A bearer instrument is a fixed-income security that was issued as a bearer security.
Securities can be issued as registered, or bearer. Most are registered, meaning that the business that sells the security keeps track of it (puts it in the registry, in other words).
But with the bearer form, there is no record of who owns the security, and whoever has the certificate in hand is assumed to be the owner and entitled to the payments. The difference in issuance style is important, because with no record of it on file with the issuing business, the transfer tax when the security is sold or inherited would not apply. Plus, it makes it much more crucial to have the physical certificate.
For example, let's say you buy some registered shares. If you lose the certificate or receipt, you'll still be able to draw payments, because the company registered you as the owner. But let's say you buy those same shares issued as bearer. If you lose the documentation, there really isn't a way to prove to the business you bought shares, i.e...that you own any of them.
Related or Semi-related Video
Finance: What is a Bearer Bond, or Beare...20 Views
Finance a la shmoop... what is a bearer bond or bearer stock alright you know
that saying possession is nine-tenths of the law
right well that's how bearer bonds and stocks work if you have the paper [Man presenting a bond]
representing the bond or stock aka the bond or stock certificate itself in your
hot little hands or wallet well then you own the bond or stock whether you stole
it or bought it or you know 3D printed it...In bearer bonds and
stocks there's no record or tracing of who bought or owned the bond or stock
sort of the opposite of how Bitcoin works and because of this non tracing [Money in a laundry machine]
and the ease with which money could be laundered for our kindly loving
terrorist friends bearer bonds and stocks are not very common today because
investors simply don't like the idea that their precious assets can be stolen [Thief running from police with money]
and then used to you know match plaid with stripes to counter this anonymity
most securities are in fact registered meaning that ownership is filed
officially with a brokerage or an issuer ie the company itself so that money can [A tracker appears]
be tracked and well taxed all over the world and note that one way bearer bonds
or stocks are dealt with in the fashion realm is to you know simply get rid of
the E don't look....[Man walking on a catwalk with no clothes]
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