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What Is a Share Certificate?


Investing in stocks can be a terrific way to own a stake in your favorite companies while building wealth. A share certificate is a legal document that specifies how many shares of a company or business you own. Share certificates can also be referred to as stock certificates. Holding one or more share certificates can convey certain rights to you as an investor.

A financial advisor can help you create a financial plan for your investment needs and goals.

What Is the Purpose of a Share Certificate?

A share certificate demonstrates an investor’s ownership of shares in a particular company. Share certificates or stock certificates specify the number of shares owned and serve as proof of ownership. In that sense, it works similarly to a title for a home or vehicle.

Certain information must be included on a share certificate:

  • Certificate identification number
  • Name and registration number for the company
  • Shareholder’s identifying information (i.e., name and address)
  • Number of shares and their class
  • Date shares were issued

Share certificates also afford the holder of the certificate (and its underlying shares) certain rights. These rights include the ability to vote at shareholder meetings, receive dividends if the stock pays them and receive reports about the company.

Physical vs. Electronic Share Certificates

A share certificate can be a physical document or an electronic document. Traditionally, these certificates were printed on paper, but many companies have recognized the value of issuing electronic shares instead.

Electronic stock certificates can save the company money as there’s no cost to print and mail them to investors. From an investor perspective, electronic share certificates may be easier to manage as you don’t have to worry about them being lost, stolen or damaged. It can also be easier to keep track of what you own digitally, rather than managing stacks of paper.

It’s also easier to transfer ownership of stock shares via electronic certificates vs. physical share certificates. Electronic stock certificates are held by the Central Securities Depository (CDS) in the U.S. Other countries have also adopted electronic share certificates, sometimes to the exclusion of paper certificates.

How Do I Get a Stock Share Certificate?

SmartAsset: What Is a Share Certificate?

Electronic stock certificates are becoming the norm but it’s still possible to get a paper share certificate. You can either request a paper stock certificate from the company that issued it or ask your broker to help you secure them. Keep in mind that you may pay a fee to have a paper stock certificate issued and mailed to you. You may also need to provide certain information to verify your ownership of the shares.

So why would someone need to get a paper share certificate? It may be necessary if you’re asked to provide proof of investment or assets. For example, if you apply for a home loan and cite the stock shares as an asset on your application the lender may ask to see proof that you own them.

Old stock certificates from companies that no longer exist can also be a novelty item for collectors. While those certificates may yield no ownership value, they can have value as an antique or collectible item, particularly if they’re associated with a noteworthy company or individual.

What Happens If I Lose a Stock Certificate?

Today, most investors hold electronic stock certificates but it’s possible that you may have some physical certificates hanging around. If those certificates are lost, stolen or damaged you might be wondering if that equates to losing the investment as well.

The short answer is no, if stock certificates get lost you don’t lose your shares as well. You’re still the owner of those shares and are accorded the rights that go along with ownership. If you need or want to have physical proof of ownership, you can request a replacement for lost or stolen certificates.

You’ll need to reach out to the issuing company to start the process. A transfer agent will check the company’s records to verify your ownership of the shares. They can also block someone from cashing in a lost or stolen stock certificate.

You may be required to submit an indemnity bond as a condition of getting a replacement certificate. The bond acts as an insurance policy of sorts for the issuing company.

How Do I Sell Stock Certificates?

If you decide you no longer want to own your shares you can cash in your stock certificate by selling it. With electronic certificates, that’s as easy as logging into your brokerage account and executing a trade. The process has a few more steps if you have paper stock certificates.

In that case, you’d need to mail in your physical certificates to your brokerage. You may need to sign the documents first in order to transfer ownership once the shares sell. When the brokerage receives the certificates, they will credit them to your trading account.

At that point, you can trade them the same way you would electronic shares. If you’re selling share certificates through an online brokerage that charges $0 commission fees your only cost might be the postage to mail in the certificates. Your brokerage may require that you send the documents via certified mail or purchase insurance for the package.

What Is a Share Certificate in Banking?

The term “share certificate” has an additional meaning, beyond stock ownership. In banking, share certificates are a type of savings vehicle you can open at a credit union. A credit union share certificate is the equivalent of a certificate of deposit (CD) account offered by a bank.

When you deposit money into a share certificate, you agree to leave it there for a set time period. Your deposit earns interest and once the share certificate matures, you can withdraw the initial deposit and the interest earned. The credit union may also allow you to roll the money over into a new share certificate automatically.

You can use share certificates to save for short- and long-term goals. Credit unions can also allow customers to use share certificates as collateral for secured loans. If you fail to repay the loan, the credit union can take ownership of your share certificates.

If you’re interested in saving with a credit union, comparing share certificate rates is a good place to start. It’s also helpful to review the membership requirements to ensure that you’ll be able to open accounts with a particular credit union.

Bottom Line

SmartAsset: What Is a Share Certificate?

A share certificate or stock certificate is something you may only rarely see in its physical form, but it’s still important to understand how they work. Investing in stocks and creating a diversified portfolio are two of the best ways to build wealth long-term.

Investing Tips

  • A financial advisor can help you create an investment strategy based on  your needs, goals, risk tolerance and time horizon. Finding a financial advisor doesn’t have to be hard.  SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • It’s important to choose the right brokerage when trading stocks or other securities. More brokerages have moved toward commission-free trading for stocks and exchange-traded funds (ETFs), but you may still pay fees to trade mutual funds, options or cryptocurrency. Estimating the fees you might pay to trade stocks or other assets is important, as higher fees can make a bigger dent in your returns.

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