Stock Certificates Have Gone With the Winds of Change

Stock Certificates Have Gone With the Winds of Change

But what if you still want one?

Old Stock Certificates: Lost Treasure?

Today, most stocks reside electronically in a broker’s computer. But it is possible to stumble across a physical stock certificate.If you find one, don’t assume it’s wallpaper from some bankrupt company and toss it in the trash. It might be a lost treasure.First, look on its face for the company name and location of incorporation. Find the CUSIP number, which is like stock DNA. Every time a security changes its name, or splits, or does anything to affect its stock certificate, it’s assigned a new number. Start searching with the original number. Many large discount brokerages can help track down securities that have been defunct for 10 years or longer.If the company still exists, use the Internet or library to research it. In many cases, the company was bought out or changed its name due to a merger.Each stock is incorporated in a state, and records are kept at a central location. Incorporation must go through the secretary of the state. Its databases may contain information about the company.Most companies use transfer agents to handle their securities, including the bookkeeping and issuing. The easiest way to find the transfer agent is to ask the company.If the company is no longer public, your search has ended. If it has changed names, merged, or changed in another way, you might have something to work with. Check with a lawyer.

Reviewed by Thomas J. CatalanoFact checked by David Rubin

If you owned stock before the time of the internet and online brokerages, there’s a very good chance that you had a stock certificate to prove it. When a company sold shares of its stock, it gave shareholders a physical piece of paper—the stock certificate. But these certificates have become a thing of the past, as the electronic trail has replaced the exchange of paper certificates.

However, if you’re among those who need to have physical proof of your investment, then read on to find out how you can get your hands on a stock certificate.

Key Takeaways

  • Electronic trading has made the physical stock certificate a thing of the past.
  • You may still request a stock certificate through the issuing company or via a broker.
  • Brokerage firms keep an account in your name with the number of shares that you hold.
  • Outdated stock certificates may have value as decorative collectibles.

Gone With the Winds of Change

For at least 400 years, when you purchased shares in a publicly traded company, you received a piece of paper to certify your ownership percentage. Stock certificates were the only way you could prove that you owned shares in a company.

But the World Wide Web and electronic trading changed all that. The web brought the internet into people’s homes for the first time in 1991, but it wasn’t until the late 1990s that investing began to change in response to the Internet.

Stock Certificates Are No Longer Necessary

Over time, one American company after another has stopped issuing stock certificates. Although this change may not seem very newsworthy, it occasionally did hit the news, as in 2013 when Disney retired its frame-ready certificates featuring The Walt Disney Company’s (DIS) most notable cartoon characters.

Today, most of the world’s exchanges have either done away with or are phasing out paper certificates. Stock ownership is much easier to prove now thanks to electronic records and electronic communication networks (ECN).

But What If You Want One?

However, you still can get a share certificate by asking for one. The most obvious way to get your certificate is to go directly to the company that issued the stock, the issuer, and ask to have a physical certificate mailed to you. But going through the company can be an expensive and time-consuming process.

The easiest way to get a stock certificate is via a broker, but be prepared to pay for it.

The simplest way to get a stock certificate today is to ask your broker. If you bought your shares through a brokerage firm, it will have an account with your name and the number of shares you purchased.

Some key details on the certificate itself include your name, the company’s name, the number of shares you own, as well as the CUSIP number—a unique identifier used for all stocks and bonds in the United States. Your certificate will also be signed by an officer of the company.

Be aware, though, that this request usually comes with a fee. Some brokers can charge as much as $500 for producing a piece of paper that certifies ownership of a number of shares.

What To Do If You Find a Paper Certificate?

If you have an old stock certificate it’s possible, though unlikely, that it has some value beyond wall art. They may retain some value as shares of the underlying company.

First, check to see if the issuer is still in business. If it is, look for the state in which the company was incorporated along with the CUSIP number on the certificate.

Then contact the office of the secretary of state in that state to find out if the company still does business there. If so, you can call the company directly to get the transfer agent’s contact information.

In order to cash in the stock, you need to fill out the transfer form on the back of the certificate and have it notarized. Once complete, send the notarized certificate to the transfer agent, who will register the stock to you as owner.

At that point, you can sell the stock through the transfer agent or via a stockbroker.

Outdated Certificates As Collectibles

Stock certificates were often plain, straightforward documents. In their heyday, however, companies competed to create the most visually impressive certificates. The best are appealing examples of the printer’s art.

Some stock certificates are now collectors’ items. Based on eBay (EBAY) listings, most old certificates are worth only a few dollars, but some very rare and unusual examples have considerable value.

Recently, for example, the starting bid for an 1867 Union Pacific Railroad Land Stock Certificate via Credit Foncier of America (pictured below) was just under $70,000.

Stock Certificates Have Gone With the Winds of Change

The End of an Era

The demise of the stock certificate ends a centuries-old tradition. One of the oldest known examples of a stock certificate, found in Holland, was issued in 1606. It was around that time that the Dutch East India Company became the first company to issue stock.

The certificate is housed at the Westfries Museum in the city of Hoorn in The Netherlands.

Read the original article on Investopedia.