Definition
Stock Power is a legal document, essentially a power of attorney form, that allows the owner of a registered security to transfer ownership to another party. This form is separate from the security certificate itself but is attached to it when the security is sold or pledged as collateral. It is required for the proper endorsement and transference of stocks or bonds in the securities market.
Examples
- Selling Shares: If an individual wants to sell shares of a stock they own, they will need to execute a stock power form to legally transfer the ownership to the buyer.
- Collateral for Loans: When using securities as collateral for a loan from a bank or brokerage firm, the lender will require a stock power form to be attached to the security certificate.
Frequently Asked Questions
What information is typically included in a stock power form?
A stock power form generally includes the name of the current owner, the name of the person or entity to whom the securities are being transferred, the number and type of securities, the reason for transfer, date of transfer, and signatures from the appropriate parties.
Is the stock power form only used for stock transactions?
While commonly used for stocks, stock power forms can also be used for other registered securities such as bonds.
Do stock power forms require notarization?
Yes, many financial institutions require that a stock power form be notarized to verify the authenticity of the signatures.
Can ownership be transferred without a stock power form?
No, a stock power form is a necessary legal document for transferring registered securities. Without it, the transfer cannot be officially recognized.
Where can I obtain a stock power form?
Stock power forms are typically provided by brokers, banks, or financial institutions that manage securities transactions.
Related Terms
- Registered Security: A security whose owner is recorded with the issuing company or its agent.
- Certificate: A document evidencing ownership of shares or bonds.
- Collateral: An asset pledged against a loan to ensure repayment.
- Power of Attorney: A legal authorization for another person to act on one’s behalf in specified matters.
Online References
Suggested Books for Further Studies
- Securities Processing: A Handbook of Procedures, Controls, and Information by Michael Simmons
- Securities Operations: A Guide to Trade and Position Management by Michael Simmons
- Securities Law and Practice Deskbook by Gary M. Brown
Fundamentals of Stock Power: Legal and Financial Basics Quiz
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