Securities that have been repurchased by the issuer out of the company's retained earnings and canceled, according to Securities & Exchange Commission (SEC) regulations. They have no market value and no longer represent a share of ownership in the issuing corporation.
Though retired securities have no market value, they often have value to collectors of old stock certificates. Some canceled securities have appeared fraudulently on the international market, leading the SEC to make changes to regulations governing how transfer agents handle canceled stock certificates.
Rules adopted in in 2004 amending The Securities Exchange Act of 1934 "require every transfer agent to establish and implement written procedures for the cancellation, storage, transportation, destruction, or other disposition of securities certificates. This rule will require transfer agents to: mark each canceled securities certificate with the word 'canceled'; maintain a secure storage area for canceled certificates; maintain a retrievable database of all of its canceled, destroyed, or otherwise disposed of certificates; and have specific procedures for the destruction of canceled certificates. Additionally, the Commission is amending its lost and stolen securities rule and its transfer agent safekeeping rule to make it clear that these rules apply to unissued and canceled certificates."
What if you find a old share certificates left by your grandfather? Perhaps a few shares of Berkshire Hathaway from the 1960s are worth a fortune today. That's rarely the case, but there are ways to find out whether they are worth something. Start by looking at a few things on the certificate. Look for the company name and location of incorporation, a CUSIP number, and the name of the person with whom the security is registered. All of these items are important and can likely be found on the certificate's face.
Most large discount brokerages are able to help clients track down securities that have been defunct for over 10 years. With the CUSIP number, the brokerage can uncover all splits, reorganizations and name changes that have occurred throughout the company's history. It can also tell you whether the company is still trading or out of business.
Be sure to see if the shares have the word "canceled" imprinted on them, often with holes punched through the certificate. If so, the share is worthless, but it might be worth something to a collector. For a fee, stock search companies will do all of the investigation work for you and, if the certificate ends up having no trading value, they may offer to purchase it for a collector's value. One company that offers this service is R.M. Smythe.