One terrifying thing a stockholder can experience is losing their stock certificate. This happens more often than you think. 58% of Americans reported in 2022 that they own stock. A lot of them will misplace their stock certificate. A fair number of these certificates will become lost during deliveries. Others will become damaged or destroyed.
What will you do if this happens to you? Your first instinct would be to panic. There’s no reason to do that. A missing stock certificate doesn’t mean you also lost your shares. It’s still there. You still own it. But you have to secure a new certificate.
It serves as evidence of your share in a public-traded company. It’s not necessary to have a physical stock certificate. You still own those shares and enjoy the rights that come with buying them. Most of the share certificates offered today are also digital.
So why do you need to take immediate action if you have a lost stock certificate? It’s because the certificate holds a lot of important information about you and your shares. Someone who’s savvy in investing could transfer those shares to their name. Here’s how to get a replacement stock certificate and safeguard your investment.
Get Your Transfer Agent to Do a Stop Transfer
Your first step is to get in touch with your transfer agent. Tell them about the loss. They will place a “stop transfer” on your missing certificate. A stop transfer is an instruction to stop the transfer of a securities ownership.
It will prevent anyone from moving the shares to their name. The transfer agent will also inform the US SEC about the theft or loss. The department established a division that handles missing, stolen, or destroyed share certificates.
Get an Affidavit of Loss
Once the stop transfer is in progress, you need to head to a lawyer. You have to file an affidavit of lost stock certificate. The affidavit will state that the stock certificate was either misplaced or stolen. You also need this document for a destroyed certificate.
The document must carry these vital details:
An explanation of the situation. It should include key information. For instance, the date the certificate was reportedly lost, stolen, or damaged. It should also explain where it happened and in what circumstances.
Information about your shares. The lawyer will include the number of shares each certificate signifies. It will detail if the stocks are common or preferred. It will also include the value of the shares and the corporation. The serial numbers of the certificates must become included as well.
Proof the stock certificate form was already endorsed before it went missing. The document should include an explanation of the endorsement. For instance, is it a stock power or did you sign it?
Give a rundown of what you’ve done to recover the stock certificates. This should be as detailed as possible. You need to show that you’ve done everything to find it. There should also be a thorough explanation if the certificate was reportedly destroyed.
It’s notarized and carries your signature.
The Affidavit of Loss is also needed before the shareholder receives compensation. The company will not issue a replacement certificate without this document.
Pay the Indemnity Bond
You’re also required to buy an indemnity bond. The company will look for this bond before they replace your certificate. It protects the transfer agent and the corporation. The bond is also needed in case the lost share certificate later appears. An unknown or unsuspecting buyer might present it.
How much you pay for this bond varies. Most indemnity bonds cost about 2% to 3% of the lost stock certificate’s current market price.
Delays will cost you when it comes to replacing stock certificates. Make sure you move fast. You want to ensure that your shares are safe and will remain in your name. Because once someone transfers your shares, your investment is gone. The company will never provide you with a replacement certificate.
Explore the Advantages of Our Expertise
Enjoy the benefits of working with Legacy Stock Transfer, Inc. We’re a full-service stock transfer firm. Our company has been serving public and private-held companies for two decades. Our team of stock security experts provides customized solutions. We specialize in transfer agent services and restriction removals. We also offer direct registration systems and stock certificate issuance. Our agents can also help with destroyed or lost stock certificates. We also offer 24/7 online account access. Call us at 972-612-4120. You can also reach us at info@legacystocktransfer.com.