Business, Legal & Accounting Glossary
In company law, a stock certificate – called a certificate of stock by some or also sometimes referred to as a share certificate – is a lawful certificate that verifies tenure of a detailed quantity of shares of stock in a company. In big businesses, purchasing stocks will not always give a stock certificate.
In America, electronic registration of shares is ousting the stock certificate. Firms are no longer obligatory to give paper records, and nearly 420 of the seven thousand publicly traded securities do not. Agents could charge up to five hundred dollars for supplying a paper certificate, however, this payment can be circumvented by recording stocks right with the stock transfer agent and asking them the issue of certificate.
Let’s take the example of Sweden, where the share certificates have been majorly done away with, individuals use electronic shares as an alternative. These are registered in the stock owner’s name or in the stock owner’s broker’s name. In Sweden, share certificates may be owned by few, but only those shares that are not listed on any stock exchange in Sweden. Share certificates have no relationship with voting rights. An owner of Share certificates can give proxy to another person to vote on his behalf.
There are two types of Stock Certificates one is called the registered stock certificate and the other is called the bearer stock certificates. Bearer Stock certificates as the name suggest belongs to the person who holds those certificates. The Bearer Stock certificates physical possession of the certificate entitles the holder to exercise all legal rights. There are various laws that now help to remove the bearer stock certificate and they are no more seen nowadays.
A stock certificate is a paper document indicating ownership of shares of stock in a corporation. When you purchase stock, your ownership is registered by the transfer agent and a stock certificate is mailed to you.
In modern times, most stockholders find it convenient to allow their broker to keep their stock certificates for them. There they are registered in street name. Then you rely on the broker to maintain accounting records for your shares and to mail you company reports, proxy statements, and related documents from the company. Most brokers use outside services to mail these documents. Mailings are often delayed somewhat, but most are timely.
Shareholders may still order out stock certificates after a stock purchase or from a brokerage account if desired. Some do this for safekeeping to keep their shares from being loaned to short sellers. The main reason might be to participate in a company’s dividend reinvestment program.
Certificates must be safeguarded. Selling the stock requires signing the back of the certificate and delivering it within three days to your broker. A lost stock certificate can be replaced, but only with difficulty.
Fortunately, stock certificates and their owners are registered. Unlike bearer bonds, stock certificates cannot be sold by anyone who finds one. Stolen stock certificates are not marketable.
Mutual funds also issue share certificates, but they are even rarer than stock certificates. Most are held by mutual fund companies.
Registered owner
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This glossary post was last updated: 28th November, 2021 | 0 Views.