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April 17, 2014

Re: California Corporations - Something May Be Missing In Your Affidavit Of Lost Share Certificate

When a certificated security has been lost, destroyed or wrongfully taken, the issuer has an obligation to replace that certificate if the owner:

  • So requests before the issuer has notice that the certificate has been acquired by a protected purchaser;

  • Files with the issuer a sufficient indemnity bond; and

  • Satisfies other reasonable requirements imposed by the issuer.

Cal. Comm. Code § 8405 and Cal. Corp. Code § 419.

Often issuers will require the owner to submit an “Affidavit of Lost Share Certificate”.  Undoubtedly, this is a “reasonable requirement” within the meaning of the statute.  Often, however, I find that something is missing from these affidavits.

The California General Corporation Law contemplates that certain instruments will be “verified”.  For example, an “officers’ certificate” is “a certificate signed and verified by the chairman of the board, the president or any vice president and by the secretary, the chief financial officer, the treasurer or any assistant secretary or assistant treasurer.”  Cal. Corp. Code § 173.  The law provides for two methods of verification – by affidavit and by declaration.  Cal. Corp. Code § 193.

So what’s the difference between an “affidavit” and a “declaration”?  Essentially, an oath.  A declaration is a statement made “under penalty of perjury” and stating the date and place (whether within or without this state) of execution.  An affidavit is a signed statement made under oath before an officer authorized by the laws of this state or of the place where it is executed to administer oaths.  See Cal. Code Civ. Proc. § 2003 (“An affidavit is a written declaration under oath, made without notice to the adverse party.”)  Sometimes, people will overlook the oath requirement and omit the jurat.  In California, the wording of the jurat is prescribed by Government Code Section 8202.

According to the Notary Public Handbook published by the California Secretary of State’s office:

Key wording of a jurat is “Subscribed and sworn to (or affirmed) before me.”  A jurat cannot be affixed to a document mailed or otherwise delivered to a notary public whereby the signer did not personally appear, take an oath, and sign in the presence of the notary public, even if the signer is known by the notary public. Also, a notary public seal and signature cannot be affixed to a document without the correct notarial wording.

*There is no prescribed wording for the oath, but an acceptable oath would be “Do you swear or affirm that the statements in this document are true?” When administering the oath, the signer and notary public traditionally each raise their right hand but this is not a legal requirement.

© 2010-2014 Allen Matkins Leck Gamble Mallory & Natsis LLP

About the Author

Keith Paul Bishop, Business Attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients on compliance,...

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