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. Why should investors research the C-suite executives of a company?

    Learn how C-suite officers affect shareholders; discover how the CEO impacts financial performance and why governance is ...
  2. What is the difference between a direct and an indirect distribution channel?

    Learn about the primary differences between direct and indirect distribution channels, and under what circumstances a company ...
  3. What are the differences between an MLP exchange traded fund (ETF) and an MLP exchange ...

    Learn about the tax differences between master limited partnership ETFs and ETNs, and understand the tax advantages of owning ...
  4. How can an investor determine a company's annual return from looking at its financial ...

    Understand what a share premium account is, what funds go into the account and the specific purposes for which the funds ...
RELATED TERMS
  1. Value Of Risk (VOR)

    The financial benefit that a risk-taking activity will bring ...
  2. Business Judgment Rule

    A legal principle which grants directors, officers, and agents ...
  3. Separation Of Powers

    An organizational structure in which responsibilities, authorities, ...
  4. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  5. Registered Holder

    Shareholders who hold their shares directly with a company.
  6. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...

You May Also Like

Related Articles
  1. Stock Analysis

    Google Stock: A Tale of Two Share Classes

  2. Chart Advisor

    Copper Is Headed For A Pullback

  3. Stock Analysis

    Are These Your Best ETF, ETN Bets for ...

  4. Mutual Funds & ETFs

    Are These 3 Agricultural ETFs, ETNs ...

  5. Active Trading Fundamentals

    Invest In Gold Through ETFs

Trading Center