Any business is made up of a certain amount of shares, which are fractions of their total capital. Consequently, it also has shareholders who are listed in a stock certificate and other essential documents.
By the time of creating it, the partners have to determine the value per share and the voting rights for each shareholder. The voting rights will depend on the share’s value.
In this article, we will explain how to describe all the settlements and fill out the stock certificate so that you can be ready for these kinds of situations.
Corporate Stock Certificate
When it comes to corporations, the legal document is called “Corporate Stock Certificate.” You can obtain the paper version in the Articles of Incorporation book, or you can search for one template online. If you click in this link, you can find some examples: http://templatelab.com/stock-certificate-templates.
How to fill it
Once you have the template, you need to add this information:
- Applicable Law: In the first lines, you have to write the name of the state where the company was incorporated.
- Company Identification: Then, you have to write the name of the corporation and its legal address. In case you obtained the document from the Articles of Incorporation book, it is surely already written.
- Name of the shareholder: The next line is meant for the shareholder’s name. You need to make sure to write the name correctly.
- The number of shares: After that, you need to specify the exact amount of shares the person is buying.
- Corporate officer’s sign: This certificate needs to have the signature of at least two authorized officers (like the president, vice-president, secretary, and treasurer) to be legally valid.
- Company Embossed Seal: Once you have written all the needed information, you must seal the certificate. Each company has its own seal.
- Date: Including month and year.
- The certificate’s identification number: At the top of the document (generally on the left side), write the number of the certificate.
- Share’s identification number: This line is also at the top (generally on the right side). Put the shares number and the prices of the transaction.
These last two items have the purpose of tracking share transactions in private companies, but they are also useful for internal management.
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Limited Liability Company (LLC) Membership Certificate
For this type of company, the certificate is called “LLC Membership Certificate” because it describes shareholders as “members.”
The document proves that someone is a member of an LLC and has a specific percentage of membership.
This one is different from the Corporate Stock Certificate because, in an LLC, members do not receive shares as property fractions of the company; instead, they receive memberships and assets.
In this case, you can also find various templates online: https://certificate-template.com/certificate-of-membership.
How to fill it
This is the information you need to fill the LLC’s certificate:
- Applicable Law: Write the name of the state where the company was incorporated.
- LLC name: In the first line, put the name of the company.
- Member name: In the next line, write the full name of the member.
- Certificate identification number: As in corporations companies, in this membership certificate, you must write the identification number at the top of the page (left side).
- Percentage of membership: At the top right corner, write the specific percentage of membership.
- Date: Including month and year.
- Manager’s signature: The certificate must be signed by the manager to be authentic. It may also have the signature of an additional manager, but it is not mandatory.
- Embossed Seal: To finish, you must emboss the certificate with the company seal.
This information is similar to the corporation’s certificate, but note the differences related to shareholders and members and what they own (shares- memberships).
It is important to know this because of the legal effects of each one.
General considerations
Nowadays, stock certificates are mostly digital, but many companies still use the paper version because of the formality they provide. However, both of them have downsides.
In the case of physical ones, it may get deteriorated or get lost, and digital versions can be easily corrupted or modified.
But, whatever your choice is, we recommend you to have copies of the document in a safe place separate from the original.