Also known as: stock certificates · share certificate
Written by attorneys · grounded in primary & secondary sources — see below
An instrument evidencing ownership of shares of stock in a corporation. When a corporation elects to issue shares in certificated form, the document must state on its face the name of the 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.
Starlight Media issues paper certificates to early investor Stephen Shaw that display only the company logo and the number of shares. Stephen later questions whether the documents satisfy statutory requirements. Because the certificates omit the corporation's full legal name and state of organization they fail to meet the minimum content rules for valid share certificates.
After Stella Shapiro dies her executor locates share certificates in a safe deposit box in Utah. The certificates are not in the possession of any foreign administrator. The estate may therefore administer the shares in Utah where the certificates are physically located.
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Federal agents executing a warrant at Simon Stern's office seize several mining stock certificates along with other records. The certificates become part of the evidence presented to the grand jury. Their seizure raises questions about the scope of the warrant and the admissibility of the documents.
After the Soviet government nationalizes insurance companies it annuls outstanding stock certificates and relieves the enterprises of prior debts. The United States later seeks to enforce claims against assets that had been represented by those certificates. The validity of the nationalization decree determines whether the certificates retain any legal force.
Plaintiffs file suit in Delaware and obtain an order sequestering shares of Greyhound Corporation owned by Arizona residents. Although the physical certificates are not located in Delaware Delaware law treats the situs of the shares as Delaware. The defendants challenge the sequestration as an unconstitutional assertion of jurisdiction over their property.
During a search of a suspected loansharking operation agents seize stock certificates along with address books and other documents. A grand jury later subpoenas the owner to testify about the seized items. The owner invokes the Fifth Amendment and contests the use of the certificates as a basis for questioning.
Each certificate must state the name of the corporation and that it is organized under the laws of a particular state the name of the person to whom the shares are issued and the number and class of shares represented. Certificates that omit these items do not satisfy statutory requirements even if they list the number of shares.
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A board may authorize that some or all shares be issued without certificates. Existing certificated shares remain valid until surrendered and the shift to uncertificated form does not require shareholder approval.
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Failure to note a shareholder agreement on certificates does not impair the agreement's validity. A purchaser without actual knowledge may seek rescission but the agreement remains binding on the corporation and signatories.
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…The only property of the individual defendants in Delaware was stock in Greyhound Corp., which was incorporated in Delaware. The stock certificates were not physically present in Delaware, but under Delaware law, the situs of the stock was deemed to be in Delaware. The individual defendants, whose primary residences and places of…