A stock certificate is the physical proof of your ownership of shares in a company. Usually, the corporation charges a nominal fee for issuing the paper certificate and the shareholder must keep it secure, because it is the proof of ownership and if it is lost the broker or the company may charge the shareholder another nominal fee. Stock certificates enable shareholders to get in direct contact with the company. Shareholers can use stock certificates as collateral in order to obtain a loan. If a shareholder moves to another place the shareholder must inform the company about the change of address and whether the shareholder may sell the stock. The stockholder must send the certificates to their agents or the comapny's transfer agent. This process can be lengthy and time consuming. The certificate number is important and must be carefully noted, incase you need to prove your ownership. If the certificate is lost, shareholders must report it to the broker, who informs the SEC (Stock Exchange Commission) to issue a stop transfer order to prevent some one else from transfering the ownership.
Street Name Registration
In the modern age people hardly ever hold shares in the form of stock certificates. According to street name registration, brokerage firms issue shares and hold them. The brokerage firm records whom the shareholders are. The brokerage firm sends annual reports, proxies, dividends, and provides tax consolidation information to shareholders.
In direct registration the company directly registers the shareholders' name. Although certificates are not issued, the company mails statement of ownership, periodic statements of accounts, and other information to shareholders.
Ways of Registering a Stock Certificate
Below are the different ways to register a stock certificate.
Individual Registration: The company gives ownership to a single individual or shareholder and uses the owner's legal name.
Joint Registration: There are two options in joint registration. The company uses joint tenants with two people, who have equal claim to the assets. If one of them dies the company transfers shares to the other person immediately. The company can also register the shares under two individuals' names, who are equal owners and in case one of them dies, the dead person's shares are transfered to their estate.
Custodial Registration: There are several kinds of custodial registration. Principally, the name of the custodian and the beneficial owner, who happens to be a minor, are necessary, in order to pursue custodial registration.
Trust Registration: The trust registration process requires the name of the trust, the beneficiary and the date of the trust instrument.
Transfer On Death (Tod) Registration: This is a way of registering shares and designating beneficiaries, which allows the beneficiaries not to go through the probate process if the shareholder dies. This registration process allows shareholders to keep control over their securities only while they're alive.
Street Name Registration and Direct Regisrtation are now more convenient to shareholders due to advancement in technology. The brokerage firms maintain records and send monthly paper statements to shareholders. Several sites offer online forms and software packages at reasonable prices, which would enable you fill your stock certificate without a hassle.
In you do decide to purchase stock certificates, be certain they are kept safe. Filling the correct details is important to ensure there are no problems in the future. Once you decide to get the stock certificate make photocopies of the original certificate. Note the stock certificate number, since it will help you in case if you lose the certificate.