A - E
Acquisition: When one company, by agreement, purchases a majority interest in another company (the acquired company).
Administrator: An individual(s) or entity acting in a fiduciary capacity. The individual or entity is appointed by the court. The administrator is responsible for the maintenance and distribution of the assets and/or liabilities of the deceased shareowner.
Assignment: A document (also known as a stock power) accompanying a transfer request signed by the person named on the registration for the purpose of transferring title to another person or entity.
Attorney-in-fact: Transfer by an individual acting for the shareowner under a power of attorney agreement.
Batch Order (online, telephone, mail): Requests to sell shares are aggregated and the total of all shares are sold on the open market. Batch order sale requests will be completed by the plan administrator no later than five business days from the date that the order was received. The price per share sold will not be known until the sales are completed and will always be the weighted-average price for all shares sold for the plan on the trade date.
B Notice: A notice sent by the IRS which identifies shareowners whose name does not match the SSN/TIN on the agent's records. The IRS regulations require the agent send the shareowner a W-9 and a letter explaining 1) why the shareowner is receiving the W-9 (name/TIN mismatch) and 2) if they do not return the W-9 within 30 business days, the agent is required to begin withholding tax at the required rate (currently 31%).
Beneficiary: An individual, institution, trustee, or estate that receives, or may become eligible to receive, benefits under a will, insurance policy, retirement plan, annuity, trust, or other contract.
Book-Entry Securities (Book Shares): Shares that are registered in the shareowner's name on the company's books rather than held in the form of a physical certificate. Shares held in book-entry have all the traditional rights and privileges as shares held in certificate form.
C Notice: A notice sent by the IRS which identifies shareowners who, according to their files, have been under-reporting their income and in which the agent must withhold tax at the required rate (currently 31%). The withholding must continue until the agent receives a subsequent IRS notification stating the shareowner has now paid all of his/her back taxes.
Capital Gain/Loss: When stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss. Many factors can affect gain or loss, so we recommend you contact a tax advisor or the IRS for assistance with this calculation.
Certificate (Cert Shares): Evidence of ownership in a corporation held in physical form. Shares are not held electronically.
Certificate of Fiduciary Authority: A form (PDF*) completed and signed by the current acting trustees of a trust when presented with proof of the registered trustee's inability to act allows the current trustees to act. The signed form allows the current trustees to act.
Corporate Resolution: An official document representing an action on the part of the board of directors of a corporation.
Cost Basis: The original price of an asset, used to determine capital gains. Many factors can affect gain or loss, so we recommend you contact a tax advisor or the IRS for assistance with this calculation.
CUSIP: This acronym stands for "Committee on Uniform Securities of Identification Procedures." It is used to identify issuer and the type of securities regulated by the Securities and Exchange Commission (SEC). The CUSIP number is located on the stock certificate.
Custodian: A person or institution legally charged with the responsibility of safeguarding the property of another. Custodians are used in registrations involving minors, individuals judged incompetent, or IRA's.
Direct Purchase Plan (DPP): A plan that, among other features, gives a customer the ability to purchase their initial share(s) of stock from the issuer rather than purchasing through a brokerage firm.
Direct Registration: Direct registration records shares of stock in book-entry from. Book-entry shares are registered in the shareowner's name on the company's books. A physical certificate isn't issued unless requested by the registered shareowner(s). Shares held in book-entry have all the traditional rights and privileges as shares held in certificate form. Direct registration also allows for the electronic share transactions between a broker and the transfer agent.
Dividend: A portion of a company's profits paid to its shareowners. This may be in the form of cash (cash dividend) or stock (stock dividend).
F - J
Form 1042: A form sent to shareowners when dividends (including capital gains) and other distributions on stock were paid to non-US shareowners and any NRA tax that was withheld. A complete description can be found at www.irs.gov.
Form 1099-B: A form sent to shareowners to show proceeds from the sale of stocks, bonds, commodities, etc. A complete description can be found at www.irs.gov.
Form W-8BEN: A form used to certify that a shareowner is not a US citizen, claim that they are the beneficial owner of the income and if applicable, claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the US has an income tax treaty. Foreigners are subject to US tax at a 30% rate on income they receive from several US sources including dividends. A complete description can be found at www.irs.gov.
