How To Register Stock Shares

Every bit an individual investor, you lot accept up to three choices when information technology comes to holding your securities:

This publication explains these choices in greater particular, past laying out the advantages and disadvantages of each and past answering oftentimes asked questions. Depending on the blazon of security and where you buy it, you may or may not take all these choices about how your securities are held. For example, not all companies offer direct registration, and some no longer issue physical certificates. You should ask your broker or the visitor what options you take.

Physical Certificate

When yous purchase a security, whether through your broker or from the company itself, you can enquire to have the actual stock or bond certificates sent to you. You may take to pay a nominal fee for the added expense of issuing a newspaper certificate. Information technology's important that yous safeguard your certificates until you sell or transfer your securities. It can exist difficult to prove that yous once owned a certificate that has been lost, stolen, or destroyed. Your broker — or the visitor or its transfer amanuensis — will generally accuse a fee to replace a lost or stolen stock document. For more information on safeguarding your securities, please read our "Fast Respond" on Lost or Stolen Stock Certificates.

The advantages of property a concrete document include:

The visitor knows how to reach you lot and will send all company reports and other information to you directly.
You may observe information technology easier to pledge your securities as collateral for a loan if you agree the certificates yourself in physical document grade.

The disadvantages include:

When you want to sell your stock, you will have to send the document to your broker or the company'south transfer agent to execute the sale. This may make it harder for you lot to sell quickly.
If you lose your certificate, you may exist charged a fee for a replacement certificate.
If you move, yous will have to contact the company with your modify of address so that y'all exercise not miss any important mailings.

Street Proper noun Registration

You may accept your security registered in street proper name and held in your business relationship at your broker-dealer. Many brokerage firms will automatically put your securities into street name unless you lot give them specific instructions to the contrary. Under street name registration, your firm will go along records showing you lot as the existent or "beneficial" possessor, but you will not be listed directly on the issuer'south books. Instead, your brokerage firm (or another nominee) will appear as the owner on the issuer's books.

While you volition not receive a document, your firm will send to yous, at to the lowest degree four times a year, an account statement that lists all your securities at the broker-dealer. Your broker-dealer will also credit your business relationship with your dividend and interest payments and volition provide you with consolidated taxation data. Your broker-dealer will send you issuer mailings such every bit almanac reports and proxies.

The advantages of letting your brokerage business firm hold your securities in "street name" include:

Because your securities are already with your broker, you tin place limit orders that direct your broker to sell a security at a specific price.
Your brokerage firm is responsible for safeguarding your securities certificates and then you don't have to worry about your securities certificates being lost or stolen.
Your brokerage house may keep you informed of important developments, such equally tender offers or when bonds are called.
Information technology is easier to fix a margin account.

The disadvantages include:

You may feel a slight delay in receiving your dividend and interest payments from your brokerage business firm. For example, some firms but laissez passer along these payments to investors on a weekly, bi-weekly, or monthly footing.
Since your proper noun is not on the books of the company, the company volition not mail important corporate communications directly to you.

Direct Registration

If a company offers direct registration for its securities, yous can cull to exist registered straight on the books of the company regardless of whether you bought your securities through your broker or directly from the company or its transfer agent through a directly investment plan. Direct registration allows y'all to have your security registered in your name on the books of the issuer without the need for a concrete certificate to serve every bit bear witness of your buying. While you volition not receive a document, y'all will receive a statement of ownership and periodic account statements, dividends, annual reports, proxies, and other mailings straight from the issuer.

The advantages of direct registration include:

Since you are "registered" on the books of the company as the shareholder, you will receive almanac and other reports, dividends, proxies, and other communications straight from the company.
If y'all want to sell your securities through your broker, you lot can instruct your broker to electronically motility your securities via DRS from the books of the company and and so to sell your securities. Your broker should exist able to practice this quickly without the need for y'all filling out complicated and fourth dimension-consuming forms.
You do not have to worry virtually safekeeping or losing certificates, or having them stolen.

The disadvantages include:

If you cull to buy or sell registered securities through a company's direct investment plan, you ordinarily will not be able to buy or sell at a specific market price or at a specific fourth dimension. Instead, the company will purchase or sell shares for the plan at established times — for instance, on a daily, weekly, or monthly ground — and at an average market place price.

While it is solely your determination how to concord your securities, you should carefully review each of the alternative forms of security registration and should consult with your fiscal counselor or banker-dealer to determine which class is best for you.

Often Asked Questions

Q: What is the Directly Registration Organisation?

A: The Direct Registration Organization, or DRS, is a system that enables an investor to electronically motility his or her security position held in directly registration book-entry course dorsum and along between the issuer and the investor'southward broker-dealer.

Q: Afterward I make my decision on how I want to hold my security, what do I practice?

