Bearer Form

Bearer form

Describes issue form of security not registered on the issuing corporation's books, and therefore payable to its bearer. See also: Bearer bond; coupon bond.

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bearer form

Used to refer to any security that, according to the books of the issuing organization, is not registered to an owner. Essentially, a security in bearer form is owned by the person holding the security. Compare registered security.

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Bearer Form

A security containing no ownership information and for which the physical bearer is presumed to be the owner. In the case of bonds, coupons are physically attached to the bond and must be presented to the issuer to receive interest payments. Bearer stocks may be bought and sold without endorsement. Bearer bonds have not been issued in the United States since 1982, and thus they have become a significantly less important activity. Bearer stocks are also quite rare.

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Bearer form. When securities are issued as paper certificates and the issuing corporation has no record of the owner, the securities are in bearer form.

The bearer, or holder, of the certificate is considered the owner, and when ownership changes hands a physical transfer of the certificate is required.

The securities may have attached coupons, which the holder must present or send in to the issuer or issuer's agent -- typically a bank or brokerage firm -- to receive interest or dividend payments.

Bearer securities are rare in the United States today because of the convenience, simplicity, and added security of electronic registration, known as book entry form. When book entry securities are traded, records of ownership are electronically updated, and the buyer's and seller's brokerage accounts are automatically debited and credited, similar to when you pay bills online.