What is the procedure during a business stock purchase

What the seller wants to do, in more precise legal languge, is take a security interest (also known as a pledge) of the stock to secure the obligation to pay the balance of the purchase price that is owed to him. I don't know if I'd say this is "standard," but it certainly is common. Holding the certificates is one of the ways of "perfecting" a security interest in them. It's not necessary to have a third party hold them. In order to ensure that the terms of the pledge are agreed to and effective, the parties should enter into a pledge agreement. In addition, the seller should take some steps to confirm the priority of his security interest. This isn't particularly complicated, and any lawyer with some background in business transactions can take care of it for you. The arrangement is "bad" for the buyer, in that he can't sell the shares without paying off the seller. Which, I hope, should not come as a surprise to the buyer. He will also be unable to use the shares as collateral to obtain a business loan (as almost any lender would require a first-priority security interest in them). On the other hand, he can use the business' assets (inventory, equipment, accounts receivable, etc.) as collateral in the usual way.