Can I Sell Shares Without a Certificate?
"Can I sell shares without a certificate?" is a question many shareholders end up asking themselves.3 min read
2. Contact the Company
3. Contact the Transfer Agency
4. Buy an Indemnity Bond
5. Pay a Reissue Fee
6. How to Sell a Certificate
7. Online Brokers
"Can I sell shares without a certificate?" is a question many shareholders end up asking themselves. The answer is no because the certificate needs to be endorsed to be sold, but you can get your paper certificate reissued.
Reissuing a Certificate
If you've misplaced your stock certificate, you can follow these steps to have it reissued:
- Contact the company
- Contact the transfer agency
- Buy an indemnity bond
- Pay a reissue fee
Contact the Company
Paper share certificates are important to possess because having one means your name is on the company's share register. Being included on it gives you the option to vote as a shareholder, and you will also receive correspondence and dividends directly from the company. Having those benefits is useful if you'd like to have a say in the future of the company.
If you've lost your certificate or never received one, reach out to the investor relations department of the company that issued your shares and ask them for the transfer agent that deals with their stock certificates; this information might be available online under the company's investor relations page. Transfer agents are simply the companies that keep track of the shareholders' information. Occasionally, large companies will be their own transfer agents, but generally the transfer agents are banks or trust companies. They'll have on record the number of shares issued to each shareholder, the stock certificate numbers, and the contact information for shareholders.
Contact the Transfer Agency
After you let the transfer agency know that your certificates need to be replaced, they will do the following:
- Request an affidavit. The transfer agency will require that that you supply them with an affidavit that details the missing certificates and how you lost them. There are several ways certificates could have been lost, such as fraud, theft, or being misplaced during a move, so make sure you are very detailed in your description.
- Issue a stop transfer. This works much like a stop payment does for a check. No one else will be able to cash the certificates as long as a stop transfer is active.
- Alert the Securities and Exchange Commission. The agency will also let the Securities and Exchange Commission, or SEC, know that your certificates are missing and are in the process of being reissued.
Buy an Indemnity Bond
Next, you may need to buy an indemnity bond. Should the certificates be redeemed later, the company and transfer agency will be protected by the indemnity bond. The rates are usually between 1 to 5 percent of the stock certificates' value.
Pay a Reissue Fee
Because you are asking for a paper certificate to be issued, you'll be charged a fee. This fee varies depending on the transfer agent, but expect to pay anywhere from $50 to $500. New shares will be issued after your information and payments are verified.
How to Sell a Certificate
It's not necessary to use a broker to sell your stocks; however, if you choose to use one that you do not have an account with, be prepared to pay a sizable fee. Brokerage firms no longer offer free or low prices to non-clients who only want help selling stock.
As the owner of a stock, you have the right to assign your shares to someone else, who will be known as the assignee. To transfer your stock, you must sign the back of the certificate, date the transfer, and name the assignee. The term of the sale and the price of the certificate are not written on the certificate. The new assignee can then get the certificate reissued in their name or send it to their brokerage for record keeping.
Should you decide to send the paper certificate to the assignee via mail, you need to make sure it's protected during transit. Use certified mail and get insurance through USPS. Getting delivery confirmation will also provide peace of mind, along with photocopying the front and back of the certificate to prove possession quickly should it get lost. If the certificate does get lost, contact the transfer agent for a stop transfer.
Online brokers don't require you to have paper stock certificates. If you have paper certificates, you can deposit them with the online broker of your choice to convert them to electronic files with electronic record keeping, which will conveniently eliminate the need for you to hold paper certificates.
If you need help with selling your shares without a certificate, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.