Also known as: share certificates · stock certificate
Written by attorneys · grounded in primary & secondary sources — see below
A document issued by a corporation that evidences ownership of shares. The document must state on its face the name of the issuing corporation and the state under whose laws it is organized, the name of the person to whom the shares are issued, and the number and class of shares represented.
Southland Foods issued printed certificates to new investors that displayed only the company logo and the investor names. Seth Shapiro received one of these certificates and later discovered it omitted any reference to the corporation's name or state of organization. When a dispute arose over voting rights, the court examined the face of the certificate and found it failed the statutory minimum requirements.
After a bank consolidation, Simon Stern kept his original share certificates from the acquired institution. The surviving bank recorded the shares on its books without issuing new certificates. The transaction proceeded because the existing certificates continued to evidence ownership in the combined entity.
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Sylvia Santos received share certificates containing a legend restricting transfer to non-tribal members without superintendent approval. When she attempted to sell the shares, the restriction printed on the certificate prevented the transfer. The legend operated as notice that bound subsequent holders.
Samantha Stone and other shareholders signed an agreement restricting board power over property sales. The corporation noted the agreement on every share certificate. When a later majority shareholder tried to sell land without unanimous consent, the notation on the certificates preserved the restriction's enforceability.
Scott Summers received share certificates that named him as owner but were intended to create a trust for family members. The certificates themselves showed no trust language. The court looked to the certificates to determine legal title while recognizing the separate trust arrangement.
The certificate must state the corporation's name and state of organization, the shareholder's name, and the number and class of shares represented. These elements allow anyone reading the certificate to identify the issuer, the owner, and the precise equity interest. Omitting any of these items renders the certificate noncompliant with statutory requirements.
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No. Shares may be issued through acceptance of consideration and recording on the corporation's books even without a certificate. The lack of a certificate does not permit the board to later recharacterize issued shares as unissued.
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Yes. The board may choose to issue scrip, pay cash, or dispose of fractional interests rather than issue fractional share certificates. Electronic scrip recorded on the books satisfies the statutory alternatives.
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The certificate fails the statutory minimum and is deficient. The corporate character and jurisdiction must appear on the face of the certificate itself rather than by implication from other documents.
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…agreement for their consolidation under the PNB charter. By the terms of the agreement, PNB's stockholders were to retain their share certificates, which would be deemed to represent an equal number of shares in the consolidated bank, while Girard's stockholders would surrender their shares in exchange for shares in the consolidated…