A stock certificate is a document that proves ownership of a certain number of stocks or shares. Even though most companies issue stocks digitally, some investors may prefer to have a paper trail.
What Is a Stock Certificate?
A stock certificate is a legal document that proves and records ownership of a certain number of shares of stock in a corporation. A stock certificate serves as evidence that a stockholder owns shares of stock. The authorized officers of the corporation, usually the President and the Secretary, should sign the stock certificate.
With proof of ownership, the shareholder can get access to annual reports, declare dividends, and receive invitations to shareholder meetings. Additionally, holding a physical copy of the certificate may make it easier for the investor to get a loan on the value of the shares.
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 corporation’s secretary should record all shares issued and maintain an accurate list of all shareholders.
What to Include in a Stock Certificate
A stock certificate will contain the following essential elements:
- The name of the corporation
- The state of incorporation
- The date of incorporation
- The number and class of shares issues
- The registered number of the certificate
- The name of the shareholder
- The date the certificate was issued
- The signatures of authorized personnel
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
Consider the following when creating your corporate stock certificate:
- 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
Stock Certificate Template
Review our stock certificate template so you can better understand how to fill it out. Download it as a PDF or Word file below:
Frequently Asked Questions
If a company merges with another one, the stock certificate might be worth a certain value in the new company.
No, stock certificates don’t expire. As long as the company still exists, the certificate holder can prove they own shares of the company. If a company has gone bankrupt, the stock certificate probably won’t have any monetary value.
You don’t usually have to issue a paper stock certificate unless the investor asks for one. Most investors can view online account statements with their broker. They can review this information to know how many shares they have in their portfolio.