Why Register Stock Certificates

by Mike Parker

Stock represents an equity position in a company. Each share of stock provides a equal level of company ownership, so the more shares you own, the greater your percentage of ownership in the company. Your stock ownership is registered with the company and may be documented by a stock certificate that is issued by the company. Stock registration provides an additional level of protect to the stockholder against loss or theft of the stock certificate.

Types

There are three primary types of stock certificate registration available to stockholders, according to the U.S. Securities and Exchange Commission. Your stock may be registered in your name with the issuing company, and you may take possession of your stock certificate. Your stock may be registered with the issuing company in street name, which is the name of your investment brokerage firm. Your brokerage firm will keep a book entry of your stock ownership on their books, and you will not receive any stock certificate. The issuing company also may register your stock directly, and either the company or its transfer agent will hold the stock in book entry form. No certificate will be issued.

Security

Registering your stock provides you with an added level of security. If your stock certificates are stolen, lost or destroyed, you can get them replaced by contacting the issuing company and providing it with required identification. There is typically a charge for this service.

Ease of Transfer

Stock certificates can be handy if you need to pledge your securities as collateral for a loan, but they can be cumbersome if you need to sell your securities quickly, because you must physically deliver the certificates to your broker to complete the transaction. Stock that is registered in the street name of the company or directly registered with the issuing company can be more easily transferred, since you do not have possession of the stock certificate.

Types of Ownership

Stock registration allows you to designate the type of ownership of the stock with the issuing company. You may own the stock individually, you may own the stock in common with another person or you may own the stock jointly with right of survivorship. You can register your stock as a custodian for a minor or register your stock in the name of a trust. Stock registration gives you the benefit of choosing between multiple types of ownership to fit your specific needs.

About the Author

Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

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