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Bearer shares are a type of financial instrument that do not include the name of the purchasing party, making the person who has physical possession of the shares the assumed legal owner. They can be inherited or acquired through means such as a sale or as payment of a debt. They are seen as an easy way to accumulate assets or settle debts with little paperwork involved.
In the world of stocks, bonds, and shares, there is a type of financial instrument known as a bearer share. Essentially, a bearer share is understood as a share certificate payable to the person who actually owns the share at the time the share is offered for sale. The bearer share may be held by the person or entity that originally purchased the share, or it could be someone who acquired the bearer share through means such as a sale, inheritance, or as payment of a debt. Here’s some background on how a bearer share works, and what this means for the individual or entity that owns one or more bearer shares.
Many companies issue a limited number of stock certificates that do not include the name of the purchasing party. When this type of transaction occurs, there is no record of ownership on record by the seller or the corporation that originally issued the shares in the first place. This creates a situation where the person who actually has the physical shares in their possession is assumed to be the legal and rightful owner. Proving otherwise can be an extremely difficult process.
Individuals can take possession of bearer shares in a number of ways. Perhaps the most common means has to do with heredity. Individuals can choose to leave a fixed number of bearer share certificates to loved ones, who inherit the shares upon the death of the original owner. Since there is no registered owner of the shares, there is really nothing the recipient needs to do other than physically receive the shares and keep them in a secure location. Any bearer shares received from a benefactor can be easily sold, if desired, or placed in secure storage, for use at a later date.
Bearer shares are also sometimes used to settle outstanding debts. When an individual or business is unable to meet its financial obligations, shares may be provided to the debtor at the current fair market rate or mutually agreed price per share. Since a bearer share does not have a registered owner, there is nothing the debtor needs to do other than take physical possession of the shares.
The bearer fee is often seen as a means of providing a means to accumulate assets that can be used with relatively little paperwork or procedures involved. As a means of providing an inheritance to others, or as a quick way to use available assets to pay off outstanding debts, the bearer share works with an ease that is only slightly more difficult than a cash transaction.
Smart Asset.
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