There was a time when all stocks were traded as paper certificates. Today, most trading is done electronically, with shares registered in the industry’s Direct Registration System. Some companies don’t even print certificates any more. Nonetheless, you might still have stock certificates in your possession. If so, and you need to transfer, register or replace the shares, you’ll be dealing with a transfer agent.
Normally, the stock you buy through a brokerage is in electronic form or physically maintained by the broker in “street name.” Under these arrangements, the broker holds the shares in its name for your benefit. You can choose to have the shares registered in your name and sent to you if they are available in paper form. You might have to shell out a small fee for this service. The broker will work with the transfer agent of the company that issued the stock and have the re-registered shares sent to you in the mail.
You can sell or transfer your paper stock certificates to someone else by endorsing the back of the shares. The best way to proceed is to contact the transfer agent and request a transmittal form and any other documents the agent needs to process the transfer. For example, you and the buyer might need to submit W-9 forms to allow the transfer agent to verify your Social Security numbers. You must have your signature witnessed by a financial institution that participates in the Medallion Signature Guarantee Program. Send all the documents, along with any required fee, to the transfer agent, who will issue and forward new certificates registered in the buyer’s name.
Lost or Stolen Certificates
The U.S. Securities and Exchange Commission has a lost and stolen securities program. If your certificates go missing, contact your broker or transfer agent right away and have him report the problem to the SEC. Also, have the transfer agent issue a “stop transfer” order. This prevents anyone from transferring ownership of the shares. If you subsequently reacquire the shares, contact the agent again and have the stop transfer lifted, otherwise you‘ll have problems when you want to sell the shares.
If the certificates are lost, stolen or damaged, you’ll have to complete and sign an affidavit explaining the circumstances. You’ll also have to buy an indemnity bond to protect the agent and the issuer from any damages if someone else tries to sell the missing shares. The SEC puts the cost of the bond at 2 to 3 percent of the stock’s value. Send these materials with any other required forms and payments to the transfer agent. When you receive the replacement shares, make photocopies of the front and back of each certificate to ensure you can establish ownership should the shares disappear again.
- USA Today: Electronic Records Are Replacing Paper Stock Certificates
- U.S. Securities and Exchange Commission: Holding Your Securities -- Get the Facts
- U.S. Securities and Exchange Commission: Signature Guarantees: Preventing the Unauthorized Transfer of Securities
- U.S. Securities and Exchange Commission: Stock Certificates, Lost, Stolen
Based in Greenville SC, Eric Bank has been writing business-related articles since 1985. He holds an M.B.A. from New York University and an M.S. in finance from DePaul University. You can see samples of his work at ericbank.com.