Certified Shares vs. Uncertified Shares

You might keep issuing the Certified Shares which are far more complicated rather than issuing e-shares.

or you can switch to a simple solution (e-shares which substitues the old fashion way of certified shares).

Many private company startups are issuing their stock digitally rather than on paper; such stock certificates also known as certified shares.

Any Corporation can issue certified or uncertified shares.

Certified shares are shares which are in paper form.

Uncertified shares are shares which are issued digitally. They don’t have any tangible form. This is what I like the most, you can just issue your shares by yourself or for co-founders by recording them on an excel sheet and sharing this information with them. Every time you issue new shares, you simply add a new row and the description of the new owner of these digital shares. Please, remember to call them digital shares.

Before you decide to issue any digital shares (uncertified shares), make sure that your state operates under this special regime and recognises this type of share. Please, be reminded that every corporation must prepare a resolution of directors or minutes of meetings to enable your company to keep a record of digital shares.

If you want to issue uncertified shares, make sure that you have just one Capitalization Table (ledger record) in order to keep record of all shares activities.

If you’re a small entity up to a few founders, you can simply use a Google spreadsheet to keep as your records of your company stocks.

If the company has already issued certified shares (paper shares), you will have to “surrender” them and issue new ones. I would suggest that you seek advice from your lawyer. “Surrendering” shares means that you return them back to the company and then you can exchange them for digital shares. The process might be difficult depending on the company structure. If you don’t want to make this too difficult, you can just keep both type of shares, and start issuing new shares in case you have decided to switch to more recent and simpler modern and easier way of keeping a record of your company shares.

An additional benefit might be that you don’t have to contact your lawyer or transfer agent to issue new shares, you can just do it yourself. The general ledger or captable is actually the official record of your either company shares structure or company shares.

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