Sometimes referred to as non-certificate shares, the book share is simply a share that is held by a transfer agent, rather than being held in the possession of the owner or client. The shares are recorded in the records that are maintained by the agent, so that there is always a permanent record of the value of the shares, and who holds the rights to the shares. However, the actual stock certificates are never printed or forwarded to the investor.
Uncertificated shares are not uncommon at all. One of the more common applications of the idea of book shares involves mutual fund shares. Mutual funds are often used as part of the investment strategy for corporate retirement programs. Today, many of these programs allow employees the opportunity to change their preferences on the funds that are utilized for their individual share of the retirement plan. Obviously, issuing certificates when members of the plan have the option of making changes on a recurring basis would not be practical. For this reason, it is easier for the plan to be managed with the application of book shares.
Opting for book shares rather than obtaining hard copy stock certificates poses no real danger to losing control or ownership of the shares. The records that are maintained by most transfer agents are backed up regularly, so even in the event of a loss of a main database, proprietary information regarding the shares held in trust for clients is easily recovered from one of the backups. Also, most transfer agents supply investors with periodic reports in both hard copy and electronic formats that also serve to document the current status of the shares.
Should an investor wish to obtain stock certificates for the book shares, it is a simple task to request them from the transfer agent. The agent will then make arrangements to have the certificates printed and documented properly, according to the terms and conditions that are in place for country of origin where the stocks are issued.