Stock certificates are incredibly important. Not only does the certificate provide specific information about the stock you've purchased, but most importantly, a stock certificate proves that your company is, in fact, the rightful owner. For this reason, losing a certificate can be especially problematic, but it does not have to mean chaos. There are things you can do to in the event you misplace your certificate.
Prepare an Affidavit
As soon as you recognize that you've misplaced the stock certificate, you need to prepare an affidavit. An affidavit becomes a legally binding document once you place the signatures of the business's officers on it. On the affidavit, write down everything you can remember about the certificate.
The holding company, its value, and the period when you purchased the certificate are just some of the important details you want to include. If the officers of the company were different at the time of purchase, include the names of the previous officers, as well. You should also include information describing how the certificate was lost. For example, was it stolen, or did you experience a disaster, such as a fire? The more detailed the affidavit and the sooner you prepare it, the better your chance of recovery or replacement.
Contact the Broker
If the stock is a relatively recent purchase and your company worked with a broker to complete the purchase, contact the broker for further assistance. Many brokers keep the certificate information of their clients on file. If the broker has this information, they should be able to reissue a stock certificate to you that automatically cancels out the original document.
However, this process does come with a cost. The value of the stock and the broker performing the process for you will determine how much you have to pay for a replacement issuance of the certificate.
Invest in an Instrument Bond
In terms of avoiding chaos if your stock certificates are ever lost, consider an instrument bond now. An instrument bond is a financial protection tool that ensures the stock certificate, or another financial instrument, is valid and can, therefore, be replaced in the event it is lost. However, for the bond to take effect, you will need to secure the bond while you still have the stock certificate in your possession. You may want to talk to a commercial lost instrument bond service to learn more.
Additionally, since the certificate is owned by a business entity, the official officers of the company, or other organization, must be listed on the original stock certificate and the instrument bond.
The best way to combat a lost stock certificate is not to lose the document in the first place. However, you should still invest in an instrument bond to ensure you're protected.
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