Stock certificates are documents that represent stock ownership. Stock certificates were once required as proof of ownership, however with the electronic age they have become passé among practical investors. Stock certificates can be requested by investors from either the corporation in which the stock is held or from the investor’s individual brokerage house.
What is Stock?
Stock is a financial instrument that indicates partial ownership of a company. The amount of stock owned reflects the percentage of ownership in the company. Public stock is only available from companies that have incorporated. When a company announces that it is “going public” that means it is incorporating and will be selling stock to the general public.
Stock Certificate Required Information.
A stock certificate must include the name of the corporation, the date the company incorporated, the investor’s name, the date of issue, and the number of shares held. Each stock certificate also has a seal of authenticity, a signature authenticating the document and a registered certificate number.
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Are Stock Certificates Necessary?
Stock certificates are no longer necessary as proof of stock ownership. Not only are they unnecessary, but they are logistically cumbersome, particularly among investors who buy and sell stock frequently. Stock certificates are now issued nearly exclusively by request. Companies are required by law to issue stock certificates only if they are requested. Stock certificates are largely symbolic in today’s marketplace but are nice to have as tangible proof of stock ownership.