A stock certificate is a legal document that certifies ownership of a certain number of shares of stock in a company or corporation. Many take physical delivery of the stock certificate and others leave the shares in a stock brokerage account or bank portfolio.
A registered stock certificate shows the owner's name on the certificate. It will also show the number of shares, date issued, stock certificate number, CUSIP number and transfer agent.
A bearer stock certificate does not show a title or owner's name. They are most frequently used for bonds and can be almost impossible to replace if lost or stolen. Bearer certificates are almost obsolete.
Many stock certificates now are book entry only. This means that there are no physical certificates, and records are kept by the brokerage firm, the bank or transfer agent. These are most common in CDs (certificates of deposit) and bonds.
Many brokerage firms hold stock certificates in street name. This means they keep track of the stock electronically. This allows for quick purchase, sale, dividend payments and correspondence through the underlying company.
Many stock certificates are now processed through a direct registration system (DRS). The transfer agent records the stock certificates electronically and thus reduces paperwork, the risk of loss and costs.
Obtaining a Physical Certificate
Some people still like, request, or feel the need to have a physical stock certificate. Many firms will charge a fee for delivery. Some old and bankrupt stock certificates may be worth money as a collector's item.
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