Stock Certificate

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Stock Certificate Generator

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Signature Requirements

E-Signature Valid

Stock certificates are signed by the corporation's president and secretary to authenticate the issuance. Electronic signatures are valid under the ESIGN Act and UETA. The Uniform Commercial Code also permits facsimile and electronic signatures on securities.

Sample Stock Certificate Generated by Legal Tank

Stock Certificate

Corporation

1.1

This certifies that shares of the capital stock of [____________] (the "Corporation"), a corporation organized and existing under the laws of the State of [_____________], have been duly issued and are fully paid and non-assessable as described herein. The Corporation is authorized to issue [____________] shares of [Common / Preferred] Stock, par value [$__________] per share.

Shareholder and Shares Issued

2.1

[____________] (the "Shareholder") is the registered holder of [____________] shares of [Common / Preferred] Stock of the Corporation (the "Shares"), represented by Certificate Number [______], issued on [____________].

Class and Series

3.1

The Shares are [Common Stock / Series A Preferred Stock / other: ____________]. The rights, preferences, and privileges of the Shares, including voting rights, dividend rights, and liquidation preferences, are as set forth in the Corporation's Articles of Incorporation and Bylaws. Each share of Common Stock entitles the holder to one (1) vote on all matters submitted to a vote of shareholders.

Transfer Restrictions

4.1

The Shares represented by this certificate are subject to restrictions on transfer as set forth in the Corporation's Bylaws, any Shareholder Agreement, and applicable securities laws. No transfer shall be valid unless registered on the books of the Corporation, accompanied by a properly endorsed stock power, and in compliance with all applicable federal and state securities laws.

View all 8 sections

Securities Legend

5.1

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

Additional Agreements

6.1

The Shares are subject to the terms of that certain [Shareholder Agreement / Buy-Sell Agreement] dated [____________], including rights of first refusal, tag-along and drag-along rights, and other transfer restrictions. A copy is on file at the Corporation's principal office.

Lost Certificates

7.1

If this certificate is lost, stolen, or destroyed, the Corporation may issue a replacement upon receipt of an affidavit of loss, an indemnity bond in a satisfactory amount, and such other evidence as the Board of Directors may require.

Officer Certification

8.1

IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed by its duly authorized officers and its corporate seal to be affixed hereto on the date first written above.

What Is a Stock Certificate?

A stock certificate is a physical or electronic document that serves as formal evidence of a shareholder's ownership of a specific number of shares in a corporation. Historically, stock certificates were ornately printed documents featuring intricate border designs, the corporate seal, and authorized signatures, reflecting the significant value they represented. Under DGCL Section 158, a corporation may issue shares in either certificated or uncertificated form, and the certificate itself represents the shareholder's proportional interest in the corporation's equity, entitling them to dividends, voting rights, and a share of assets upon dissolution.

The legal framework governing stock certificates is primarily found in UCC Article 8, which classifies certificated shares as securities and establishes rules for their issuance, transfer, and registration. A valid stock certificate must contain the corporation's name, the state of incorporation, the name of the registered owner, the number of shares represented, the class and series of shares, any par value or a statement that shares are no-par stock, and the signatures of authorized corporate officers. The certificate also typically bears a corporate seal, though many modern statutes no longer require one.

For closely held corporations and startups, stock certificates play a critical role in documenting the initial capitalization structure and tracking ownership over time. When shares are issued to founders, investors, or employees, the certificate serves as the tangible record of that issuance. Restrictive legends are commonly printed on certificates to notify subsequent purchasers that the shares have not been registered under the Securities Act of 1933 and cannot be freely resold without an applicable exemption such as SEC Rule 144. These legends are essential for maintaining compliance with federal and state securities laws and are typically required whenever shares are sold through a stock purchase agreement generator in a private placement.

While many public companies have moved to book-entry or uncertificated shares managed through the Depository Trust Company (DTC), privately held corporations frequently continue to issue physical certificates because they provide a clear, portable record of ownership that can be presented to banks, investors, and acquirers. The transfer of certificated shares requires endorsement on the back of the certificate or delivery of a separate stock power, followed by surrender of the old certificate and issuance of a new one by the corporation's transfer agent or secretary. Maintaining a stock ledger that tracks all certificate issuances and transfers is a fundamental corporate governance requirement, often documented alongside corporate minutes.

