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S corp stock certificates
An S corporation is a tax status. The certificate is still a state-law document. The federal rule that matters on the certificate is the ban on more than one class of stock, not a magic legend.
The federal limit is one class of stock
26 U.S.C. § 1361(b) defines a small business corporation, the corporation that can have an S election. It is a domestic corporation which is not an ineligible corporation and which does not have more than 100 shareholders, does not have a shareholder who is not an individual other than the estates, trusts, and organizations the section describes, does not have a nonresident alien as a shareholder, and does not have more than 1 class of stock. The certificate question sits in that last clause. If the shares described on the certificate, or in the articles, give some holders different rights than others, you are outside "not more than 1 class of stock."
The section does not say the certificate must be stamped "S corporation." It does not list font, paper color, or a par-value line. Blogs that sell a special S corporation certificate are selling a label. The statute you can cite is the one-class limit, plus the shareholder limits. A printed single-class set is the catalog match because it is one class, not because the federal statute names the product. Printed Standard Certificates Class 1 are $56.00 for 20.
Trap: ordering a two-class set for an S corporation. Class 2 certificates exist for corporations that really have two classes, at $56.00. 26 U.S.C. § 1361(b) says a small business corporation does not have more than 1 class of stock. Do not print a second class and hope the election survives it.
Who can be on the holder line
| 26 U.S.C. § 1361(b) limit | What it means for the certificate holder line |
|---|---|
| Not more than 100 shareholders | The ledger of holders of record is the list you count. A transfer that breaks the count is a tax problem, which is why states allow a restriction to protect the status. |
| Shareholders are individuals, with listed exceptions | Putting a partnership or a corporation on the holder line is the fact pattern the "individual" rule is about. Read the exceptions in the section before you treat every trust as forbidden. |
| No nonresident alien shareholder | The holder line should not name a person the section treats as a nonresident alien. |
| Not more than 1 class of stock | The certificate should not recite a second class, a preferred dividend right, or a liquidation preference that the common holders do not share. |
This page does not restate every trust exception in 26 U.S.C. § 1361(b). The official text does that. The certificate practice is simpler: do not invent a class the election cannot hold, and do not add a holder the election cannot hold, without reading the section. Ineligible corporations under the same subsection include certain financial institutions, insurance companies, and a DISC or former DISC. Those are entity types, not certificate legends.
The state law that actually mentions S status
N.J.S.A. 14A:7-12 is the fetched statute that uses the tax election by name. A restriction on transfer may exist for the purpose of maintaining the status of the corporation as an electing small business corporation under subchapter S of the United States Internal Revenue Code. The same section says the restriction is not valid against a person who becomes the holder without actual knowledge unless it is noted conspicuously on the security or contained in the uncertificated information statement. New Jersey gives you the purpose and the legend rule together. A buy-sell that exists only in a drawer does not do the work the conspicuous-note sentence describes.
Other states authorize a restriction to protect who the owners are, without using the words "subchapter S." N.C. Gen. Stat. § 55-6-27(c) authorizes a restriction to maintain the corporation's status when it depends on the number or identity of its shareholders, to preserve a securities exemption, or for any other reasonable purpose. RCW 23B.06.270 uses those same three ideas. C.R.S. § 7-106-208(1) says a restriction does not affect shares issued earlier unless the holder acquired them with knowledge, is a party, voted for the restriction, or consented. A.R.S. § 10-627(B) and Va. Code § 13.1-649(B) are the enforcement rules: note the restriction conspicuously, or it does not bind a person without knowledge.
An S election depends on number (not more than 100), identity (who may be a shareholder), and a single class. A restriction aimed at those facts is what these state sections are for. The federal section does not itself say "print this sentence." The state section says the restriction has to be conspicuous if you want it to bind a buyer who did not already know.
| Source | What it contributes |
|---|---|
| 26 U.S.C. § 1361(b) | The one-class limit and the shareholder limits |
| N.J.S.A. 14A:7-12 | A restriction may exist to keep S status, and it must be conspicuous or actually known |
| N.C. Gen. Stat. § 55-6-27(c) and RCW 23B.06.270 | Restrictions to protect a status that depends on number or identity |
| C.R.S. § 7-106-208(1), A.R.S. § 10-627(B), Va. Code § 13.1-649(B) | The restriction has to be noted, or a buyer without knowledge may take free of it |
Trap: a preferred stock certificate in an S corporation. Preferred rights are a second set of rights. 26 U.S.C. § 1361(b) says the corporation does not have more than 1 class of stock. Print one class, and put any transfer limit in a conspicuous legend the state statute recognizes.
Paper is still a state choice
26 U.S.C. § 1361(b) does not choose between a certificate and a written statement. North Carolina, Washington, Colorado, Arizona, Virginia, and Massachusetts all confirmed that shares may but need not be certificated. New Jersey requires certificates unless the board provides for uncertificated shares. Michigan requires certificates unless the board uses the uncertificated section. Delaware requires certificates unless the board resolves otherwise under DGCL 8 Del. C. § 158. Whichever path the state allows, the shares themselves still have to fit inside one class. The statement you send an uncertificated holder should describe the same single class the certificate would have described.
State pages: New Jersey, North Carolina, Delaware. The legend page is stock certificate legends.
What to order
Order the one-class printed set at $56.00. Do not order the Class 2 set for an S corporation unless you have concluded, from 26 U.S.C. § 1361(b), that you are not keeping the election. The print utility at $0.99 can print a single one-class certificate. It will not fix a second class that is already in the articles. The articles are the place the second class usually lives. The certificate only repeats it.
Printed Standard Certificates Class 2 - Set of 20
$56.00
Two-class corporation set
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Mark's Corpex Certificate Print Utility
$0.99
Print your own certificate file
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Must an S corporation print "S corp" on the certificate?
26 U.S.C. § 1361(b) does not say that. It says a small business corporation does not have more than 1 class of stock, along with the shareholder limits. A state may require a conspicuous transfer restriction if you want that restriction to bind a buyer.
Can an S corporation use two classes of certificates?
Not if it wants to stay inside 26 U.S.C. § 1361(b). That subsection says the corporation does not have more than 1 class of stock. The Class 2 printed set is for corporations that have two classes.
Which state statute mentions subchapter S by name?
Among the sections fetched for this guide, N.J.S.A. 14A:7-12. It allows a restriction whose purpose is maintaining status as an electing small business corporation under subchapter S.
Do other states allow a restriction to protect who the owners are?
Yes. N.C. Gen. Stat. § 55-6-27(c) and RCW 23B.06.270 authorize a restriction to maintain a status that depends on the number or identity of shareholders. The restriction still has to be noted conspicuously if you want it to bind someone without knowledge.
How many shareholders can the ledger show?
26 U.S.C. § 1361(b) says a small business corporation does not have more than 100 shareholders. The stock ledger is where you count them. See the ledger guide for what Delaware requires that record to contain.
Which certificate should we buy?
Printed Standard Certificates Class 1, $56.00 for 20, one class. Sign them under the state certificate statute, not under the Internal Revenue Code.
Statutes last checked November 3, 2026. Official text: 26 U.S.C. § 1361(b); N.J.S.A. 14A:7-12; N.C. Gen. Stat. § 55-6-27(c).