Most of the time when a business is started, it’s too big to control or provide resources by a single person. To solve that problem and have enough resources and finances to run the company, usually two or more than two people start the company. It is not necessary for all of them to invest the same amount of money in the business but they can have different shares and ownership rights. For example, a person with more money can invest the 60% of the finances where the other 40% comes from 4 different partners.
This also explains that the first person owns 60% of the shares of that company where the four others own 10% shares for each. For dozens of purposes, the details of partnership or ownership in a company need to be written on a document. This document includes the name of each partner, his joining date in the company, amount or percentage of his shares in the company and his rights, obligations and power in the decision making process. This document is known as the stock certificate or share certificate.
Elements of a Stock Certificate:
- The name of the owner
- Registration or reference number for record
- Corporate seal
- Number or quantity of the shares owned by one
- Signatures for authentication purposes
Here is preview of a Free Shareholders Stock Certificate Templates created using MS Word,
Importance of Stock Certificate for Shareholders:
Most of the time, friends or the people who know each other for a long time, start the business together as partners. This can start very well but if there isn’t any written or documented proof of each of the partnership in the company, it can lead to an unpleasant situation or a law suit against any of the partners. To make sure that doesn’t happen or even if it happens, each partner has its own rights to deal with the situation, stock certificates are created.
For example, a partner claims that he owns 51% of the share in a company so he gets to make all the decisions. If that’s true, he can prove his majority shareholding by showing the stock certificate where if he is committing a fraud, the other partner(s) can prove him guilty by presenting their stock certificates.
Along with many other uses and benefits of stock certificates, there is one very important benefit that comes handy when a shareholder wants to sell his shares to another partner. If someone decides to leave the partnership and sell the shares to someone else, he needs to have the stock certificate in order to make the transfer for the ownership of the shares.
How to buy a Stock Certificate?
There are mainly three ways to buy shares for yourself but before that, you need to go through a very long process of assessing the company you want to buy shares in and then evaluating the worth of the company in order to negotiate with your stock broker. Then you can buy the stocks online from various websites that are built for this purpose, you can get help from a transfer agent or you can buy the shares in the typical manner by going in the stock exchange, meeting with the stock broker and paying for the shares that you want to need. In return, you will get the stock certificate proving you have bought the shares in a company.