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We are a PA-based "C" Corporation. If a

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shareholder looses their stock-certificate, what...
We are a PA-based "C" Corporation. If a shareholder looses their stock-certificate, what is the procedure to replace it?
Submitted: 2 years ago.Category: Business Law
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1/19/2016
Business Lawyer: Lucy, Esq., Attorney replied 2 years ago
Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 32,264
Experience: Attorney
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Hi,

I'm Lucy, and I'd be happy to answer your questions today.

There are three steps for reissuing a lost stock certificate:

  1. The owner who lost the certificate must submit an affidavit, stating that the certificate was lost or stolen, giving all the facts surrounding the loss. This is for the corporations files so they are protected if the someone finds the certificate and tries to sell it.
  2. The owner must purchase a bond to protect the company from loss if someone else presents the stock certificate. The bond is usually 2-3% of the market value of the shares. If you have a small, closely held corporation that isn't traded on the open market, that could be a pretty small amount.
  3. The person who lost the certificate has to ask for a new one before someone else buys it without knowing about the loss. So, for example, if A loses the certificate, he must report it before B finds it and sells it to C, who thinks B owned it rightfully.

If all three of those conditions are filled, you can ask the person who issued the original share certificates to provide a new one. If you have a transfer agent, refer the owner to that person, and they will take care of everything. Asking all owners to make copies of their stock certificates and store them somewhere safe, separate from the originals, can also protect you if something like this happens again, because then you know exactly which stock numbers should be cancelled and not honored.

If you have any questions or concerns about my response, please reply WITHOUT RATING. It's important that you are 100% satisfied with my courtesy and professionalism. Otherwise, please rate my service positively so I am paid for the time I spend answering questions. If you are on a mobile device, you may need to scroll to the right. There is no charge for follow-up questions. Thank you.

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Customer reply replied 2 years ago
The share certificate is worth $250,000 to the seller at today's valuation. He only paid $15,000 2-years ago! Some return. Where does he get a Bond from? How does he purchase a Bond? And what happens if he does not have the 2-3% of the share value to pay for the Bond?
Business Lawyer: Lucy, Esq., Attorney replied 2 years ago

Per the S.E.C., you do not have to reissue the share if he cannot pay for a bond to protect you. To get a bond, contact the transfer agent who originally helped issue the certificates. You should have a brokerage firm that can help you with that. if you don't, try contacting a local attorney who works in securities to complete the transaction for you.

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