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Book shares are held by a transfer agent, with no physical certificate issued to the investor. This is common with mutual fund stocks and poses no risk to ownership. Certificates can be requested from the transfer agent if needed.
Sometimes referred to as non-certificate shares, the book share is simply a share held by a transfer agent, rather than in the possession of the owner or client. The shares are recorded in the records kept by the agent, so that there is always a permanent record of the value of the shares and who owns the rights to the shares. However, the actual share certificates are never printed or sent to the investor.
Uncertified shares are not uncommon. One of the most common applications of the book stock idea involves mutual fund stocks. Mutual funds are often used as part of the investment strategy for corporate retirement programs. Today, many of these programs allow employees the opportunity to change their preferences about the funds used for their individual part of the retirement plan. Obviously, it would not be practical to issue certificates when plan members have the option to make changes on a recurring basis. For this reason, it is easier to manage the plan with the shared books app.
Opting for book stocks over paper stock certificates poses no real danger of losing control or ownership of the stock. The records maintained by most transfer agents are regularly backed up, so even in the event of a primary database loss, ownership information about shares in trust for clients is easily retrieved from one of the the backups. In addition, most transfer agents provide investors with periodic reports in both paper and electronic formats that also serve to document the current status of the shares.
If an investor wishes to obtain share certificates for the shares in the book, it is a simple task to request them from the transfer agent. The agent will then arrange for the certificates to be properly printed and documented, in accordance with the terms and conditions in effect for the country of origin where the holdings are issued.
Smart Asset.
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