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Stock Certificate

DEFINITION

Stock certificate is a printed document which states the name, incorporation state, and date of incorporation, the registered number of the certificate, the number of shares of stock in a corporation the certificate represents, the name of the shareholder, the date of

issuance, and the number of shares authorized in the particular issue of stock, signed by the President and Secretary of the corporation. On the reverse side of the certificate is a form for transfer of the stock certificate to another person. After transfer the new owner should register the change of ownership with the corporation.

In corporate law, a stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation. In large corporations, buying shares does not always lead to a stock certificate

Usually only shareholders with stock certificates can vote in a shareholders' general meeting. Sometimes a shareholder with a stock certificate can give to another person to allow them to vote the shares in question. Voting rights are defined by the corporation's charter and corporate law.

PARTNERSHIP CERTIFICATE

The particulars submitted to the registrar are examined. It is also seen whether all legal formalities required have been observed or not. If everything is in order, then the registrar shall record an entry in the register of firms. The firm is considered registered thereon.

UNIT CERTIFICATES

An investor has a right to receive his unit certificates on allotment within a period of 10 weeks from the date of closure of subscription lists in the case of a close ended scheme and 6 weeks from the date of closure of initial offer in the case of an open ended scheme.

STOCK CERTIFICATES DIVIDED INTO TWO FORMS:

a. Registered stock certificates - A registered stock certificate is normally only evidence of title and a record of the true holders of the shares will appear in the stockholder's register of the corporation.

b. Bearer stock certificates - A bearer stock certificate, as its name implies is a bearer instrument and possession of the certificate entitles the holder to exercise all legal rights associated with the stock. Bearer stock certificates are becoming uncommon - they were popular in offshore jurisdictions for their perceived confidentiality, and as a useful way to transfer beneficial title to assets held by the corporation without payment of stamp duty. International initiatives have curbed the use of bearer stock certificates in offshore jurisdictions, and tend to be available only in onshore financial centers, although they are rarely seen in practice.

MINING STOCK CERTIFICATES

Many corporations, while possibly no longer listed anywhere as an active company under the name on the certificate, may have merged with another company or simply changed their corporate name, and may still be operating and financially successful. Conversely, many corporations have gone bankrupt or been dissolved for various reasons. In either case, there are several procedures to obtain information as to whether that old stock certificate still has value.

STRUCTURE FOR SECURITISATION OF SECURITIES

Securitization is a structured transaction, whereby the originator transfers or sells some of its assets to a Special Purpose Vehicle (SPV) which breaks these assets into tradable securities of smaller values which could be sold to the investing public. The appropriate structure for securitization depends on a variety of factors like quality of assets securitized, default experience of original borrowers, amount of amortization at maturity, financial reputation and soundness of the originator. The general principle is that the securities must be structured in such a way that the maturity of these securities may coincide with the maturity of the securitized loans. However, there are three important types of securities as listed below:

a. Pass through and pay through certificates .In the case of pass through certificates, payments to investors depend upon the cash flow from the assets backing such certificates. In other words, as and when cash is received from the original borrower by the SPV, it is passed on to the holders of certificates at regular intervals and the entire principal is returned with the retirement of the assets packed in the pool. Thus, pass through certificates have a single maturity structure and the tenure of these certificates is matched with the life of the securitized assets. On the other hand pay through certificates has a multiple maturity structure depending upon the maturity pattern of underlying assets.

b. Preferred stock certificates Preferred stocks are instruments issued by a subsidiary company against the trade debts and consumer receivables of its parent company. In other words, subsidiary companies buy the trade debts and receivables of parent companies to enjoy liquidity. Thus trade debts can also be backed through the issue of preferred stocks. Generally these stocks are backed by guarantees given by highly rated merchant banks and hence they are also attractive from the investors point of view. These instruments are mostly short term in nature.

c. Asset based commercial papers This type of structure is mostly prevalent in mortgage backed securities. Under this type SPV purchases portfolio of mortgages from a single group on the basis of interest rates, maturity dates and underlying collaterals. They are, then, transferred to a trust which in turn issues mortgage backed certificates to the investors. These certificates are issued against the combined principal value of the mortgages and they are also short term instruments. Each certificate holder is entitled to participate in the cash flow from underlying mortgages to the extent of his investments in the certificates.

d. Other types Apart from the above, there are also other types of certificates namely,

i) Interest only certificates and

ii) Principal only certificates.

