How To Buy Authentic Registered Certificate Of Stock Ownership

Every bit an individual investor, you have up to 3 choices when it comes to holding your securities:

This publication explains these choices in greater detail, by laying out the advantages and disadvantages of each and by answering frequently asked questions. Depending on the type of security and where you purchase it, you may or may not have all these choices most how your securities are held. For example, not all companies offering directly registration, and some no longer outcome physical certificates. You should ask your broker or the visitor what options you lot accept.

Physical Certificate

When you lot buy a security, whether through your broker or from the company itself, you tin can ask to accept the actual stock or bond certificates sent to you. You may accept to pay a nominal fee for the added expense of issuing a paper document. Information technology's of import that you safeguard your certificates until you sell or transfer your securities. It can be hard to prove that you in one case owned a certificate that has been lost, stolen, or destroyed. Your broker — or the company or its transfer amanuensis — volition generally charge a fee to replace a lost or stolen stock certificate. For more than information on safeguarding your securities, please read our "Fast Answer" on Lost or Stolen Stock Certificates.

The advantages of property a physical certificate include:

The company knows how to reach you lot and will ship all visitor reports and other information to you direct.
You may observe information technology easier to pledge your securities as collateral for a loan if you hold the certificates yourself in physical certificate course.

The disadvantages include:

When you want to sell your stock, you will have to send the certificate to your banker or the company's transfer amanuensis to execute the auction. This may get in harder for yous to sell apace.
If you lose your document, you may be charged a fee for a replacement certificate.
If you lot motility, you will accept to contact the visitor with your modify of address so that you exercise not miss any important mailings.

Street Name Registration

You may have your security registered in street name and held in your account at your broker-dealer. Many brokerage firms will automatically put your securities into street name unless you give them specific instructions to the contrary. Under street proper noun registration, your firm volition keep records showing you as the existent or "beneficial" owner, simply y'all will not be listed directly on the issuer's books. Instead, your brokerage house (or some other nominee) will appear as the owner on the issuer's books.

While yous volition non receive a certificate, your firm volition send to you lot, at least four times a year, an account argument that lists all your securities at the broker-dealer. Your broker-dealer will also credit your account with your dividend and involvement payments and will provide you with consolidated tax information. Your banker-dealer volition send you issuer mailings such as annual reports and proxies.

The advantages of letting your brokerage firm agree your securities in "street name" include:

Considering your securities are already with your broker, you can place limit orders that straight your broker to sell a security at a specific toll.
Your brokerage business firm is responsible for safeguarding your securities certificates so you don't have to worry virtually your securities certificates existence lost or stolen.
Your brokerage firm may go on y'all informed of important developments, such every bit tender offers or when bonds are chosen.
Information technology is easier to set up a margin account.

The disadvantages include:

You may experience a slight filibuster in receiving your dividend and involvement payments from your brokerage house. For instance, some firms only laissez passer along these payments to investors on a weekly, bi-weekly, or monthly footing.
Since your name is non on the books of the company, the company volition not post important corporate communications direct to yous.

Straight Registration

If a visitor offers direct registration for its securities, you can cull to exist registered directly on the books of the company regardless of whether y'all bought your securities through your broker or directly from the visitor or its transfer agent through a direct investment plan. Directly registration allows you to have your security registered in your name on the books of the issuer without the need for a concrete certificate to serve every bit evidence of your ownership. While you will not receive a document, you will receive a statement of ownership and periodic business relationship statements, dividends, annual reports, proxies, and other mailings directly from the issuer.

The advantages of direct registration include:

Since you are "registered" on the books of the visitor as the shareholder, y'all volition receive annual and other reports, dividends, proxies, and other communications directly from the company.
If yous want to sell your securities through your banker, you tin instruct your broker to electronically move your securities via DRS from the books of the visitor and then to sell your securities. Your broker should be able to practice this apace without the need for you filling out complicated and time-consuming forms.
Yous exercise not have to worry about safekeeping or losing certificates, or having them stolen.

The disadvantages include:

If you choose to buy or sell registered securities through a visitor'south straight investment plan, you usually volition not be able to buy or sell at a specific market place toll or at a specific time. Instead, the visitor will buy or sell shares for the programme at established times — for example, on a daily, weekly, or monthly ground — and at an boilerplate market price.

While it is solely your decision how to hold your securities, you should carefully review each of the culling forms of security registration and should consult with your fiscal counselor or broker-dealer to decide which form is all-time for you lot.

Frequently Asked Questions

Q: What is the Direct Registration Arrangement?

A: The Straight Registration System, or DRS, is a organisation that enables an investor to electronically motility his or her security position held in direct registration book-entry course dorsum and forth betwixt the issuer and the investor'south broker-dealer.

Q: Afterwards I make my decision on how I desire to concord my security, what practise I do?

