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What is a Certificate of Stock?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 20 March 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Certificates of stock are documents that provide proof of ownership of a specified number of shares in a given corporation. Sometimes referred to as a stock certificate, a certificate of stock will include all pertinent information necessary to establish the legal claim of the holder of the document, including details about the number and type of shares held. In the bylaws of come corporations, holding a valid certificate of stock is necessary for the stockholder to have voice and vote in a stockholder’s meeting.

It is important to note that owning shares in a company does not automatically mean that a certificate of stock will be issued. Depending on the legal documents used to establish the company, individuals who own a small number of shares may not be issued a certificate of stock as a matter of course. The actual document would be issued only to individuals and others who held a significant number of shares in the company.

There are two different types of stock certificates in common use today. A registered certificate will provide proof of title to the shares, with the name of the shareholder appearing in the records of the corporation. The bearer certificate of stock will identify the number of shares accounted for by the document, and will allow the holder of the document to vote those shares. A bearer certificate is not unusual when the actual shareholder wishes to remain anonymous for some reason, or wishes to allow a third party to vote his or her shares.

While persons who own a smaller number of shares are not issued a certificate of stock in most instances, it is still possible to verify ownership of those shares. Many companies will provide simple proof of ownership through a formal letter that is provided on the official letterhead of the company, and signed by one or more financial officers of the corporation.

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