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What Is a Corporate Stock Certificate?

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  • Written By: B. Turner
  • Edited By: W. Everett
  • Last Modified Date: 22 November 2016
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A corporate stock certificate is a document issued to the owners of a corporation. Stock certificates are used only in corporations and not other forms of business due to the fact that each investor or stockholder in a corporation is essentially a part owner. The corporate stock certificate reveals the number of shares that the investor owns, and this number can be used to determine what percentage of the company each stockholder owns. In addition to providing information on the number of shares the investor owns, these certificates include identification information about the company and owners, as well as the terms of ownership. Private corporations, or those that do not allow public investment, may not utilize corporate stock certificates.

In a small corporation, a single owner may control the entire company. In this case, only one corporate stock certificate would be issued in total. Larger corporations issue thousands or even millions of stock certificates because they are owned by a large number of people. While the traditional corporate stock certificate was a paper document, today's stock certificates may be issued electronically. Small business owners who incorporate may choose to make their own stock certificates using paper or computer templates, while larger businesses often outsource this work to professional printers or equity security consultants.

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Each corporate stock certificate contains the name of the investor and identifying information about the company. It also includes the number of shares the investor owns, as well as the terms or type of ownership. It may provide information on how to redeem the certificate, or sell one's ownership in the firm. Many stock certificates also provide information on owner voting rights, dividends, and other pertinent data.

Despite the relative simplicity of these documents, they serve a number of important functions. They can be used to demonstrate ownership, which allows the investor to attend company meetings and vote on corporate issues. By selling or transferring these documents, an investor can give up ownership in the company in exchange for money. Stock certificates can also be bought and sold on the market as part of investment and financial strategies.

It is quite common for people to find old corporate stock certificates in their homes and wonder what to do with these documents. If the certificate holder is able to contact the firm, he may find that the certificate represents a share of ownership. This may be true even if the company has merged with another firm. Stock certificates for corporations that are no longer in business are generally worthless unless they have some type of historical value.

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