Key Takeaways:

  • Stock certificates serve as proof of share ownership and can be obtained upon request, though most companies and brokers discourage physical certificates in favor of electronic registration.
  • Physical stock certificates contain key information such as the shareholder’s name, company details, number of shares owned, and official signatures.
  • Obtaining a stock certificate can be done through a broker, directly from the company, or via a transfer agent.
  • Modern alternatives to physical stock certificates include book-entry registration, Direct Registration System (DRS), and digital stock certificates.
  • Costs and processing times vary depending on the company and transfer agent, with some charging fees for issuing physical certificates.
  • Lost or stolen stock certificates require replacement procedures through transfer agents, often involving indemnity bonds and fees.
  • Gifting and transferring stock certificates is possible but involves specific documentation and processes.
  • Collectors and historical investors seek physical stock certificates for their aesthetic value and historical significance.

If you want to learn how to get a stock certificate, you will need to be familiar with what a stock certificate is and how owning stock will affect your tax requirements.

What is On a Stock Certificate?

A stock certificate is a document that confirms ownership of shares in a company. A stock certificate typically includes the following:

  • Shareholder’s name
  • Company name
  • Number of shares owned
  • Seal of authenticity
  • Signature from someone who has the authority to issue the certificate
  • A CUSIP or CINS number

Before the introduction of online brokers, physical stock certificates were necessary to authenticate stock ownership. While a stock certificate is not required to prove ownership of shares, you may still request a paper certificate if desired. Even if the stock is purchased electronically, you can still obtain a paper certificate if you wish to have one on hand. However, you cannot have both digital and paper registrations for the same shares. You can only have one or the other.

Although businesses must provide a physical certificate upon request, issuing one requires additional effort, including drafting, printing, and mailing the document. Furthermore, businesses are required to record all people who hold stock at the end of the trading day in the computer system; for this reason, businesses generally find it burdensome to have to issue physical stock certificates, particularly if the shareholder ends up selling the stock a few days after purchasing it.

A lot of companies will provide additional documentation advising that they no longer print physical stock certificates; moreover, brokerage firms discourage investors from owning such certificates.

Book-Entry vs. Physical Stock Certificates

Modern stock ownership is primarily recorded electronically in what is known as a book-entry system. In this system, records of ownership are maintained without the need for paper certificates. The main benefits of book-entry stocks include:

  • Security: Minimizes the risk of loss or theft.
  • Convenience: Eliminates the need to physically transfer documents when selling shares.
  • Lower Costs: Many companies charge fees for issuing and handling physical certificates.

However, some investors still prefer paper stock certificates for personal or historical reasons. Physical certificates provide a tangible asset, which can be framed or kept as memorabilia, particularly for companies with iconic branding.

Stock Certificate for Funding

You can use a stock certificate for funding after you have opened a new brokerage account. In fact, most brokers accept this certificate as a form of funding. In order to do so, you will need to mail the certificate to the company. Thereafter, the business will add the amount of money to the newly opened brokerage account. Note that the certificate name must match the name of the brokerage account holder. For example, John Smith cannot use his partner’s stock certificate to fund his brokerage account, even with their consent.

How to Transfer a Stock Certificate

If you need to transfer a stock certificate to another individual or entity, follow these steps:

  1. Endorse the Certificate: The current owner must sign the designated transfer section on the back.
  2. Medallion Signature Guarantee: Most transfers require a Medallion Signature Guarantee, which is a stamp provided by banks or financial institutions to prevent fraud.
  3. Submit a Stock Power Form: If the back of the certificate lacks a transfer section, a stock power form can be completed.
  4. Send to the Transfer Agent: The endorsed certificate and supporting documents must be submitted to the company’s transfer agent.
  5. Confirm the Transfer: Once processed, the recipient will either receive a new physical certificate or a book-entry registration in their name.

Stock transfers between family members, trusts, or as gifts may also require additional paperwork, such as a gift letter or tax documentation.

Obtaining a Stock Certificate

There are a few ways in which to request a physical stock certificate. Below are the ways you can receive a certificate:

  • Ask your broker to obtain it on your behalf
  • Contact the business directly
  • Order the certificate through a transfer agent

You can reach out to your broker and ask that he obtain the certificate for you. This is the easiest way to obtain the certificate because you don’t have to do anything more than request your broker to obtain it for you. Regardless of the type of brokerage firm you are using, i.e. online or full-service brokerage firm, you can have him obtain it on your behalf for a nominal fee. Before you submit your request, you should speak to your broker to find out how long it could take and what the fee will be.

Alternatively, you can reach out to the company directly. If you buy stock from a specific company, you can reach out to that company and ask that it mail you a physical stock certificate. If you are unable to find contact information for the company, you can visit the Secretary of State website in the state where the business operates.

You also have the option of ordering a stock certificate through the company’s transfer agent. A lot of companies issuing shares utilize a transfer agent who handles the company’s stocks. You can find the transfer agent’s name by looking at the company’s annual report. In order to find the report, you can visit the SEC website and search the company’s website to find all of the applicable filings, including the annual report.

Replacing a Lost or Stolen Stock Certificate

Losing a stock certificate can be a complicated issue, but it can be replaced through the issuing company’s transfer agent. The process typically involves:

  1. Reporting the Loss: Notify the transfer agent or the company immediately.
  2. Providing Proof of Ownership: Investors may need to verify ownership with account statements or supporting documents.
  3. Obtaining an Indemnity Bond: To prevent fraudulent claims, the transfer agent may require an indemnity bond covering the certificate’s value.
  4. Paying Replacement Fees: Companies often charge administrative fees, which can vary.
  5. Receiving a New Certificate: Once approved, a replacement stock certificate is issued or shares may be registered electronically.

For shareholders dealing with estate transfers, additional probate documents may be necessary.

Frequently Asked Questions

  1. Can I still request a paper stock certificate?
    Yes, some companies still issue physical stock certificates upon request, though most prefer electronic registration. Check with your broker or the company’s transfer agent.
  2. How much does it cost to get a stock certificate?
    Fees vary by company and transfer agent, typically ranging from $25 to $500, depending on the issuer’s policies and processing costs.
  3. What should I do if I lose my stock certificate?
    Report the loss immediately to the company’s transfer agent. You’ll need to obtain an indemnity bond and pay a replacement fee to receive a new certificate.
  4. Can I transfer my stock certificate to someone else?
    Yes, stock certificates can be transferred by endorsing the back, obtaining a Medallion Signature Guarantee, and submitting the necessary paperwork to the transfer agent.
  5. Why do some investors still prefer physical stock certificates?
    Some investors prefer physical certificates for their historical value, aesthetic appeal, or as a tangible proof of ownership, even though electronic records are more secure and convenient.

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