Stock ledger
| Stock ledger |
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Stock ledger is a record, which follows all stock transactions of a company and contains evidences of every change in stocks. The stock ledger is also called the stock transfer ledger, the corporate stock ledger or even the stock book.
Importance of the stock ledger
This record is only a part of all records, a company is obliged to keep. Each and every transaction that refers to the shares of the business needs to be documented in the stock ledger. That includes for example shares initial place, stock transfers that took place, and also shares which company surrendered or lost. Nowadays stock ledger adopts into two forms, a record stated on the paper or a record maintained online[1].
The stock ledger is a very important record that enables identification of all shareholders of the company, at any time. It is created by the sum of all stock transactions after they took place. It is an official, business document of all present-day and former shareholders, which accommodates details of the stockholders and of the shares owned by them. All of the above stated pieces of information contained in the stock register are crucial for the company and for the shareholder as well[2].
Information written in the stock ledger
Every establishment releasing shares is obliged to keep it registered. Below are included pieces of information, that may be contained in stock transaction register[3]:
- Name of the shareholder,
- Mailing address which includes contact number of a shareholder,
- Stock certificate number,
- Number of shares transferred,
- The date of when shares were bought,
- Price paid per share,
- The class of shares,
- Transfer reason.
Updates in the stock ledger
This ledger needs to be kept up to date and also needs to be updated every time when a transaction involving shares takes place. Making a record of transfer as well as purchase of stock should be treated as a fragment of the transaction process. It is possible for the potential investors to have an insight to the stock ledger, therefore it needs to be kept accurate of all current shareholders[4].
Legal perspective of the company stock ledger
Corporate matters as important as stock ledger needs to be regulated and also inspected by the law. In this case most regulations concerning are stated in Title 8, General Corporation Law of Delaware State, some of them are listed below to show the instances of government regulations[5]:
- "The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order.
- "stock ledger" means 1 or more records administered by or on behalf of the corporation in which the names of all of the corporation's stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with § 224 of this title.
- Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose, and to make copies and extracts from: The corporation's stock ledger, a list of its stockholders, and its other books and records.
- The Court may summarily order the corporation to permit the stockholder to inspect the corporation's stock ledger, an existing list of stockholders, and its other books and records, and to make copies or extracts therefrom.
- Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to the director's position as a director.
- Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases)."
Examples of Stock ledger
- The stock ledger will contain records of all purchases and sales of shares of the company. This includes the date of the transaction, the number of shares purchased or sold, the price per share, the name of the buyer or seller, and the total cost or proceeds of the transaction.
- The stock ledger may also include information about any dividends that were paid out to shareholders, as well as any stock splits or reverse stock splits that took place.
- If a company does not have a physical stock ledger, the information may be stored in an electronic database or spreadsheet. This information can be used to generate reports about the company's stock ownership, as well as to track changes in the company's capital structure.
Advantages of Stock ledger
A stock ledger provides a comprehensive and accurate record of a company's stock transactions. The advantages of maintaining a stock ledger include:
- Increased efficiency in tracking stock movements and ensuring compliance with relevant regulations. A ledger provides a central point of reference for all stock transactions, allowing for easy monitoring and review.
- Improved accuracy in stock valuation. A ledger keeps an accurate and up-to-date record of all stock transactions, allowing for precise valuation of stock holdings.
- Reduced risk of fraud and abuse. A ledger helps to ensure that all stock transactions are properly documented, making it harder for fraudulent or unauthorized stock transactions to go undetected.
- Improved transparency. A ledger provides an easy-to-understand overview of a company's stock holdings, helping to ensure that shareholders and other stakeholders are provided with accurate information.
Limitations of Stock ledger
A stock ledger is a vital tool for the efficient management of a company's stock, but it has some limitations:
- It does not provide visibility into the overall inventory levels and does not allow for proactive management of stock.
- Stock ledgers do not account for changes in demand or supply.
- They do not provide details on the prices at which the stock is bought and sold.
- Stock ledgers are not flexible, and it can be difficult to make changes to the data.
- It is not possible to compare stock ledgers between different companies, as they are specific to the individual company.
- Stock ledgers do not provide any insights into customer behavior or trends.
A Stock ledger is also known by various names, depending on the context. These include the following:
- Stock transfer ledger: This is the record of all transactions related to the transfer of stocks from one party to another. It is usually maintained by the corporate secretary and is used to track the ownership of the company’s shares.
- Corporate stock ledger: This is the record of all stock-related activities of the company. It contains information about the issuance, sale, and repurchase of stocks, as well as the transfer of ownership.
- Stock book: This is a book that contains all of the company’s financial records, including the stock ledger. It is used to track the company’s financial performance.
In summary, the Stock ledger is a record that follows all stock transactions of a company and contains evidence of every change in stocks. It is also known by various names such as the Stock transfer ledger, the Corporate stock ledger, or the Stock book.
Footnotes
References
- Allen W.T., Kraakman R., (2016), Commentaries and Cases on the Law of Business Organization., "Wolters Kluwer Law & Business", subchapter: 6.6,
- Delaware Code Revisors, (2019),Title 8, Corporations., p: 44-48,
- Epicor, (2012), Merchandising 4.3.3, Stock Ledger, User Guide., Austin, p:2-4,
- Holmberg S.R.,(2018), Who are the shareholders?, "Roosevelt Institute", p: 6-10,
- Stock Ledger , (2019),
- Stock Issuance, Transfer Ledge, (2019),
- Welch E.P., Saunders R.S., Land A.L., Voss J.C., Turezyn A.J.,(2016), Folk on the Delaware General Corporation Law: Fundamentals., "Wolters Kluwer Law & Business", p:735-737.
Author: Artur Bućko
