1. How Are Stocks Held?
2. What Is a Share Certificate?
3. Signatures in a Stock Certificate

Wondering who can sign a share certificate? Despite the fact that there have been numerous attempts to retire them, a substantial number of companies and stockholders remain connected to paper share certificates. A share certificate should be signed by two company directors or one director and the company secretary. For companies with a single director and no company secretary, the company director should sign in the presence of a witness who attests to his or her signature.

How Are Stocks Held?

There are three ways to hold a stock certificate:

  1. Physically: The certificates are registered in the name of the purchaser or investor. All dividends and paperwork are sent straight to that person. A physical copy of the certificate is also issued.
  2. Street name: The most common way to hold a stock certificate is by street name. The certificates are registered under the name of the brokerage firm and the investor is documented as the beneficiary. The dividends and paperwork are appointed to the brokerage firm, which then passes them on to the investor. A physical copy of the certificate is not issued.
  3. Direct: This option exists for investors that are looking for the issuer of the certificate to hold the stock on their behalf. This option is not always feasible or available.

Additional information regarding holding stock can be obtained by visiting the U.S. Securities and Exchange Commission (SEC) website.

What Is a Share Certificate?

Share certificates consist of a written document issued by a business certifying that on the date the certificate is issued, a specific individual is now the registered owner of shares in the company. It provides legal proof of the transaction. A share certificate may also be referred to as a stock certificate.

Most stock holdings are currently tracked and monitored electronically. However, if an investor requests a physical certificate, the issuer must comply with the request. Also, some investors prefer to have a physical record of the transaction. Investors who purchase shares in the market can also be issued a share certificate. A share certificate will act like a receipt for the purchase of ownership in the business. It will also include the date of the transaction.

A share certificate will include the following information:

  • Registration number
  • Company name
  • Certificate number
  • Stockholder address and name
  • Number of purchased shares
  • Class of shares
  • Issue date
  • Amount paid

Share certificates must be issued within two months of the transfer or issue of the shares. Businesses will typically issue one certificate for all the shares purchased unless the stockholder specifically requests to receive individual certificates. Occasionally, a stockholder will give a proxy to another individual so they can use their shares to vote on a matter. A business's corporate law and charter will determine the voting rights of shareholders.

If a share certificate gets lost, stolen, or damaged, it can be replaced with a new certificate. In the past, the holder of a stock certificate needed to present it in order to receive their dividends. The issuer would then endorse the back of the stock certificate in order to document the receipt of the dividend to the holder. Nowadays, shareholders rarely hold a physical certificate.

Some countries have even abolished the practice, forcing issuers and holders to go electronic. The Central Securities Depository in the U.S. is responsible for holding shares electronically. A share certificate may be in either bearer form or registered form. A bearer share certificate allows the holder to exercise the legal rights attached to the stock, while a registered share certificate provides proof of title ownership.

There are many older stock certificates that are considered rare and collectible based on the intricacy of the design, beauty, and historical context. The study and collection of share certificates and other financial documents is known as scripophily. The value of the share certificate will depend on the current value, condition, and age.

Signatures in a Stock Certificate

When it comes to stockholders transferring shares, an officer of the business should sign as a witness to these transactions. This will help prevent any disputes or misunderstandings down the road. All stock certificate holders are entitled to have a certificate signed by two authorized officers in the corporation. Corporations don't have the authority to issue a certificate in bearer form. The signatures may be a facsimile.

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