South Florida Arbitration & Litigation Lawyer Blog
Physical Certificate – Securities Ownership:
This post is designed to provide the reader with a general description of securities ownership through the ownership of a physical certificate. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. Thus, this post should not be relied upon as providing legal or investment advice. If you have any questions concerning this post, you should consult a qualified professional.
When you buy a security, whether through your broker or from the company itself, you can ask to have the actual stock or bond certificates sent to you. You may have to pay a nominal fee for the added expense of issuing a paper certificate. It’s important that you safeguard your certificates until you sell or transfer your securities. It can be difficult to prove that you once owned a certificate that has been lost, stolen, or destroyed. Your broker – or the company or its transfer agent – will generally charge a fee to replace a lost or stolen stock certificate.
The advantages of holding a physical certificate include:
- The company knows how to reach you and will send all company reports and other information to you directly.
- You may find it easier to pledge your securities as collateral for a loan if you hold the certificates yourself in physical certificate form.
The disadvantages include:
- When you want to sell your stock, you will have to send the certificate to your broker or the company’s transfer agent to execute the sale. This may make it harder for you to sell quickly.
- If you lose your certificate, you may be charged a fee for a replacement certificate.
- If you move, you will have to contact the company with your change of address so that you do not miss any important mailings.