A stock certificate is simply physical proof that the certificate holder owns shares in a company. While nowadays stock holdings are most often tracked using digital technologies, you are still required to issue a paper share certificate if your investor requests it. Additionally, some investors enjoy having a paper record of ownership.

Corporations can give their shareholders Stock Certificates as proof of ownership of corporate stock. While a certificate lists the stock owner and the number of shares they own, it isn't the stock itself—rather, it's evidence that the shareholder owns the stock. When creating your Stock Certificate, you'll want to include information like: the name and location of your corporation, the stock purchaser, the stock certificate number, the number of shares, whether the stock has a minimum price per share (aka "par value"), whether you're issuing common or preferred stock, what (if any) transfer restrictions apply, and the date the stock will be issued. If your organization has a corporate seal, you'll can affix it to the printed Stock Certificate. Also included is the Committee on Uniform Securities Identification Procedures (CUSIP) or CUSIP International Numbering System (CINS) number.

A share certificate acts a bit like a receipt. If you're interested in the initial buying and selling of corporate stock, our Stock Purchase Agreement may be able to help.

What are the benefits of Stock Certificates?

One of the main benefits of issuing share certificates is documentation. While the financial industry has carved out a brand-new frontier in high-speed, algorithm-based trading many individuals prefer to hold onto stock for longer than fractions of a second. For these long-term investors, a stock certificate provides useful documentation of their company shares for their financial records. The original corporation can also benefit from the documentation of stock certificates.

How are stocks held?

There are three ways in which stocks can be held:

Physical certificate:
The stocks are registered in the name of the investor. All paperwork and any dividends are sent directly to that individual. A physical hard copy certificate is also provided.

"Street name” registration:
This is the most common form of stock ownership, in this setup the stocks are registered under the name of a brokerage firm and the investor is listed as the beneficiary of the holdings in the firm's books. All company paperwork and dividends are sent to the firm which can then pass them on to the individual investor. A paper certificate is not issued.

"Direct” registration:
This occurs when your name is registered in the stock issuer's records and the company itself or its transfer agent holds the stock on your behalf. This type of registration is not always available. For more detail on stock holding, you can visit the U.S. Securities and Exchange Commission's FAQ.

Can I personally trade or gift my stock?

Yes, it's usually possible to trade or gift stocks you own to another individual. Doing so, however, requires more than simply passing along the stock certificate. Generally, for paper certificates the bond holder will have to sign over the stock. Occasionally a paper stock will come with its own form to do just that. If not, the original investor will have to sign the stock over alongside a guarantor (typically the investor's brokerage firm). If the stock is held electronically, ownership can be passed by changing the title of the stock.

Stock options can be a trickier matter. Most of the time the eligibility to trade or sell options are strictly limited by a contract. Any change in ownership of these assets would have to comply with that contract language.