Form W-9: A form used to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption. Withholding agents may require signed Forms W-9 from U.S. exempt recipients to overcome any presumptions of foreign status. A complete description can be found at www.irs.gov.
Forms of Ownership or Registration. Shareowners have a number of ways to register their accounts. Some of the more common types of ownership and a brief description are listed below.
- Individual registration A form of individual ownership. Upon the death of the individual, the shares are subject to probate proceedings.
- Joint tenancy registration A form of ownership when two or more individuals hold shares. Upon the death of one joint owner, the survivor(s) are entitled to the entire property. This is different from tenancy in common and tenancy by the entirety.
- Tenants by the entirety registration A form of ownership recognized by certain states as an appropriate form of registration for a husband and wife in such a manner that, except in concert with the other, neither husband nor wife has a disposable interest in the property during the lifetime of the other. Upon the death of either, the property goes to the survivor. This is different from tenancy in common and joint tenancy.
- Tenants in common registration A form of ownership when two or more individuals hold shares. In this situation each tenant owns an undivided interest which, upon the death of one tenant, his/her undivided interest passes as such to his heirs or devisees and not to the surviving tenant(s). This is different from tenants by the entirety and joint tenancy.
- Transfer on death (TOD) registration A form of individual or joint tenant ownership where a beneficiary has been designated. Only one beneficiary can be designated per registration. The beneficiary has no rights in or with respect to the securities until the securities owner(s) die. Upon the death of the securities owner(s), the ownership of the securities passes to the (TOD) beneficiary. Not all states have passed statutes to allow for TOD registrations. Please check with a customer service representative if you are unsure of your state's statutes.
- Custodial registration A form of ownership that can be established for a minor who has not attained the age of majority as defined in the laws of their state of residence. We do not recommend registrations in a minor's name alone. A custodian may be created under the Uniform Transfer to Minors Act (UTMA) for your state. The Uniform Transfer to Minors Act has replaced the Uniform Gift to Minors Act (UGMA) in most states for new shares.
- Trust registration A form of ownership governed by a trust agreement created during the lifetime of a grantor or created under a decedent's will. The general guidelines for registering securities in a trust registration include: - the name(s) of the trustee(s) - the name of the trust or the grantor or the in the case of trust under will, the name of the deceased - and the date of the trust (not applicable for a trust under will).
Joint Tenancy: See Forms of Ownership or Registration.
K - O
Letters of Appointment: A certificate issued by the court evidencing the appointment of an administrator or executor of an estate. (Also called Letters Testamentary or Letters of Administration.)
Limit Order (online or telephone):
- Day Limit Order – Sale requests for a day limit order will be promptly submitted by the plan administrator to a broker. The sale will be executed when and if the stock reaches, or exceeds, the specified price on the day the order was placed. The request will be automatically canceled if the price is not met by the end of the trading day.
- Good-‘Til -Date/Canceled (GTD/GTC) Limit Order – Requests to sell shares with a GTD and GTC limit order will be promptly submitted by the plan administrator to a broker. The sale will be executed when and if the stock reaches, or exceeds, the specified price at any time while the order remains open (up to the date requested or 90 days for GTC). The request is automatically canceled if the price is not met by the end of the order period.
Market Order (online or telephone): During market hours, sale requests will be promptly (generally within 30 minutes) submitted by the plan administrator to a broker. The sale will be at the prevailing market price when the trade is executed. Once entered, a market order request cannot be canceled. Sale requests submitted near the close of the market may be executed on the next trading day, along with other requests received after market close.
Market Price: The per-share amount at which a shareowner buys or sells stock.
Market Value: The market price multiplied by the number of shares owned.
Medallion Signature Guarantee Program: The Securities Transfer Association has recognized three signature guarantee programs.
- STAMP - Securities Transfer Agents Medallion Program
- SEMP - Stock Exchanges Medallion Program
- MSP - Medallion Signature program
Medallion guarantee is used to validate a signature or the validity of a document. It is backed by a bond and protects the issuer of the securities and their transfer agent from fraudulently transferred securities. Medallion guarantee may be obtained from most major banks, brokerage firms or credit unions.
Merger: A merger is the consolidation of two corporations into one, or the takeover and absorption of one corporation by another.
Minor - A person who has not yet reached the legal age.
P - T
Par Value: Dollar amount assigned to each share of stock by the issuing corporation; bears no relation to the current stock market value.