In the case of interest only certificates payments are

made to investors only from the interest incomes earned from the assets securitized. As the very name suggest, payments are made to investors only from the repayment of principal by the original borrowers, in the case of principal only certificates. These certificates enable speculative dealings since the speculators know well that the interest rate movements would affect the bond values immediately. For instance, the principal only certificates would increase in value when interest rates go down. It is so because it becomes advantageous to repay the existing debts and resort to fresh borrowings at lower cost. This early redemption of securities would benefit the investors to a greater extent. Similarly, when the interest rates go up, interest only certificate holders stand to gain since more interest would be available from the underlying assets. One cannot exactly predict the future movements of interest, and hence these certificates give much scope for speculators to play their game.

Stock Certificates Lost or Stolen

Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates.

If the securities certificate is lost, accidentally destroyed, or stolen, immediately contact the transfer agent and request that a stop transfer be placed against the missing securities. The broker may be able to assist with this process.

The stop transfer helps to prevent someone from transferring ownership from one name to another's. The transfer agent or broker-dealer will report the certificates missing to the Stock Exchange Certificates lost and stolen securities program.

If expecting a certificate through the mail, and it doesn't arrive, immediately contact the organization that arranged the transaction typically with the brokerage firm. While many companies choose to use registered or certified mail to deliver securities certificates to individuals, some prefer regular mail so as not to call attention to the potential value of the item.

REPLACING SECURITIES CERTIFICATES

Get a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the following:

1. The owner must state all the facts surrounding the loss in an affidavit;

2. The owner must buy an indemnity bond to protect the corporation and the transfer agent against the possibility that the lost certificate may be presented later by an innocent purchaser. The bond usually costs between one or two percent of the current market value of missing certificates; and

3. The owner must request a new certificate before an innocent purchaser acquires it.

If later find the missing certificate, notify whoever called to place the stop transfer so that the lost or stolen securities report may be removed.

Securities certificates are valuable and should be safeguarded. To avoid the cost and burden of safeguarding certificates, some investors opt for letting their brokerage firm or another company holds their securities for them. And increasingly, certificates for many securities are not even available: with these book entry securities, ownership is reflected on the books of a company.

The actual transfer of securities is governed by state law, rather than the federal securities laws.

The Securities Transfer Association, however, is not equipped to respond to individual enquires via the telephone, mail, or e-mail. Shareholders with transfer related enquiries, even if they are general in nature, would be best served by speaking to the transfer agent or issuer for the security in question or their broker-dealer.

Stock certificate printed document which states the name, incorporation state, and date of incorporation, the registered number of the certificate, the number of shares of stock in a corporation the certificate represents, the name of the shareholder, the date of issuance, and the number of shares authorized in the particular issue of stock, signed by the President and Secretary of the corporation. On the reverse side of the certificate is a form for transfer of the certificate to another person. After transfer the new owner should register the change of ownership with the corporation.

In corporate law, a stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation. In large corporations, buying shares does not always lead to a stock certificate

Usually only shareholders with stock certificates can vote in a shareholders' general meeting. Sometimes a shareholder with a stock certificate can give to another person to allow them to vote the shares in question. Voting rights are defined by the corporation's charter and corporate law.

PARTNERSHIP CERTIFICATE

The particulars submitted to the registrar are examined. It is also seen whether all legal formalities required have been observed or not. If everything is in order, then the registrar shall record an entry in the register of firms. The firm is considered registered thereon.

UNIT CERTIFICATES

An investor has a right to receive his unit certificates on allotment within a period of 10 weeks from the date of closure of subscription lists in the case of a close ended scheme and 6 weeks from the date of closure of initial offer in the case of an open ended scheme.

STOCK CERTIFICATES DIVIDED INTO TWO FORMS:

a. Registered stock certificates - A registered stock certificate is normally only evidence of title and a record of the true holders of the shares will appear in the stockholder's register of the corporation.

b. Bearer stock certificates - A bearer stock certificate, as its name implies is a bearer instrument and possession of the certificate entitles the holder to exercise all legal rights associated with the stock. Bearer stock certificates are becoming uncommon - they were popular in offshore jurisdictions for their perceived confidentiality, and as a useful way to transfer beneficial title to assets held by the corporation without payment of stamp duty. International initiatives have curbed the use of bearer stock certificates in offshore jurisdictions, and tend to be available only in onshore financial centers, although they are rarely seen in practice.

MINING STOCK CERTIFICATES

Many corporations, while possibly no longer listed anywhere as an active company under the name on the certificate, may have merged with another company or simply changed their corporate name, and may still be operating and financially successful. Conversely, many corporations have gone bankrupt or been dissolved for various reasons. In either case, there are several procedures to obtain information as to whether that old stock certificate still has value.

