Ownership needs to be documented — through shares of corporations or written and signed acknowledgements of ownership or membership interests.
I have met with a client approaching retirement who believed he owned stock in his company but never saw any share certificate or list of shareholders. Unsigned documents showed a discussion years earlier about purchasing shares but there was no written proof that a deal was completed. This client’s career was spent building the equity in the company and was suddenly at risk because this client did not insist on documenting the ownership interest.
Issued shares and written acknowledgment of ownership interests are essential to prove ownership. Without a share certificate or proof of ownership of a limited liability company a person may find that there is a disagreement as to whether the ownership is effective. Shareholders and owners of members of limited liability companies have certain statutory rights. Without the proof of ownership these rights are in questions.
A mere promise to make a person an owner without the documentation to complete the deal may later be re-characterized as an idea that was not consummated. An ownership interest that is disputed may evaporate and with it the benefits of equity in the company.
When buying or being gifted ownership of a business leave nothing to chance. Ensure that you receive written and signed proof of ownership. If you are in need of absolute assurance contact an attorney specializing in corporate law.