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Published on 12/23/1996 All articles from this issue

Get ready to say goodbye to stock certificates

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By Clyde Noel / Town Crier Staff Writer

On Dec. 31, corporate America will take a major step by making stock ownership a paperless one.

It all starts when AT&T spins off NCR (National Cash Register). The spinoff will be a distribution of NCR shares on the basis of one share of NCR stock ownership for every 16 shares of AT&T.

The NCR shares will be issued in electronic registration form. Electronic registration is quickly becoming the new standard in share ownership because it is less costly to the issuing company. It's also more convenient for the share owner, and it supports the U.S. Securities Industry's overall direction to a "book entry" form of securities ownership.

When a company declares a stock spinoff or stock split, the company typically issues stock certificates to the investors who hold their shares in their own name as proof of ownership of the new shares. This spinoff will be issued through an account statement that serves as proof of ownership.

In the case of the upcoming AT&T/NCR transaction, direct registration account statements will be issued to about 1.7 million AT&T shareholders.

In a report from A.G. Edwards & Sons Inc. Executive Cashier Bill Winter said stock certificates may become a thing of the past because direct registration is the first step in that direction.

"However, direct registration is causing a great deal of confusion among share owners," Winter said. "Account statements will change the way stocks are traded."

Winter said when you sell shares of a given stock through your brokerage firm you have physical possession of your stock certificates and you deliver those certificates to your broker to settle the sell transaction.

Winter continues by saying if you ever decide to sell through your broker the shares acquired via direct registration, you cannot use the account statement as a substitute for stock certificates. You have to call or make a written request to receive stock certificates for your shares or you would have to deal directly with a transfer agent to complete your sell transaction.

To keep shareholders happy, at the end of a special report to AT&T shareholders, the report stated: "If for any reason, you would feel more comfortable with a physical certificate for any or all of your whole shares, you may request a stock certificate at any time after Dec. 31 from the First National Bank of Boston, the NCR transfer agent."