Business Law

Business Law News ISSUE 3, 2023

DITCHING PAPER STOCK CERTIFICATES: HOW TO ISSUE UNCERTIFICATED SHARES

Written by Rick Randel*

I. INTRODUCTION

Many California business lawyers have grown weary of paper stock certificates. Because stock certificates have to be printed on special paper and wet-signed, we can’t just email a Word document or pdf to our client. Instead we have to print the physical certificate in hardcopy and mail or FedEx it to the client for signature. Then the client has to mail or FedEx it back to us for insertion in the minute book (which they often fail to do).

And then, when the shares are later transferred (including the fairly frequent transfer from an individual to their trust), the certificate has to be surrendered and cancelled, and a new one issued. The original certificate has often been lost, triggering the requirement for an affidavit of lost certificate and the issuance of a new certificate, only to be immediately surrendered and cancelled.

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