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Stock Certificate: Definition, History & Uses

Updated: Apr. 26, 2022By: Richard Best

A stock certificate is a piece of paper issued by a company to shareholders as proof of ownership of a share of the company.

Corporate company stock shares
tupungato/iStock via Getty Images

What Is a Stock Certificate?

The stock certificate is a physical proof of a holder's stock ownership. It includes essential information such as:

  • The shareholder's name
  • The date the shares were issued
  • The number of shares issued
  • The type of stock owned
  • A unique certificate identification number (CUSIP)
  • A signature of the person with the authority to issue the certificate

Each certificate is embossed with a corporate seal.

Stock certificates are typically printed on specially prepared paper with intricate designs, much like our paper currency, to make it difficult to replicate or counterfeit. Stock certificates issued by some companies were considered works of art, often adorned with elaborate designs and ornate engravings as part of their branding. That's why some people frame their certificates and display them prominently in their homes or offices.

For example, stock certificates issued by the Disney Corporation included full-color depictions of their famous characters, making them suitable for framing and displaying in their children's rooms.

How Stock Certificates Are Used

The primary use of stock certificates was to represent an investor's share of ownership in a company. Before the electronic age, they were the only proof of ownership an investor had. When investors wanted to sell their stock, they would have to turn in their stock certificate to a broker who would then send it back to the company.

Since issuing stock certificates was replaced by electronic recordkeeping, there is no longer a practical use for them. These days old certificates are sometimes kept as a memento or collectible. Rare stock certificates can have significant value among people who collect old stock certificates.

If you do come across a stock certificate from a company that is still in business, you can check to see which state the company was incorporated in, and then inquire whether the company still conducts business there. You can then contact the company's transfer agent for instructions on how to register the stock in your name. Once in your name, you can sell the stock through a broker or the transfer agent.

Tip: Although companies no longer regularly issue stock certificates, old certificates may still have value, even if the company has merged or been acquired.

The History of Stock Certificates

The first known stock certificate was issued in 1606 by the East India Company to finance its commercial trading operations. The trading of stocks dates back to at least 1602, when the Amsterdam Stock Exchange was created to trade stocks issued by the Dutch East India Company. Large shareholders of East India Company stock certificates became very wealthy-on paper. But, when the company's business practices came into question, the certificates became worthless. As a result, the British government banned the issuing of shares until 1825.

The exchange of shares of stock became prevalent with the creation of the New York Stock Exchange (NYSE) in 1792, which is now the largest and most influential stock exchange in the world. The issuing of stock certificates reached an apex during the frenzied trading right before the Stock Market Crash of 1929. Following the crash, more than 40% of the paper value of common stock evaporated, and large numbers of companies went out of business during the crash and the ensuing Great Depression. During that period, a common use of stock certificates issued by defunct companies was as wallpaper, often covering entire walls of a former shareholder's home.

One of the last issued paper stock certificates was from the Walt Disney Company in 2013, even though electronic-entry systems replaced stock certificates in the 1990s.

Physical vs. Electronic Stock Certificates

Today, few companies issue paper stock certificates, relying instead on electronic book-entry methods to record and track stock ownership. When shares of stocks are purchased, there is no physical exchange of securities. Instead, an accounting entry is made by the financial institution handling the purchases or sales of securities on behalf of investors. The securities can be registered in "street name," which is the name of the brokerage firm holding the security for you in book-entry form. Or it can be registered directly with the issuing company. All parties, including the company issuing the shares, the financial institutions, and investors, benefit from this streamlined process because it's more efficient, safer, and less costly.

However, some investors prefer to have a physical stock certificate as evidence of their ownership. Although companies are not required to issue paper stock certificates, many will do so upon request.

How To Obtain a Stock Certificate

The easiest way to obtain a stock certificate today is through the broker who sold you the shares. They retain the information pertaining to the sale of the shares, including the contact information of the company's transfer agent, who is responsible for issuing the stock certificate. Most brokers charge a fee for this service, which can run as high as $500.

Alternatively, you can take a more direct route by going through the company's transfer agent. However, this can be a time-consuming process. You can find the transfer agent's contact information on the company's annual report, which is usually available on the company's website.

Pros & Cons of Holding a Physical Certificate


  • The issuing company will be able to notify you directly with company news and other information that can impact your shares.
  • Instead of having any dividends deposited in a brokerage account, they will send them directly to you.
  • You can pledge physical stock certificates as collateral for a loan.


  • You have to send the certificate to your broker or the company's transfer agent to sell the shares, which can preclude a quick turnaround of funds.
  • If you lose your certificate, you may have to pay a fee to replace it.
  • If you move, you need to contact the transfer agent with the address change so you don't miss any notifications.

Important: A major shortcoming of physical stock certificates is that, unlike electronically held shares, they cannot be sold at a push of a button. However, physical stock certificates can be deposited into brokerage accounts, thereafter giving the owner the opportunity to sell the shares quickly.


  • If it represents an existing company or a company that has merged with another company, it can still have monetary value. You will need to do some research to determine if it's still a valid stock certificate. If the company no longer exists, older stock certificates may have some value as a collectible.

  • Stock certificates contain an identifying number called a CUSIP number, which can be used to determine if a company still exists. Provide the certificate to the Secretary Of State in the state where the company is incorporated, and they should be able to give you the information you need.

  • Contact the company and ask the transfer agent to help you transfer the registration in your name and collect any dividends owed.

  • You can take the stock certificate to your broker, who can convert it for you, after which it will be held electronically as a book entry and reported to your account.

  • You don't sell a stock certificate; you sell the shares represented by your stock certificate. To do that, you can take the certificate to your broker and provide instructions to sell. Or, you can send the certificate to the issuing company requesting to change the registration to direct registration which can then be sold by your broker or ask the issuer to sell the stock if it offers a way to do that.

  • First, you need to contact the company's transfer agent to request a "stop transfer" to prevent someone from transferring ownership. Your broker should be able to help you with this process.

This article was written by

Richard Best profile picture
Thirty-plus years in the financial services industry as an advisor, managing director, directors of marketing and training, and currently as a consultant to the industry. Author and columnist on wealth management and investing topics.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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