FeatureCertificated SharesUncertificated (Book-Entry) Shares
Physical DocumentYes, printed certificate issuedNo, recorded electronically in stock ledger
Transfer MethodEndorse and surrender certificateWritten instruction to transfer agent
Restrictive LegendsPrinted directly on certificateIncluded in written statement to shareholder
Common UsagePrivate corporations, startups, closely heldPublic companies via DTC system
Legal ValidityFully valid under DGCL §158 and UCC Art. 8Equally valid under DGCL §158 and UCC Art. 8

⚠ Statutory Requirement: UCC Article 8 governs the issuance, transfer, and registration of certificated securities, establishing the legal framework for determining valid ownership, "protected purchaser" status, and the rights of adverse claimants. DGCL Section 158 further specifies the required contents for valid certificates issued by Delaware corporations.

📝 Common Pitfall: Omitting the restrictive legend on certificates for privately placed shares. Under Section 5 of the Securities Act of 1933, the corporation faces liability if unregistered shares are later transferred without an applicable exemption. Every certificate for shares sold via Regulation D or Section 4(a)(2) should bear a conspicuous legend referencing these transfer restrictions.

⚠ Compliance Alert: Number every certificate sequentially and cross-reference it in your stock ledger immediately upon issuance. This sounds basic, but missing certificate numbers are the single most common deficiency flagged during acquisition due diligence under DGCL § 219(c) stock ledger requirements.

Why You Need a Stock Certificate

You have just incorporated a new business and need to issue shares to the founders, documenting each founder's ownership percentage and the consideration paid for their shares, download our free stock certificate template to simplify the initial corporate organizational process.

Your startup is raising capital through a create your stock purchase agreement with angel investors, and the investors require physical stock certificates bearing appropriate restrictive legends as evidence of their investment.

An existing shareholder wants to transfer shares to a family member, trust, or third-party buyer, and you need to cancel the existing certificate and issue new certificates reflecting the updated ownership.

Your corporation is undergoing due diligence for a potential acquisition, and the buyer requires a complete set of stock certificates and the stock ledger to verify the corporation's capitalization table. Our attorney-drafted document service can prepare compliant share documentation for acquisition-level scrutiny.

You need to document an employee equity grant by issuing certificates for restricted stock that include vesting schedules, repurchase rights, and Section 83(b) election considerations.

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Stock Certificate is often used alongside other business formation documents. Depending on your situation, you may also need:

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Download a free stock certificate template instead

Key Sections in a Stock Certificate

Corporation Information

This section displays the corporation's full legal name, state of incorporation, and date of incorporation. It identifies the issuing entity and establishes the legal jurisdiction governing the shares.

Shareholder Name and Share Details

The certificate identifies the registered shareholder by full legal name and specifies the number of shares represented, the class and series of shares, and any par value. The share count is typically written in both numerals and words to prevent alteration.

Restrictive Legends

Securities law legends notify holders and potential transferees that the shares have not been registered under the Securities Act and are subject to transfer restrictions. Additional legends may reference shareholder agreements, right-of-first-refusal provisions, or repurchase options.

Certificate Number and Date

Each certificate bears a unique sequential number that corresponds to an entry in the corporation's stock ledger. The issuance date documents when the shares were officially issued to the registered owner.

Officer Signatures

The certificate must be signed by officers authorized by the board of directors, typically the president or CEO and the secretary or treasurer. These signatures authenticate the certificate and confirm that the shares were properly authorized and issued.

Transfer Provisions

The reverse side of the certificate typically contains a transfer form (stock power) that the shareholder can endorse to transfer ownership. This transfer section includes spaces for the transferee's name, the date of transfer, and the shareholder's signature with a medallion signature guarantee.

Stock Certificate Legal Requirements

DGCL Section 158 provides that shares may be issued in certificated or uncertificated form, and if certificated, the certificate must bear the corporation's name, the shareholder's name, the number and class of shares, and the signatures of authorized officers.

UCC Article 8 governs the issuance, transfer, and registration of certificated securities and establishes rules for determining who qualifies as a "protected purchaser" entitled to take shares free of adverse claims.

SEC Rule 144 imposes holding period requirements and volume limitations on the resale of restricted securities, and certificates for restricted shares must bear legends referencing these restrictions.

Securities Act Section 4(a)(2) and Regulation D provide exemptions from registration for private placements, but the corporation must ensure that certificates bear appropriate legends and that transfer restrictions are communicated to all holders.

State blue sky laws impose additional registration or exemption requirements for stock issuances, and certificates may need to reference state-specific restrictions in addition to federal securities legends.

Common Stock Certificate Mistakes to Avoid

Issuing shares without first confirming that the articles of incorporation authorize the class, series, and number of shares being issued, which can result in unauthorized and potentially void share issuances. A business plan should outline the capitalization strategy before any shares are issued.

