Facts about the Stock Certificate template

Contents

What is a Stock Certificate?

Stock certificates represent ownership in a company, and are the asset being traded when someone says they “bought stock.” They are the main ingredient in almost any financial portfolio. Certificates themselves have been issued as far back as the 1600s, and while they are no longer issued as physical pieces of paper, they are still the foundation of modern trading today.

Historically stock certificates were physical pieces of paper frequently adorned with intricate designs and inlays. This was designed to make them harder to counterfeit, but it also allowed companies to incorporate them into their brand and make something that a stock holder would want to display. Disney famously printed popular characters from its animated films on their certificates. The information on certificates generally included the date it was purchased, a seal and signatures as well as the number of shares it represented.

All of the above information is still recorded by stock certificates today, but it is recorded electronically. As of 2013 paper stock certificates are no longer distributed with a purchase, but they can be requested. Instead of issuing paper certificates, ownership of shares of stock is recorded by electronic book entry. Banks and financial institutions use book-entry form to keep track of investors accounts and keep record of their stock ownership.

What is a Stock Certificate used for?

Stock certificates are used to record a stockholder’s partial ownership of a company. They are particularly useful in situations where evidence for holding shares is required. Some of these situations might include requesting a loan on share value, declaring dividends and/or attending shareholder meetings.

Some stock certificates have a value beyond the what their shares are worth because they have sentimental or display value. Investors sometimes frame a physical stock certificate and hang it in their office to show their commitment to long term, stable growth. Parents will also frame Disney stock certificates in order to represent their investment in a child’s future. Older stock certificates are considered collectibles by many.

Why should you use a Stock Certificate?

It is impossible to sell a stock, or do anything else that requires proof of ownership with it, unless you have a stock certificate. If the stock you own was bought before 2013 or through a broker or other kind of financial institution that manages stocks, chances are your records are digitized and safe from theft or misplacement. If the certificate is older you may want to make sure you have a digital copy and if the worst happens you should immediately request a halt on securities transfers from your transfer agent and follow the instructions provided by the U.S. Securities and Exchange Commission.

If you would like a physical copy of the stock certificate you can consult your broker or institution that is recording it. They can provide physical copies on request, though you may have to pay a fee.

How to write a Stock Certificate?

The style of physical stock certificates can vary widely. Some are colorful and ornate while others are more mundane. They can also be known by different names such as a Notice of Shareholder Ownership, Certificate of Acquisition, or simply Share Certificate. No matter the name stock certificates are composed of the same information. These essential elements include:

  • The location of the company selling the stock

  • The date and time of the stock issuance

  • The number and value of the shares

  • The identity of the stock purchaser

  • The stock’s registration number

  • The state where the stock was purchased

  • The class of the issued shares

  • The signatures of the corporation’s authorized officers

Corporate seals can also be required. This seal is unique to each company and is used to validate certificates in states that require it. Some corporations also have special rules and regulations that govern the transfer of stock, known as transfer restrictions. Transfer restrictions are commonly used by private corporations to control who is able to become a partner with the company by buying shares. The goal is usually to limit secondary trading and liquidation of the stocks, thereby protecting their business interests as well as employee loyalty incentive programs that involve shares.

How to Fill Out a Stock Certificate with PDFSimpli in Five Steps

  • 1. Prepare:

    In order to write a stock certificate you will need to gather the necessary information. This might include the detailed information of the company and stock purchaser, date and time of the sale, value and number of the stocks as well as any transfer restrictions. It is also wise to double check the information for typos and accuracy.

  • 2. Choose the Right Program:

    Good legal software should provide attractive and industry approved templates for you to choose from. It should also make the template easy to customize. PDFSimpli fulfills both of these criteria. It even allows you to use all of its features during the trial period, including saving, downloading and sending for eSigning.

  • 3. Fill Out or Edit the Stock Certificate:

    After choosing a good template you can enter the information that you prepared in the first step. PDFSimpli highlights the areas you need to edit. You can also add any extra information required by your company or state manually.

  • 4. Review Your Work:

    Even the most accomplished writers make typos. Give the stock certificate a once over or maybe even a thrice over! Some good proofreading strategies include reading it aloud, having a colleague look it over or reading through it backwards. It is also important to verify that the details you entered are placed in the right sections.

  • 5. Save, Download, Print or Send for Signature:

    When your stock certificate has been finalized you can download it, save it for the company records, print it or even send for a signature. PDFSimpli makes it easy to distribute your document with a convenient and secure process.

Stock Certificate Frequently Asked Questions

Stocks are often traded frequently and at high volumes. It may seem daunting to read every stock certificate for every trade that you make, especially if they are recorded digitally. While this may be true, stock certificates can contain transfer restrictions and other terms. In this case it is be beneficial to read the terms and make sure you understand the nature of the agreement that is being entered into.

With the advent of digital trading and the elimination of the practice of issuing paper stock certificates one might wonder whether stock certificates are still necessary. In fact they are. Stock certificates formed the bedrock of share trading through centuries of investment history. Even though they are no longer exchanged physically, the electronic process by which trades are recorded is meant to mimic the symbolism of exchanging paper to record a transfer of ownership. The fact that physical certificates can still be requested proves their relevance, and the long term nature of investment means that they will continue to be relevant as long as stocks are held.

The owner of a stock certificate is responsible for its safekeeping, but accidents and unforeseen disasters can occur. Most banks, agents, companies and firms have procedures in place for these occurrences. According to the U.S. Securities and Exchange Commission (SEC) the owner is responsible for taking immediate action to prevent the lost or stolen certificate from being accidentally traded or transferred. It is also recommend that the owner keeps copies of both the front and the back of the certificate to aid in the process of getting it replaced.