Lost share certificates

3 key takeaways

• Lost share certificates are physical proof of share ownership that can be misplaced or destroyed.
• Replacing lost certificates involves contacting the issuing company or its transfer agent and often requires completing an indemnity bond.
• Shareholders should act promptly to replace lost certificates to maintain their ownership rights and avoid complications in future transactions.

What is a lost share certificate?

A lost share certificate is a physical document that has been misplaced, stolen, or destroyed. These certificates serve as proof of ownership of shares in a company and are essential for executing certain transactions, such as selling the shares or transferring ownership. When a certificate is lost, the shareholder must go through a specific process to get a replacement issued by the company or its transfer agent.

Importance of lost share certificates

• Proof of ownership: Without the certificate, proving ownership of shares can be difficult.
• Necessary for transactions: Share certificates are often required for selling shares or transferring them to another party.
• Protection of rights: Replacing lost certificates ensures that shareholders maintain their rights and interests in the company.

How lost share certificates work

Reporting the loss

When a shareholder realizes a share certificate is lost, they should immediately report the loss to the company’s transfer agent or the company’s shareholder services department. This helps to prevent unauthorized transactions with the lost certificate.

Completing necessary forms

The shareholder will typically need to fill out an affidavit of loss and possibly an indemnity bond. The indemnity bond protects the company from any future claims if the lost certificate is found and misused.

Paying fees

There may be fees associated with the issuance of a new certificate. These fees cover administrative costs and the indemnity bond premium.

Issuance of a new certificate

Once the necessary paperwork is completed and any fees are paid, the company or transfer agent will issue a replacement certificate to the shareholder.

Examples of lost share certificates

• Individual investor: An individual who misplaces their share certificates during a home move needs to contact the issuing company to get replacements.
• Inheritance scenario: Heirs of a deceased shareholder find that the share certificates are missing and must follow the replacement procedure to claim ownership of the shares.
• Damage incident: Share certificates damaged in a natural disaster, such as a flood or fire, require the shareholder to obtain replacements.

Real world application

• Corporate mergers and acquisitions: During a merger or acquisition, companies often require shareholders to submit their share certificates. Lost certificates need to be replaced promptly to ensure a smooth transaction.
• Estate settlements: Executors of estates must ensure all share certificates are accounted for. Lost certificates complicate the distribution of assets to beneficiaries.
• Divorce settlements: In divorce proceedings, shares might need to be divided between parties. Lost share certificates must be replaced to facilitate the division.