Omitting required restrictive legends on certificates for unregistered securities, exposing the corporation to liability under Section 5 of the Securities Act for facilitating illegal transfers.

Failing to maintain an accurate stock ledger that tracks all certificate numbers, issuance dates, share transfers, and current registered owners, which creates governance problems during audits and acquisitions.

Issuing certificates with an incorrect par value or failing to collect at least the par value as consideration for the shares, which can create liability for directors under state corporate law.

Not canceling surrendered certificates upon transfer and retaining them in the corporate records, which can lead to fraudulent double-transfers or ownership disputes.

Frequently Asked Questions About Stock Certificates

What is a stock certificate?
A stock certificate is a formal document that evidences a shareholder's ownership of a specified number of shares in a corporation. It functions as the physical proof of equity ownership, similar to how a deed evidences ownership of real property. The certificate identifies the corporation, the shareholder, the number and class of shares, any par value, and bears the signatures of authorized corporate officers. While many public companies have transitioned to electronic book-entry share ownership, privately held corporations commonly continue to issue physical certificates because they provide a tangible, portable record of ownership.
Are stock certificates still used?
Yes, stock certificates are still widely used, particularly by closely held corporations, startups, and small businesses. While publicly traded companies have largely transitioned to book-entry or uncertificated shares through the Depository Trust Company system, private corporations benefit from issuing physical certificates because they provide clear documentation of ownership, include restrictive legends required by securities laws, and are commonly requested by investors, banks, and acquirers during due diligence. DGCL Section 158 and similar statutes in other states continue to authorize certificated share issuance as a valid form of documenting ownership.
What information must be on a stock certificate?
A valid stock certificate must include the corporation's full legal name, the state of incorporation, the name of the registered shareholder, the number of shares represented, the class and series of shares (if applicable), any par value or a no-par designation, a unique certificate number, the date of issuance, and the signatures of authorized corporate officers. For privately issued shares, the certificate must also bear restrictive legends notifying holders that the shares are unregistered securities subject to transfer restrictions under the Securities Act. Many certificates also include the corporate seal, though this is no longer legally required in most states.
How do I issue stock certificates?
To issue stock certificates, the board of directors must first adopt a resolution authorizing the issuance, specifying the number of shares, the class, the consideration to be received, and the recipients. The corporation must verify that the articles of incorporation authorize the shares being issued and that the consideration meets the minimum par value requirement. The corporate secretary then prepares the certificates with all required information, obtains the authorized signatures, records the issuance in the stock ledger, and delivers the certificates to the shareholders. The entire process should be documented in the corporate minutes or by unanimous written consent.
What is the difference between certificated and uncertificated shares?
Certificated shares are evidenced by a physical or electronic stock certificate that the shareholder receives and can present as proof of ownership, while uncertificated shares exist only as entries in the corporation's stock ledger without any physical certificate being issued. Both forms are equally valid under DGCL Section 158 and the MBCA. Uncertificated shares require the corporation to send a written statement to the shareholder containing the same information that would appear on a certificate. The practical difference is that transferring certificated shares requires endorsing and surrendering the physical certificate, while uncertificated shares are transferred through instructions to the corporation's transfer agent.
Do I need stock certificates for my LLC?
This depends on your specific circumstances and the laws of your state. Stock Certificate requirements can vary significantly by jurisdiction. Legal Tank's generator accounts for state-specific requirements and produces attorney-verified documents that meet current legal standards. For situations involving significant assets, complex arrangements, or contested matters, we recommend consulting with a licensed attorney in your jurisdiction for personalized guidance.
How do you transfer stock certificates?
Transferring certificated shares requires the registered shareholder to endorse the certificate on the reverse side or execute a separate stock power, which is then delivered to the transferee along with the certificate. The transferee presents the endorsed certificate to the corporation's transfer agent or secretary, who cancels the old certificate, records the transfer in the stock ledger, and issues a new certificate in the transferee's name. For restricted securities, the corporation must verify that the transfer complies with applicable securities law exemptions before processing it. Many transfers also require a medallion signature guarantee from a financial institution to authenticate the endorsement.
What is a CUSIP number?
A CUSIP (Committee on Uniform Securities Identification Procedures) number is a unique nine-character alphanumeric identifier assigned to securities traded in the United States and Canada. CUSIP numbers are administered by the American Bankers Association and assigned through CUSIP Global Services. While publicly traded stocks receive CUSIP numbers to facilitate clearing and settlement through the DTC system, most privately held corporations do not obtain CUSIP numbers for their shares because they are not traded on public exchanges. A corporation can request a CUSIP number if it anticipates future public trading or if required by institutional investors.

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