A: You should check with the issuer or your broker-dealer to find out if the issuer offers direct registration. If you lot are purchasing a security, tell your broker-dealer you lot want to hold your securities in straight registration. If you lot currently hold a document, yous tin can mail or accept your certificate either to the issuer or to your broker-dealer with instructions to change to direct registration. If you currently hold your security in street name registration, yous can instruct your broker-dealer or the issuer to movement your security position to the issuer for direct registration. In any situation, you will receive a statement of ownership from the issuer acknowledging your DRS book-entry position once the change has been made.

If you lot desire a certificate or if you lot want to use street name registration, tell your broker-dealer your choice at the time of buy. If you lot elect a certificate, one will be sent to yous. If y'all choose street name registration, your banker-dealer will send y'all a confirmation and periodic account statements acknowledging your ownership. If you currently hold a certificate, you can deliver the certificate to your broker-dealer with instructions to change your registration to street name registration. If you currently hold in street proper name registration, you tin tell your broker-dealer to obtain a certificate for you lot.

Q: What exercise I have to do to sell my security?

A: To sell a security held in direct registration, y'all can:

instruct the issuer to sell your security (many issuers accept programs in place to adjust sale requests); or
instruct your broker-dealer or the issuer to electronically move your security to your broker-dealer for your broker-dealer to sell; or
asking a physical certificate and deliver information technology to your broker-dealer to sell.

To sell a security held in street name registration, yous can:

instruct your broker-dealer to sell your security; or
request a physical certificate and deliver it to another broker-dealer to sell; or
instruct your broker-dealer or the issuer to electronically move your security to the issuer for the issuer to sell (many issuers accept programs in place to accommodate sale requests) or to electronically move to another banker-dealer to sell.

To sell a security for which yous hold a physical certificate, you lot tin can:

deliver the certificate to your broker-dealer with your instructions to sell or
deliver the certificate to the issuer with your instructions (a) to change the registration to DRS and motility the position to your broker-dealer to sell if your security is eligible for straight registration or (b) for the issuer to sell if the issuer has a programme in identify to accommodate sale requests.

When selling a security through the issuer, the issuer will sell your security under the terms and conditions in identify for that issue. For example, some sell orders will be executed on the day the issuer receives them, and some orders are aggregated for frequent, but not daily, execution. (Note: you should enquire the issuer if it offers a selling service and what the terms and conditions are.) Gain from the sale volition be mailed to y'all three business days subsequently the date of sale.

When selling through your broker-dealer, your instructions will exist acted on immediately and in accordance with the guidelines it provides to yous. Proceeds from the auction will exist made available to you or credited to your account three business days after the engagement of sale.

Q: Tin can I identify a limit order? Market order? Stop order?

A: Only a banker-dealer can execute a limit, market, or finish lodge. Every bit a result, you can place any of these types of orders only if you use a banker-dealer to execute a transaction for securities held in straight registration, street-name, or in certificate form.

Q: What nigh my relationship with my banker-dealer if I use direct registration?

A: You can maintain your relationship with your broker-dealer regardless of your choice of registration.

When you purchase a security to hold in direct registration, you lot can tell either your broker-dealer or the issuer to include pertinent broker-dealer data in the issuer'south records.
If you exercise not have your broker-dealer information included in the issuer's records at the fourth dimension of purchase and afterward want to or if you lot want to change the broker-dealer information in the issuer's records, you may do and so. You should contact either your broker-dealer or the issuer to obtain information on the procedures and the documents required for such actions.

Q: If I concord certificates and there is a stock distribution, will I go a certificate for my boosted shares?

A: If the issue is eligible for direct registration, you lot will probably receive a statement of buying instead of an boosted certificate.

Q: What are the fees associated with straight registration? With street proper noun registration? With a certificate?

A: There are no fees charged by an issuer for straight registration. Withal, because broker-dealers offer differing services and plans, you should contact your broker-dealer to learn what, if whatever, fees it charges.

Q: If I opt for straight registration, what happens if I lose my argument of ownership?

A: If you ever need a indistinguishable statement of ownership, you lot should contact the issuer. The issuer will mail you a new statement of buying.

Q: What happens if my physical document is lost or stolen?

A: Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates. If your securities certificate is lost, accidentally destroyed, or stolen, you should immediately contact the transfer amanuensis and request that a "stop transfer" be placed against the missing securities. Your broker may exist able to assist y'all with this process.

The "stop transfer" helps to prevent someone from transferring ownership from your proper noun to some other'south. The transfer amanuensis or broker-dealer will report the certificates missing to the SEC'southward lost and stolen securities plan. For more than information please read our "Fast Respond" on Lost or Stolen Stock Certificates.

Q: How are my securities protected if I choose street name ownership?

A: Nearly all banker-dealers are members of Securities Investor Protection Corporation ("SIPC"). As a effect your securities and money held at your broker-dealer are protected upwardly to $500,000 with a $100,000 limit for cash. Many broker-dealers also bear insurance in excess of SIPC'south coverage. However, SIPC does non protect you against losses acquired by a pass up in the market value of your securities. For more than data most SIPC coverage, please read our "Fast Answer" on the Securities Investors Protection Corporation.

We have provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.