A:

Regardless of whether a shareholder loses his or her stock certificate, that person still owns the shares. However, in order to replace the physical certificate, the shareholder must contact the company's stock transfer agent.

The corporation should be able to provide the shareholder with information on how to contact the transfer agent. The best strategy is to contact the company's investor relations department..

Upon notifying the transfer agent of the loss, the agent will place what is called a "stop transfer" on the certificate to prevent others from cashing it in. This is much like the stop payment that you might place on a check at your local bank. The transfer agent or the broker-dealer will then notify the SEC of the lost or missing certificates.

There is some information that the shareholder must also provide.

First, the shareholder must describe the loss and any facts surrounding the loss in an affidavit. Second, the shareholder must purchase an indemnity bond. The purpose of the bond is to protect the corporation and the agent in case the lost certificate is somehow redeemed by another party at a later date. (Think of it simply as additional insurance). Note: The cost of this bond is typically 1-3% of value of the shares.

In any case, when this information has been provided, a new certificate will then be issued.

Remember to photocopy both sides of the certificate when you receive it. This may help speed up the re-issuance process should the certificate be lost or stolen. You may also hold the security in street name. That way, your brokerage firm will hold the physical security for you.

For further reading, see What Owning A Stock Actually Means.

RELATED FAQS
  1. I hold stock certificates in a company that just had a stock split. What happens ...

    The short answer is that a stock split will have little effect on the holder of stock certificates. In most cases when an ... Read Answer >>
  2. What protects an investor’s interest in the case of terrorist sabotage, or act of ...

    Currently, most stock ownership is done electronically thru the combined effort of the brokerage firms and the transfer agents ... Read Answer >>
  3. Should I convert my telecom paper stocks to electronic records?

    Convert your paper shares of a telecommunications company's stock to electronic form in just a few simple steps, and make ... Read Answer >>
Related Articles
  1. Investing

    What Does a Transfer Agent Do?

    Transfer agents maintain the records and documents related to shareholder accounts.
  2. Investing

    Old Stock Certificates: Lost Treasure Or Wallpaper?

    What if you've discovered some old shares in bearer form? Follow our tips and find out what they're worth.
  3. Insights

    What Is a Silver Certificate Dollar Bill Worth Today?

    Although a silver-certificate dollar bill no longer can be exchanged for silver, the date, grade and unique features make certain certificates very valuable.
  4. Financial Advisor

    How to Find the Best Life Insurance Agent

    Choosing a life insurance agent is the first and most important step in obtaining coverage. Buyers should pay attention to five key factors.
  5. Investing

    Old Stock Certificates: Lost Treasure?

    Today, most stocks reside electronically in a broker’s computer. But it is possible to stumble across a physical stock certificate.
  6. Financial Advisor

    A Day In The Life Of A Real Estate Agent

    While every day is unique for a real estate agent, there are some activities that may be a typical part of an agent's day.
  7. Investing

    How Real Estate Agent and Broker Fees Work

    Buying or selling a home? What you need to know about real estate agent and broker fees.
  8. Investing

    Do You Need A Real Estate Agent?

    There's no guarantee that realtors will act in your best interest, but it may be worth hiring one anyway.
  9. Investing

    Top 5 Signs Of A Bad Real Estate Agent

    The signs of a bad agent go beyond whether your home sells quickly.
RELATED TERMS
  1. Transfer Agent

    A trust company, bank or similar financial institution assigned ...
  2. Push Out

    One of two ways to effect a stock split. In a push out, new share ...
  3. Cage

    A term used to describe the department of a brokerage firm that ...
  4. Trust Certificate

    A bond or debt investment, usually in a public corporation, that ...
  5. Currency Certificate

    A note that grants the holder the right to convert a specific ...
  6. Certificate Of Insurance

    A document issued by an insurance company/broker that is used ...
Hot Definitions
  1. Book Value

    1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated ...
  2. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends each year relative to its share price.
  3. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. ...
  4. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  5. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  6. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
Trading Center