Overview of Stock Certificate
Stocks are generally issued through a process called Stock Certificate which has been adopted by many private companies due to its ease of transfer and other several advantages. A stock certificate is a legal document which entitles the owner to certain shares in a corporation or public enterprise. The certificate is the tangible evidence of the ownership of stock in the company and gives the holder the right to vote, receive dividends and dispose of their shares at any time.
Procedure for Issuing Stock Certificates in the Philippines
In the Philippines, the procedure for issuing stock certificates is governed by the Corporation Code. According to this law, the board of directors of the company must authorize the shares and approve the issuance of a stock certificate to the shareholder. Once approved, the shares must be registered in the books of the company, and a pertinent note must be made in the minutes of the board of directors’ meeting. After that, a register of all outstanding shares must be maintained. The next step is to print the certificate with the details of the shareholder, the authorized shares and the signature of the executives of the company.
Types of Stock Certificate
The two main types of stock certificates are the bearer stock certificate and the registered stock certificate. With the bearer stock certificate, the shares are registered in the name of the holder and this type of certificate is transferable simply by delivery. On the other hand, the registered stock certificate contains the name of the registered owner and it is transferred through the courtesy of the corporation. Philippines companies are typically issued bearer certificates, although some companies opt for registered certificates.
What Information Should be Included in Stock Certificates?
The Philippine Stock Exchange requires that the following details be included in the stock certificates:1) Full name of the company, 2) Corporate stock number, 3) Class of stocks, 4) Par value of the stocks, 5) Number of stocks issued, 6) Date of issue, 7) Number of certificated, 8)Name of registered owner and 9) Signatures of the authorized corporate officers.
Advantages of Stock Certificates
Stock certificates have several benefits when it comes to companies and businesses. For example, stock certificates offer organizations a way to identify and manage their shareholders in a timely manner. Moreover, a physical certificate also serves as a sort of “proof” of stock ownership for the shareholder, providing more confidence to potential investors and customers. Stock certificates also provide more efficiency when it comes to stock transfers, since the physical stock certificate is easy to sell or transfer to other individuals or companies. Furthermore, it is a much faster and simpler way to register and certify stock ownership changes than other methods.
The Requirement for Companies to Issue Stock Certificates in the Philippines
The Securities and Exchange Commission (SEC) and the Philippine Stock Exchange require all companies listed on the exchange to issue physical or electronic certificates to their shareholders. These certificates are meant to provide proof of ownership of the company and provide information as to the class, quantity, and par value of the stocks. Furthermore, all stock transactions must be accompanied by the issuance and transfer of certificates.
Managing and Maintaining Stock Certificates
In order to effectively manage and maintain their stock certificates, companies in the Philippines should have a proper system in place to do so. This includes having a registry system to keep track of the stock certificates issued and received, and regularly auditing the system to ensure accuracy. Companies need to ensure that the information on the stock certificates is accurate and up to date, as any discrepancies could lead to litigation. Furthermore, regular maintenance will also help ensure that the certificates are not misplaced or lost, as any negligence could lead to legal repercussions.
Conclusion
Stock certificates provide many benefits to companies and businesses, as well as their stockholders. However, in order for these benefits to be realized, private companies in the Philippines need to ensure that they are adhering to regulations, as well as effectively managing and maintaining their stock certificates. By observing the regulations and properly managing the certificates, private companies will be set on the path to running a successful business.
