Certificate of ownership
| Certificate of ownership |
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Certificate of ownership is a formal document that evidences title to an asset. Example of certificate of ownership is share certificate. The certificate of ownership is usually issued based on registers kept by authorized body. In case of shares it is shareholder register.
Certificate of ownership is also used in other areas, e.g. to evidence ownership of the land. For example, when planning new construction, it is necessary to prepare planning application. It the applicant is not the sole owner of the land, he has to inform all other owners shown in certificate of ownership about the plans. Only if others owners agree, the application can be submitted to local authority.
Certificate – written proof, statement of something. It gives owner specified rights, confirmation of owning something, state's origin of the some goods (Certificate of authenticity).
Share certificate – written document, signed by a representative of a corporation that serves as a proof of ownership of specified amount of shares. Share certificate is also related to stock certificate.
When company issues stocks/shares in the market, person who buys issued shares become shareholder and receive a share certificate. Simplifying, the share certificate is a receipt of purchase and gives ownership in the company on a basis of how many shares have been bought. In the process of time, share certificate may get damaged, lost or even stolen therefore it has to be reissued. Replaced document has to have the same number of shares written on it. Owner of document, in this case is obligated to give out destroyed document or give a proof that it have been stolen.
Certificate's key informations that should be included:
- Certificate's number
- Class of shares (For example, Google's class of shares: Class - A shares, Class – B, Class – C, they give you some privileges)
- Address and full name of owner
- Amount of owned shares
- Shares’ issuing date
- Company registration number and name
- Value of shares paid by the buyer
Share certificate gives some privileges, like voting rights which are defined by the corporate law. Shareholder with a stock certificate can grant proxy to somebody else to have a voting rights.
Historical and modern context
Back in the days, stock certificate was the only proof to the dividends, without it, shareholder would not get any payment from entitlement to dividend. Historically, every time the certificate was submitted, the evidence of payment from rights to dividends was recorded on the back of it. Thanks to that, all payments were saved on the document.
Nowadays, with all the information technology, in modern markets, investors hardly become an owner of physical share certificates. Thanks to digitalization, share certificate can be sold or given away without moving away from the seat by our desk, it's being transferred through a book entry than through transfer of physical document. Basically, If owner finds a person who is willing to buy his shares, everything is made through IT system, they might not even meet each other.
Collectible value
Today, thanks to its beauty and sophisticated design, the older and more rare documents became highly collectible. Not only the beauty matters but also historical context does. Science called “Scripophily” study certificates and other financial documents from the past, also, colleting this documents is named the same. The more rare and extraordinary certificate is the higher value it represent, just like car collecting or an art.
References
- Blume M. E., Jean Crockett J., Friend I., (1974) Stockownership in the United States: Characteristics and Trends Business Survey.
- Li, Y., & Deng, R. H. (2006, March). Publicly verifiable ownership protection for relational databases. In Proceedings of the 2006 ACM Symposium on Information, computer and communications security (pp. 78-89). ACM.
- Pogue G.A., Faucett R.B., Bussard R.N, (1969) Cash management: A systems approach
- Shelton, J. P. (1965). The first printed share certificate: An important link in financial history. Business History Review, 39(3), 391-402.
Author: Grzegorz Szewczyk
