Lost Instrument Surety Bond
Lost Instrument Surety Bond or Lost Instrument Bond
- A Lost Instrument Surety Bond
is required by the transfer agent of a private corporation before replacing a
lost stock or bond certificate. Generally, the old certificate of stock must be
presented to the transfer agent or issuing corporation to be cancelled before a
new or replacement certificate of stock is issued. But what happens if a
shareholder claims the original certificate of stock was lost? Before
authorizing the replacement of a lost security such as a Certificate of Stock,
the Board of Directors of a small private corporation will direct the
appropriate officers of the corporation to require that the shareholder post a
surety bond with the corporation.
The lost instrument surety bond will indemnify (reimburse) the transfer agent or corporation (the issuer of the replacement certificate) for a financial loss suffered because after issuing the replacement certificate, the original certificate is later sold, traded or transferred. The person or entity who lost the original certificate is the obligor in the surety contract. Together with the surety company, the obligor guarantees the transfer agent and/or the issuer of the replacement certificate against loss. If the surety must pay a claim against the bond, it will seek recovery from the obligor. Typically, the Lost Instrument Surety Bond will cost 3% of the value of the certificate, subject to a minimum fee. After it has been posted, the missing certificate will be reissued.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
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The lost instrument surety bond will indemnify (reimburse) the transfer agent or corporation (the issuer of the replacement certificate) for a financial loss suffered because after issuing the replacement certificate, the original certificate is later sold, traded or transferred. The person or entity who lost the original certificate is the obligor in the surety contract. Together with the surety company, the obligor guarantees the transfer agent and/or the issuer of the replacement certificate against loss. If the surety must pay a claim against the bond, it will seek recovery from the obligor. Typically, the Lost Instrument Surety Bond will cost 3% of the value of the certificate, subject to a minimum fee. After it has been posted, the missing certificate will be reissued.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
Website development by
Vine Design.