Do you know what you'd do if you lost a stock certificate?
It's possible for stock certificates to get lost or stolen. When this happens, you may be in a race against time to fix things before this permanently affects your portfolio.
Unfortunately, even veteran investors often don't know what to do when they lose a stock certificate. And once that lost stock certificate is gone, every minute matters!
To help you save both time and money, we put together this guide for what to do when you lose a stock certificate. Keep reading to discover everything you need to know!
What Do I Need the Stock Certificate For?
The stock certificate serves as proof of your share whenever you buy into a publicly-traded company. Many certificates are now digital and go through the Central Securities Depository. However, some companies provide physical stock certificates.
And even when the company does not provide a physical stock certificate, many shareholders prefer to have their certificates printed. This lets them keep the certificate in the same area (such as a fireproof safe) where they keep other important documents.
Keeping a physical copy is often important to shareholders who fear their online information getting compromised. But a physical stock certificate is relatively easy to lose or steal, so it's important to know what to do if that happens.
Is the Certificate Necessary To Prove Stock Ownership?
A physical stock certificate is not necessary to prove that you own shares in a company. Even without that certificate, you legally own the stock and can enjoy all the rights that come with ownership.
In other words, with or without a physical certificate, you will still receive the dividends you are owed. And you will still receive notifications and other important communication from the company you have invested in.
Why, then, is it important to take action if your stock certificate is lost or stolen? The stock certificate provides plenty of information about both you and your shares. If a savvy person steals or simply finds your certificate, they may be able to transfer those shares from your name to their own name.
We recommend safeguarding your physical stock certificate as best you can to prevent loss or theft. And if the certificate still ends up lost or stolen, you can use this guide to take action and prevent your shares from being transferred to someone else.
Why Would Someone Want A Physical Certificate?
A physical stock certificate serves as additional proof that you own shares in a company. Along with electronic documentation, a physical stock certificate provides additional verification of your investment.
Additionally, many smaller businesses may insist on using a physical stock certificate. These are often businesses concerned about investors' online data being compromised.
As an investor, you may also prefer a tangible stock certificate due to online privacy concerns. And if nothing else, the stock certificate is a memorable memento of important investments.
What Should I Do If I Have A Lost Stock Certificate?
The first thing you must do is contact the stock transfer agent of the company you have invested in. This agent will be able to put out a "stop transfer" order that will keep someone else from transferring your shares to themselves. The agent will also let other concerned parties know that the stock certificate has been lost or stolen.
If you're not sure how to reach the transfer agent, simply contact the company. They will be able to put you in touch with the agent ASAP.
It's important to speak to the transfer agent as soon as you notice a stock certificate is lost or stolen. Until the agent places the stop-transfer order, your shares may be in danger!
The Next Steps To Take
Speaking with an agent and getting the stop-transfer order is merely the first step when you have a lost or stolen stock certificate. Below, we walk you through what the next steps are and how you can easily take care of everything.
Describe the Loss
Before you can replace your paperwork, you must complete more paperwork. In this case, you must file an affidavit. This affidavit must contain all relevant facts about your loss. Make sure you have all of your details straight before completing the affidavit!
Get An Indemnity Bond
You will need to get an indemnity bond before you can replace your stock certificate. This bond exists to help protect both the company and the transfer agent in the unlikely event that your shares are transferred to someone else's name.
If you must get such a bond, it may cost you between two to three percent of your shares' current value. As annoying as that is, the bond serves as an additional layer of insurance protecting you, the company, and the agent in the event of any wrongdoing.
Request A New Certificate
Once the steps above have been completed, you can request a new stock certificate from the company. Once you receive that certificate, be sure to put it somewhere safe so you can reduce the chances of it being lost or stolen again!
Safeguard Your Stock Certificate and Other Records
It's scary to imagine what someone can do if they find or steal your stock certificate. Of course, people can do nefarious things if they ever get hold of things like your car note or your mortgage paperwork.
This is why we recommend keeping important paperwork somewhere safe in your home. If the safe is fireproof, that's good. And if it has a sturdy lock, that's even better!
Get Your Stock Certificate Today
While it's frightening to deal with a lost stock certificate, there are many benefits to having a physical certificate. And you should be able to enjoy those benefits without living in fear of what could happen.
We specialize in providing printed stock certificates to investors just like you. Best of all, you can enjoy free shipping on every order. If you're ready to better protect your investments, all you have to do is contact us today!