STRUCTURE FOR SECURITISATION OF SECURITIES

Securitization is a structured transaction, whereby the originator transfers or sells some of its assets to a Special Purpose Vehicle (SPV) which breaks these assets into tradable securities of smaller values which could be sold to the investing public. The appropriate structure for securitization depends on a variety of factors like quality of assets securitized, default experience of original borrowers, amount of amortization at maturity, financial reputation and soundness of the originator. The general principle is that the securities must be structured in such a way that the maturity of these securities may coincide with the maturity of the securitized loans. However, there are three important types of securities as listed below:

a. Pass through and pay through certificates In the case of pass through certificates, payments to investors depend upon the cash flow from the assets backing such certificates. In other words, as and when cash is received from the original borrower by the SPV, it is passed on to the holders of certificates at regular intervals and the entire principal is returned with the retirement of the assets packed in the pool. Thus, pass through certificates have a single maturity structure and the tenure of these certificates is matched with the life of the securitized assets. On the other hand pay through certificates has a multiple maturity structure depending upon the maturity pattern of underlying assets.

b. Preferred stock certificates Preferred stocks are instruments issued by a subsidiary company against the trade debts and consumer receivables of its parent company. In other words, subsidiary companies buy the trade debts and receivables of parent companies to enjoy liquidity. Thus trade debts can also be backed through the issue of preferred stocks. Generally these stocks are backed by guarantees given by highly rated merchant banks and hence they are also attractive from the investors point of view. These instruments are mostly short term in nature.

c. Asset based commercial papers This type of structure is mostly prevalent in mortgage backed securities. Under this type SPV purchases portfolio of mortgages from a single group on the basis of interest rates, maturity dates and underlying collaterals. They are, then, transferred to a trust which in turn issues mortgage backed certificates to the investors. These certificates are issued against the combined principal value of the mortgages and they are also short term instruments. Each certificate holder is entitled to participate in the cash flow from underlying mortgages to the extent of his investments in the certificates.

d. Other types Apart from the above, there are also other types of certificates namely,

i) Interest only certificates and

ii) Principal only certificates.

In the case of interest only certificates payments are made to investors only from the interest incomes earned from the assets securitized. As the very name suggest, payments are made to investors only from the repayment of principal by the original borrowers, in the case of principal only certificates. These certificates enable speculative dealings since the speculators know well that the interest rate movements would affect the bond values immediately. For instance, the principal only certificates would increase in value when interest rates go down. It is so because it becomes advantageous to repay the existing debts and resort to fresh borrowings at lower cost. This early redemption of securities would benefit the investors to a greater extent. Similarly, when the interest rates go up, interest only certificate holders stand to gain since more interest would be available from the underlying assets. One cannot exactly predict the future movements of interest, and hence these certificates give much scope for speculators to play their game.

Stock Certificates Lost or Stolen

Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates.

If the securities certificate is lost, accidentally destroyed, or stolen, immediately contact the transfer agent and request that a stop transfer be placed against the missing securities. The broker may be able to assist with this process.

The stop transfer helps to prevent someone from transferring ownership from one name to another's. The transfer agent or broker-dealer will report the certificates missing to the Stock Exchange Certificates lost and stolen securities program.

If expecting a certificate through the mail, and it doesn't arrive, immediately contact the organization that arranged the transaction typically with the brokerage firm. While many companies choose to use registered or certified mail to deliver securities certificates to individuals, some prefer regular mail so as not to call attention to the potential value of the item.

REPLACING SECURITIES CERTIFICATES

Get a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the following:

1. The owner must state all the facts surrounding the loss in an affidavit;

2. The owner must buy an indemnity bond to protect the corporation and the transfer agent against the possibility that the lost certificate may be presented later by an innocent purchaser. The bond usually costs between one or two percent of the current market value of missing certificates; and

3. The owner must request a new certificate before an innocent purchaser acquires it.

If later find the missing certificate, notify whoever called to place the stop transfer so that the lost or stolen securities report may be removed.

Securities certificates are valuable and should be safeguarded. To avoid the cost and burden of safeguarding certificates, some investors opt for letting their brokerage firm or another company holds their securities for them. And increasingly, certificates for many securities are not even available: with these book entry securities, ownership is reflected on the books of a company.

The actual transfer of securities is governed by state law, rather than the federal securities laws.

The Securities Transfer Association, however, is not equipped to respond to individual enquires via the telephone, mail, or e-mail. Shareholders with transfer related enquiries, even if they are general in nature, would be best served by speaking to the transfer agent or issuer for the security in question or their broker-dealer.