A stock certificate certifies that the certified person or organization is the share holder and that they own a part of the company mentioned in the certificate.

What can possibly prevent someone from walking into the office of any company office and claim ownership? Obviously, it is the lack of proof in the form of certificate to prove ownership.

It should be noted that only the stockholder who has purchased a major of a company’s stocks will be able to claim to own that company. It is for this reason that only a part of the company’s ownership is sold for stocks.

Physical stock certificates are becoming pretty rare these days and most of the stock certification is done electronically these days since most of the stock trading is also done electronically.

Since many of the stock investors operate via brokers, they prefer to have their broker maintain an electronic record of their respective stock ownerships.

Next : Issuing Stocks