After the stock split, what happens to the certificate?


In stock certificate is a physical paper that represents the ownership in the company. The certificates include information such as the number of shares owned, the date when purchased and an identification number. When a stock split, a company divides its existing shares into multiple shares in an attempt to increase the liquidity of shares.

Why stock certificates has a significant impact on the Twine

A stock split does not have a significant impact on the holder of securities. In most cases, when an investor buys stock in the company, they never kept in paper form of the investor or the brokerage firm the investor. Instead, the company’s shares are held in electronic form and registered with the transfer agent of the company. However, investors have the right to obtain the shares in paper form, called stock certificates. If your shares are stored in paper form, you will still be registered as the owner of record with the transfer agent.

You, as a shareholder, will continue to hold their certificates. During the split, the transfer agent, the company will add the split-adjusted shares in its records. These additional shares will be in electronic form, in the books of the transfer agent and stock certificates generally are not issued at the time of the split.

For example, if the company has introduced 2-for-1 stock split, it would mean that for every one share you hold in the company now, you will receive an additional share. If you held 100 shares before the split you would own 200 shares after the split. But don’t get too excited, the price per share will be cut in half, making everything even. If these 100 shares was organized as a joint-stock certificates, you would keep the shares and will not be obliged to return the certificates. An additional 100 shares of the company is just registered to you by the transfer agent.

In other words, You want to hold 100 shares in the form of stock certificate 100 shares will be held electronically by the transfer agent. If you would like to receive additional 100 shares in paper form, you would just need to ask agent to send, to send you stock certificates.

Bottom Line

The only thing that is happening with your stock certificates in the event of a stock split is that each individual certificate will be worth less than before, but you get extra shares that are given to you in electronic form. There is no need to send your certificates back or break them in half to sell them. Companies tend to do a stock split as easy on investors.

(To learn more about the stock split, see stock split.)

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