What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


How to Read a Stock Certificate

Original post by W D Adkins of Demand Media

Stock certificates are physical documents that provide shareholders with proof that they own shares of a company’s stock. Many people own shares in electronic form, but others prefer to hold physical certificates instead. Because companies often embellish their stock certificates with attractive designs, and some of these companies are rich in history, a market for old stock certificates exists among collectors. A stock certificate not only establishes ownership of specific shares, it also describes the shares represented.

Contents

Step 1

Look for the company’s name, which usually appears in a large font at the top of the certificate. If you are examining an old stock certificate, keep in mind that the company name may have changed or the firm may have gone out of business. The stock certificate must also indicate the state in which the company was chartered. The state agency that recorded the company’s articles of incorporation may be able to provide updated information.

Step 2

Locate identification and tracking information on the stock certificate. Most important is the CUSIP number. CUSIP is an acronym for Committee for Uniform Securities Identification Procedures, and the CUSIP number uniquely identifies the issuing corporation. Every stock certificate also has its own identification number, which allows the issuing company and others to verify authenticity and ownership. Some stock certificates also state the name of the company’s transfer agent.

Step 3

Determine exactly what equity ownership the stock certificate represents. The number of shares will be stated on the face of the certificate, along with a reference to the type of shares. Shares may be common stock or part of an issue of preferred stock.

Step 4

Establish the ownership of the stock certificate, if possible. On the face of the certificate, you will see the name of the person to whom it was issued, but you also need to look on the back. If the transfer of ownership section on the back has been completed and signed, the stock certificate is no longer valid because ownership of the shares was transferred to someone else.


                   

References

About the Author

W D Adkins has been writing professionally for two years. His writing interests include education, business and finance. Adkins is a doctoral student with Masters Degrees in history and sociology from Georgia State University. He is also a member of the Society of Professional Journalists.


Advertisement