Other Commercial
Lost Securities Bond
A bond a transfer agent or company requires before it will replace a lost, stolen, or destroyed stock or bond certificate.
- Required by
- Issuers and transfer agents under UCC 8-405
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond protects the issuer and its transfer agent if the original certificate later turns up in the hands of a good-faith buyer. Under UCC 8-405, the issuer must replace the certificate if the owner asks in time, files a sufficient indemnity bond, and meets other reasonable requirements. If the original resurfaces and the issuer pays twice, the surety covers the loss.
Who needs it
- Shareholders with lost stock certificates
- Estates settling accounts with old paper certificates
- Bondholders with lost bond certificates
What the underwriter looks at
- Market value of the securities
- Applicant's credit
- Whether the certificate may have been sold or pledged
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
Why do I need a bond to replace my own stock?
Because if the old certificate reaches a buyer who did not know it was lost, the company may have to honor both. The bond covers that risk.
How is the bond amount set?
Usually on the current market value of the shares, and some transfer agents require an open penalty bond. The transfer agent tells you what it needs.
Can the transfer agent arrange the bond?
Many offer a blanket bond program. You can also buy the bond from a surety broker.