Ensuring eSignature Compliance for Stock Certificates in India

How to eSign a document: eSignature lawfulness for Stock Certificate in India

I often get clients that come in that are selling their business to someone and they're asked okay well who owns the company and their usual response is well I own the whole company or my wife and I own the company okay well the attorney's involved in the deal are going to say prove it like how can you show what you own in this company so how exactly does one show ownership in an LLC or a corporation so the old school way was to physically print out if you can see that it's a stock certificate so to have the name of the company the name of the shareholder number of shares when it was issued it would be signed by someone at the company and you would hold on to this as your proof of ownership of that company when you go to sell it on the back there is a form called a stock power you'd basically fill that out and sign saying I'm transferring under selling it to somebody else um and here's a sample of one I blacked out the name but filled in with someone's name basically the number of shares they own the name of the corporation when it was issued so that's the most that was the the traditional way now the company itself would is supposed to keep records so they would also show yes we issued stock certificate number eight to so and so on this day for 3 000 shares of stock and so the company if you went to them they would say okay here's our corporate records and it shows all these stock certificates that were issued and who owns the stock of the company um and when you think about your brokerage account for example okay well I own shares in Facebook how do I prove that it's all electronic for most of those and if you transfer or sell it's usually done through DTC depository trust company that does electronic transfers either between brokerages or however the transfer takes place so you never when you buy stock in a brokerage account or investment account nobody's usually sending you a physical stock certificate although they used to a long time ago so when you have a small private company you may also not have these you may do it electronically you may track it on a ledger online uh any transfers and that can also often be enough as long as there's some kind of proof but in an LLC you can issue a membership certificate as well typically in an llc's operating agreement on towards the back the most common forms the last page will have a list of the owners the member schedule it'll say their name their address what they own and this will normally be the way that you'll show who owns what in your LLC so anyone who has an LLC and when I ask them where's your operating agreement or company agreement and they say oh we never put one together well how do you know who owns what you've got four Partners in this LLC and you've never done anything to document who owns it so it's always a good idea to make sure that you're you have an operating agreement in the first place for an LLC and it has the list of the current owners listed as an attachment or somewhere in there uh Corporation there's corporate records and whether you do it electronically or if you actually fill out stock certificates make sure those are up to date and so that you can show okay well you know we issued this stock to this person and let's say they don't have it they can fill out an affidavit saying that they lost it there's other ways to take care of it but you do want to document have you own your company that's very important especially when you go to sell because attorneys on both sides of the deal are going to be asking where's your stock certificates uh where's your stock Ledger or your record books to show who owns the company to make sure that when you sell the company if someone's buying your company they want to make sure that they bought 100 that there's not some random shareholder out there that's going to show up and say hey I've got a stock certificate um and you guys never paid me and I own 10 of that company so as a buyer that's a huge concern that they want to make sure that there's nobody no stragglers out there and that they've purchased every stockholder if they're doing a stock purchase so make sure that you document everything and make sure to subscribe to this YouTube series