What to Do if You Find an Old Stock Certificate
You’re digging through your grandmother’s belongings and you come across an old stock certificate in a box or in a desk drawer. Maybe you recognize the name of the company; likely, you don’t know anything about it. What do you do with this document? Does it have any value at all?
You absolutely can figure out if the certificate actually has any value or if it’s merely a historical novelty, but it will require a bit of homework.
What is a stock certificate?
The stock certificate you hold in your hands is a piece of paper that represents a small percentage of ownership of a company. It is not something you can redeem. So, what can you do with it?
If the company (or a company it merged with or purchased it) still exists, you should be able to sell the certificate. You may also be able to collect dividends that were intended for the owner of the certificate, up to seven years’ worth. To do this, you’ll have to track down what company this share currently represents and then go through the process of being identified as the owner of the certificate.
How to find the value of your stock certificate
Determine if the company still exists
The first thing you should do is find out whether the company that issued the stock certificate still exists. Your best tool for this initial search is Google. Search for the name of the company; the address of the company may also help.
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If you can find the company itself, you’re in luck. All you need to do is contact the company and ask for its transfer agent. The transfer agent is the person that will help you get registered as the owner of the certificate and collect any uncollected dividends.
Identify the CUSIP number
If you can’t easily find information about the company on the stock certificate, your next step is to get the CUSIP number from the stock certificate and contact a large brokerage.
What is a CUSIP number? Think of it as a unique identifier for your stock certificate. With that number, if that share represents a company that’s still in business (even if it has changed names, merged or moved) or has been bought out by a company that is still in business, a well-established brokerage can connect your certificate to the current company that it represents. Outside of North America, other numbering systems are used, such as SEDOL.
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Contact a brokerage or a stock search service
Over the years, your certificate may have undergone splits, been exchanged for shares in a new company and many other things. On the other hand, the company may have gone out of business or become a private company. In any case, a large brokerage can help you identify what’s going on with the certificate, particularly if the company was renamed or bought out by a publicly traded company that’s still in business.
The brokerage may charge you a fee for this service or require the stock be listed within an account with the brokerage. If you’re uncomfortable with that, you can also use a stock search service, who will just charge you a fee for the search. Businesses that provide this type of service include RM Smythe and America West Archives. You will likely have to go this route if the company for which you hold a certificate has become a privately held company or has gone entirely out of business.
Get in touch with the transfer agent
Once you know the name of the company that corresponds to your certificate today, you need to contact that company and find out who its transfer agent is. A transfer agent is usually a separate company that keeps track of the names and addresses of all shareholders of the company so that, if the company pays dividends or has other business that requires shareholder involvement, the shareholders can easily be contacted.
The transfer agent will require proof that you have this certificate and will have you fill out a form that identifies the certificate and explains how you came to be in possession of that certificate. Once that’s complete and verified, you will be listed as the owner of that certificate with the transfer agent, and the company will pay you any dividends that have accrued to you.
Talk to a brokerage
Once the transfer agent has listed you as the owner of the certificate, you can then add that certificate to a brokerage account to easily sell the certificate if you choose and collect the dividends electronically.
Once your certificate is listed with a brokerage, the paper certificate you hold becomes more of a novelty item that you can hang onto for memories, as paper certificates are no longer usually traded. Stock trading is done electronically today.
What if the company is no longer publicly traded?
You may find during your search that the company still exists, but it’s not publicly traded, meaning that a single person or a limited group of people now own the company because they bought out all shares at some point in the past. Likely, they were unable to track down the owner of the certificate that you hold in your hands.
In this situation, you should directly contact the company. It will likely make you a reasonable offer for the share you hold, simply because it’s the easiest course. You may want to contact a financial attorney if you don’t feel comfortable with this situation.
What if the company no longer exists?
If the company no longer exists, your share becomes more of a novelty. If it has an interesting design or story behind it, frame it and display it somewhere. If not, you can sell it as a novelty item on eBay or another online marketplace.
In my experience, it turned out that the share of stock was for a construction company that had gone out of business decades before. The certificate was beautifully designed, however, so it ended up getting framed and hung up as a decoration and conversation piece.
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