Bearer Shares: Understanding Ownership and Investor Implications

The bearer share is a type of stock that is handled differently from the majority of stocks in the market. Here are the basics of the bearer share and how it can affect you as an investor.

The Bearer Share

The bearer share is a share of stock that is held directly by the owner. The company that issues the stock does not register the personal information of the person that buys it. With this type of security, if you have it in your possession, you are considered the owner. This type of security is not registered with anybody, and therefore, no one keeps track of when it changes possession.

Investment Impact

This adds a different element to trading stock. If you wish to convey ownership of the stock to someone else, you only have to deliver the physical stock certificate to them. This also can increase your level of risk associated with this type of investment. Most stocks are registered with the stock exchange and the SEC (Securities and Exchange Commission). Therefore, until you sell the stock through the stock exchange, it will remain in your possession. With the bearer share, you will have to keep a close eye on the physical stock certificates because you would not be able to prove ownership if you cannot find them.