A: You lot should check with the issuer or your broker-dealer to discover out if the issuer offers direct registration. If you lot are purchasing a security, tell your broker-dealer you want to hold your securities in direct registration. If you lot currently hold a document, you tin mail service or take your certificate either to the issuer or to your broker-dealer with instructions to modify to direct registration. If you currently hold your security in street proper noun registration, you tin instruct your broker-dealer or the issuer to move your security position to the issuer for direct registration. In any situation, you volition receive a statement of ownership from the issuer acknowledging your DRS book-entry position one time the change has been fabricated.

If you lot want a certificate or if you lot want to utilise street name registration, tell your broker-dealer your choice at the fourth dimension of buy. If yous elect a certificate, one volition be sent to yous. If you choose street name registration, your broker-dealer will transport you a confirmation and periodic account statements acknowledging your buying. If y'all currently concur a certificate, yous can deliver the document to your broker-dealer with instructions to modify your registration to street proper noun registration. If yous currently agree in street name registration, y'all can tell your broker-dealer to obtain a document for you lot.

Q: What do I have to do to sell my security?

A: To sell a security held in direct registration, y'all can:

instruct the issuer to sell your security (many issuers have programs in place to accommodate auction requests); or
instruct your broker-dealer or the issuer to electronically movement your security to your broker-dealer for your banker-dealer to sell; or
request a physical document and deliver it to your broker-dealer to sell.

To sell a security held in street name registration, you can:

instruct your banker-dealer to sell your security; or
request a physical certificate and deliver it to another banker-dealer to sell; or
instruct your broker-dealer or the issuer to electronically move your security to the issuer for the issuer to sell (many issuers take programs in identify to accommodate sale requests) or to electronically move to another broker-dealer to sell.

To sell a security for which yous concur a physical document, you tin can:

evangelize the document to your banker-dealer with your instructions to sell or
deliver the certificate to the issuer with your instructions (a) to change the registration to DRS and movement the position to your broker-dealer to sell if your security is eligible for direct registration or (b) for the issuer to sell if the issuer has a programme in place to adapt auction requests.

When selling a security through the issuer, the issuer volition sell your security under the terms and conditions in place for that issue. For example, some sell orders will be executed on the day the issuer receives them, and some orders are aggregated for frequent, but non daily, execution. (Note: you should ask the issuer if information technology offers a selling service and what the terms and conditions are.) Proceeds from the auction will exist mailed to you lot three business days after the date of sale.

When selling through your broker-dealer, your instructions will be acted on immediately and in accord with the guidelines it provides to yous. Proceeds from the auction will be made bachelor to you or credited to your account iii business days subsequently the appointment of auction.

Q: Tin I place a limit order? Market order? Stop social club?

A: Only a broker-dealer tin execute a limit, market place, or cease club. Every bit a result, you tin can identify whatsoever of these types of orders only if yous use a broker-dealer to execute a transaction for securities held in directly registration, street-proper noun, or in document course.

Q: What about my relationship with my broker-dealer if I employ direct registration?

A: You can maintain your human relationship with your banker-dealer regardless of your selection of registration.

When you lot purchase a security to concur in straight registration, you can tell either your banker-dealer or the issuer to include pertinent broker-dealer information in the issuer'due south records.
If you lot do not have your broker-dealer information included in the issuer'due south records at the time of purchase and later want to or if you lot want to change the banker-dealer information in the issuer'south records, you may exercise so. Yous should contact either your banker-dealer or the issuer to obtain information on the procedures and the documents required for such actions.

Q: If I hold certificates and there is a stock distribution, will I get a document for my boosted shares?

A: If the issue is eligible for direct registration, you will probably receive a statement of buying instead of an additional certificate.

Q: What are the fees associated with direct registration? With street name registration? With a document?

A: There are no fees charged by an issuer for directly registration. However, because broker-dealers offer differing services and plans, yous should contact your broker-dealer to acquire what, if any, fees it charges.

Q: If I opt for direct registration, what happens if I lose my statement of ownership?

A: If you lot ever need a duplicate statement of buying, you should contact the issuer. The issuer will mail you a new statement of ownership.

Q: What happens if my physical certificate is lost or stolen?

A: Brokerage firms, banks, transfer agents, and corporations take procedures in place to assistance investors replace lost or stolen certificates. If your securities certificate is lost, accidentally destroyed, or stolen, yous should immediately contact the transfer agent and request that a "stop transfer" be placed against the missing securities. Your broker may be able to help yous with this procedure.

The "end transfer" helps to prevent someone from transferring ownership from your proper name to another's. The transfer amanuensis or broker-dealer will study the certificates missing to the SEC's lost and stolen securities programme. For more data delight read our "Fast Answer" on Lost or Stolen Stock Certificates.

Q: How are my securities protected if I choose street name ownership?

A: Almost all broker-dealers are members of Securities Investor Protection Corporation ("SIPC"). As a result your securities and money held at your broker-dealer are protected up to $500,000 with a $100,000 limit for cash. Many broker-dealers also carry insurance in excess of SIPC's coverage. Withal, SIPC does not protect yous against losses acquired by a refuse in the market value of your securities. For more than information about SIPC coverage, please read our "Fast Answer" on the Securities Investors Protection Corporation.

We have provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.