Nowadays, a Stock Certificate in paper form is a rarity. You will only receive a physical certificate if you ask for it specifically. In the digital era, Stock Certificates don't hold the importance they once did.
However, Stock Certificates still exist, just without the fancy artwork of the past. Stock Certificates were big and had a unique design to avoid counterfeiting.
Today, all shares are recorded like book-keeping. This method made sure paper certificates are a thing of the past.
A Stock Certificate or a Share Certificate is documentation of ownership in a company. All outstanding shares of a corporation must be accounted for, and that's the Stock Certificates" purpose.
As mentioned, the certificate can be a physical piece of paper or issued electronically. However, it's essential to keep in mind that a Stock Certificate does not have a trade value but is merely proof of how many shares are held by a particular shareholder.
If a physical certificate is issued and becomes lost or damaged, you haven't lost any money or shares. Just report it to the corporation and request a new one.
Depending on your state, a Stock Certificate may also be known as:
Every company that is registered as a corporation will issue Stock Certificates to the shareholders. It's also a way for a company to keep track of the total float of shares and the primary purpose of documentation.
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A Stock Certificate doesn't require an extensive list of information, just the essential info. There are several key details to pay attention to, and that's a lot easier if you have a template guiding you through the filling out of the certificate.
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Small corporations have a designated person, usually the company secretary, who is in charge of keeping track of all the float shares. Whether to issue new shares or transfer ownership of existing shares, the document requires said person's signature. Notarization is not required.
If a corporation issued a physical Stock Certificate to a shareholder, the shareholder should keep it for personal records. If a corporation holds physical Stock Certificates, they're a part of the shareholder's internal documentation. As mentioned, digital certificates are far more common nowadays.
Most commonly, corporations repurchase shares to prop up the share value. This is beneficial to all shareholders and a corporation may pull the trigger if the shares are undervalued or if it simply has cash on hand. It's also a way for the company’s management to increase the ownership of the company. For example, if the management would like to pick up more voting rights, whether to push through a resolution or stave off a takeover big.
A stock ledger is the official record of a corporation’s existing float of shares. The ledger is usually in the form of a table and records all transactions, ownership info, and other relevant information regarding its shares. While corporations aren’t always required to keep a ledger by law, they almost always choose to do so.
A portfolio in the context of investment is a corporation’s holding of financial assets like stocks, properties, cash, cash equivalents, and more.
An IPO is the process of a private corporation going public by issuing shares that are available for trading at a stock exchange. It is done to raise capital from institutional investors. To participate in an IPO, a corporation has to meet all the requirements set by the SEC. Additionally, the original founders of a corporation can use an IPO as an exit strategy.
Stock Certificates have a long history. The first stock certificate can be traced back to 1606 and it was issued by the Dutch East India Company. Collecting old stock certificates that no longer have any value is a hobby known as scripophily. One of the last paper stock certificates issued by a major corporation was a Disney certificate in 2013.
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