With book-entry shares, actual share certificates are not printed.
Sometimes called uncertified shares, book-entry shares are simply a share held by a transfer agent rather than the owner or customer. The shares are recorded in the records kept by the broker so that there is always a permanent record of the value of the shares and who owns the rights to the shares. However, real stock certificates are never printed or shipped to the investor.
Uncertified stocks are not uncommon. One of the most common applications of the book-entry 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 participation in the retirement plan. Obviously, it would not be practical to issue certificates when plan members have the option to make changes periodically. Therefore, it is easier to manage the plan with the application of scriptural actions.
Opting for book-entry shares over paper share certificates poses no real danger of losing control or ownership of the shares. Records maintained by most transfer agents are regularly backed up, so even in the event of a loss of a primary database, ownership information on shares held in trust for clients is easily recovered from a database. of backups. In addition, most transfer agents provide investors with periodic paper and electronic reports that also serve to document the current status of the shares.
If an investor wishes to obtain share certificates for book-entry shares, it is easy to request them from the transfer agent. The agent will then arrange for the certificates to be printed and duly documented, in accordance with the terms and conditions in force in the country of origin where the shares are issued.