The concept of digital stock certificates is becoming increasingly popular and more so with each passing day. In order to understand why digital certificates are the way to go, it is essential to understand what they are. A certificate is a piece of paper that certifies ownership of a company. Most companies issue them to keep accurate records of their stock ownership. There is a wide range of different types of certificates including; basic certificates, limited certificates, special certificates and company reports.

With startups of the distributed ledger technology, a new standard for stock certificates was developed. This standard is known as the distributed ledger protocol (DLP). startups enables an individual or company to issue digital stock certificates that are accessible to everyone. This new standard was introduced by Blockstream, a company that develops open source software, namely the Open Ledger Project (OLP).

There are many benefits associated with the use of DLP. DLP allows for paperless issuance, meaning that digital stock certificates are compliant with all laws that may be applicable to other forms of paper certificates such as the Securities Exchange Commission (SEC). You can either issue paper certificates prior to onboarding or at any later time after onboarding. If you need to also issue non-digital stock certificates to be compliant with your home jurisdiction, then you should consult with your legal advisor. Even though DLP does not affect the power of your attorney, it may affect the scope of your liability and your risk in the case that someone becomes injured while making a purchase from your company on the premise of purchasing one of your paper certificates.

Although DLP is a fairly new standard and is not widely used yet, there are certain pros and cons associated with this new generation of digital stock certificates. One of the main benefits associated with DLP is that it does not make it difficult for the person purchasing the certificate to resell the security on the secondary market. If a person is unable to resell the security on the secondary market, then they will not have capital to invest in additional securities.

Another pro of DLP is that it reduces the costs associated with accounting procedures and paper. Since there are no more sheets of paper that need to be filed during the year, the accounting process is significantly reduced when utilizing digital stock certificates. This also reduces the costs associated with maintaining the shareholders records in an efficient manner. When a shareholder issues a security and wishes to sell their shares, they do not have to worry about filing a new document and starting the process over again because of an accidental loss of the data contained in the old document. Because the new file is encrypted and cannot be decrypted until it is uploaded to the server, once the shareholder sells the shares their rights to the security automatically transfers to the new owner.

Digital Stock certificates also provide for an easy transfer of ownership when the person selling wishes to move their shares to another location. Because all of the transactions are recorded on the electronic certificate and can be verified, it can be very convenient to allow others to access the shares without having to provide them with access credentials or the passwords associated with the password protected database. These types of transfer services can easily be implemented into the payroll of a company. Once the employee accesses their payroll electronic certificates, all of the employee’s shares can be tracked from anywhere at any time. This is beneficial when an employee is transferred to a new company as well, since the employee can immediately sell their old shares and transfer to the new company’s digital stock certificates.

Finally, one of the main benefits of DLP certificates is that investors can easily transfer funds without being forced into the long hours of tedious book-entry. Book-entry procedures can be a pain in general, especially if an investor does not know the specific details of how the system works or when the clock is consistently running backwards. Digital stock certificates eliminate this problem by allowing investors to quickly transfer funds between accounts in either the electronic or paper format. Because digital certificates can be updated and searched via the Internet, investors can also add other transaction features such as allowing employees access to their accounts remotely via a PDA, laptop computer, or even their cell phone. Many investors also use these types of services when they are traveling and need to keep track of stock transactions made outside of the country.

startups of using these services are clear. Digital stock certificates and other types of onboarding solutions help investors manage their portfolio in a much more efficient manner. They eliminate the tedious tasks involved with traditional book-entry and greatly simplify transfer and ownership tracking. These onboarding solutions also provide additional security and peace of mind to investors by eliminating the fear of fraud or theft. These benefits have become particularly important as companies continue to find ways to gain a larger share of value from their stock portfolios by providing greater dividends and growth capital to their shareholders.