss of a share certificate be rectified?

If a share certificate has been lost, stolen, or destroyed, most companies' articles of association allow the directors to accept an indemnity from the shareholder instead of the missing certificate. This indemnity serves as a guarantee that the company won’t face any financial losses if the lost certificate resurfaces and is misused.

The company may also choose to issue a replacement certificate. If this is the case, the shareholder requesting the new certificate will usually need to:

• Provide evidence of the loss, such as a written declaration.

• Return the damaged certificate if it still exists.

• Sign an indemnity to protect the company from potential liability.

You can find Docue's share certificate template here.

3. Why is an indemnity important?

An indemnity is essential before issuing a duplicate certificate because it protects the company from potential financial loss. If the original certificate resurfaces and is fraudulently used to sell the shares to an innocent third party, the company could be held liable for damages. Essentially, by issuing a certificate, the company is making a statement that the named shareholder is the rightful owner - so if that certificate is later misused, the company could be on the hook for the value of those shares and any related costs incurred.

To find out more about indemnities and how they differ from warranties, read this blog.

4. What happens if I find the original share certificate after giving an indemnity?

If you find the original certificate after receiving a replacement, you should check the terms of the indemnity to determine the required action. In most cases, the original certificate must be returned to the company or registrar for cancellation to prevent any perceived duplicate ownership issues. Some indemnities may specify that you must destroy the original instead. Always follow the instructions outlined in the indemnity to avoid any potential legal or financial consequences.

5. Does a lost share certificate prevent a share transfer?

No, a lost share certificate does not prevent a share transfer. If a share certificate goes missing, don’t panic - the transfer of shares can still proceed, as long as the company and shareholder follow the right steps according to the company's rulebook. Whether through an indemnity or a replacement certificate, there are solutions to ensure smooth ownership transitions while keeping the company protected. When shares are sold, legal ownership only transfers once the buyer is entered into the company’s register of members.

6. How can I create a missing share certificate indemnity?

With Docue, you can create a top-quality missing share certificate indemnity letter in just minutes. Our easy-to-use platform guides you through the missing share certificate indemnity template process step by step ensuring your document is legally sound and tailored to your needs. It includes model clauses designed by our lawyers to help you draft the indemnity yourself and tailor it to your needs.

Our templates also include guidance notes that have been drafted by our lawyers throughout to help you through the document creation process.

E-signature: Signatures can be collected electronically via the e-sign function.

Secure storage: All legal documents that you make are securely saved in your company's own contract account, Docue Drive.

Sign up now to use Docue's missing share certificate indemnity template.