Table of Contents
- What Is a Stock Certificate?
- Why Do I Need a Stock Certificate?
- What Happens If I Do Not Have a Stock Certificate?
- When Is a Certificate of Stock Used?
- What Should Be Included in a Stock Certificate?
1. What Is a Stock Certificate?
A Stock Certificate is a legal document that proves and records ownership of a certain number of shares or stock in a corporation.
A Certificate of Stock will contain the following basic elements:
- Name of the Corporation
- State of Incorporation
- Date Incorporated
- Number and Class of Shares Issued
- Registered Number of Certificate
- Name of Shareholder
- Date Certificate Issued
- Authorized Signatures
- Corporate Seal
As a reference, people often call a Stock Certificate by other names:
- Certificate of Acquisition
- Notice of Shareholder Ownership
- Physical Certificate
- Paper Stock Certificate
- Share Certificate
Stock Certificate Sample
The sample stock certificate below details an agreement among the shareholder, ‘Vicki E Krebs’, and ‘Adan J Tolar’ and ‘Sherry M Florence’, the president and secretary of ‘ABC, Inc.’ respectively. By signing the document, Adan J Tolar and Sherry M Florence confirm that Vicki E Krebs owns twenty shares of common stock of ABC, Inc.
Stock Certificate2. Why Do I Need a Stock Certificate?
A Certificate of Stock serves as evidence that a stockholder owns shares of stock. With proof of ownership, the shareholder may receive annual reports, declare dividends, and receive invitations to shareholder meetings. Additionally, holding a physical copy of the certificate may make it easier to get a loan on the value of the shares.
3. What Happens If I Do Not Have a Stock Certificate?
Without a Certificate of Stock, the shareholder does not have proof of purchase or ownership. The U.S. Securities and Exchange Commission provides guidance on what to do if your securities certificate is lost, accidentally destroyed, or stolen. A Certificate of Stock serves as a record that you owned the shares and allows you to sell your stock quickly if needed.
4. When Is a Stock Certificate Used?
A Certificate of Stock is often provided to shareholders as proof of ownership, especially in closely held corporations with only a small group of shareholders or investors. The Secretary of the corporation should record all shares issued and maintain an accurate list of all shareholders.
5. What Should Be Included in a Stock Certificate?
A Certificate of Stock should generally address the following:
- Who is receiving the stock certificate
- What is the registration number of the stock
- When the stock was issued
- Where the company was incorporated
- How many shares of stock and their value
Here are some other useful details a Certificate of Stock might include:
- Corporate Seal: some states require a seal to validate certificates
- Transfer Restrictions: check the corporate filing documents for fine print
For more information, the U.S. Securities and Exchange Commission describes your choices as an individual investor when it comes to owning stocks.