Payable Date: The date a dividend payment is made to the shareowners of record. Payments are made by sending a check to the shareowner or crediting a shareowner's bank account or purchasing shares through a dividend reinvestment plan. Stock dividends are made by issuing a physical stock certificate or entering the shares into Direct Registration.
Personal Identification Number (PIN): A number established by the shareowner to authorize telephone and/or online transactions.
Power-of-Attorney: A document used by an Attorney-In-Fact for handling the transfer of securities on behalf of a shareowner(s).
Probate: A court procedure by which a will is proved to be valid or invalid or to include all matters and proceedings pertaining to administration of estates, guardianships etc.
Prospectus: A document provided by the issuing company offering an analysis of their financial history, products, services, and management team.
Proxy Card: Authorization, whether written or electronic, that shareowners' votes may be cast by others. Shareowners can and often do give management their proxies, delegating the right and responsibility to vote their shares as specified.
Record Date: The date shareowners of record become eligible to receive the dividend that will be paid on the payable date. The books of the company are closed and shareowners of record in the company's books as of the close of business that day will receive dividends, proxies, rights, or other benefits elected by the board of directors.
Registered Shareowner: The person whose name appears on the shares. The name(s) are recorded on the records of the issuing company (corporate client) and their transfer agent. This is the opposite of holding shares in street name. (See forms of Ownership or Registration.)
Reverse Split: A corporation reduces the number of shares outstanding by issuing one new share for more than one old share (i.e. 1 new share in exchange for 5 old shares). The purpose of a reverse split is usually to increase the price per share in the market.
Securities - Term that applies to a wide variety of investments, including common stock, preferred stock, options, bonds, rights, warrants.
Shareowner Online: A service offered to shareowners to view and make changes to their account(s) via the internet. The address is www.shareowneronline.com.
Small Estate Affidavit: If an estate is too small to be probated under its state's guidelines, an individual(s) may request the transfer of shares using small estate proceedings for that state and the form used is often called a Small Estate Affidavit. Each state has different limitations for the size of the decedent's assets and the process to collect as a small estate may vary and in the case of some states requires court certification.
Spin-Off: A distribution of the outstanding shares of a corporation that is being allocated to the holders of another corporation.
Street Name: Stocks held in street name are shares that are registered in the name of a broker. However, on the broker's records, the shareowner is listed as actually owning the stock. A broker will sometimes hold shares in street name for the convenience of the shareowner.
Stock Certificate: The stock certificate is a physical instrument representing a shareowner's proportional ownership in the corporation.
Stock Power: A form (PDF*) accompanying a transfer request signed by the person(s) named on the registration for the purpose of transferring title to another person or entity. Also known as an Assignment.
Stock Split: A method used by corporations to increase the number of shares outstanding without changing each shareowner's proportionate ownership interest in the corporation. The shareowner's overall equity remains the same, although he or she now owns more stock (e.g. in a 2 for 1 split, the owner of 100 shares worth $100 each would then be the owner of 200 shares worth $50 each).
Stop Order: Requests to sell shares will be promptly submitted by the plan administrator to a broker for a stop order. The sale will be executed when the stock reaches a specified price, at which time the order becomes a market order and the sale will be at the prevailing market price when the trade is executed. The price specified in the order must be below the current market price (generally used to limit a market loss).
Surety Bond: A bond issued by an independent surety provider that protects the Transfer Agent and the Issuer in the event that the original certificate re-surfaced and is legally negotiated. When a certificate is lost/stolen/destroyed and a replacement is requested, the shareowner must obtain a surety bond from a surety company before a replacement can be issued.
Tax Waiver: Some states require that taxes be paid before securities are transferred from the name of a decedent. Upon payment, some state tax departments issue a form called a tax waiver consenting to the transfer of shares registered in the name of the decedent. This is also called an Inheritance Tax Waiver.
Tenants by the Entireties: See Forms of Ownership or Registration. This is abbreviated as TEN ENT.
Tenants in Common: See Forms of Ownership or Registration. This is abbreviated as TEN COM.
Tenants (Joint) with Rights of Survivorship: See Forms of Ownership or Registration. This is abbreviated as JT TEN or JTWROS.
Tender: A tender is an offer from an outside investor to shareowners of a corporation to purchase their shares at a stipulated price within a specific time frame. A tender can be an exchange, a merger, or a reverse split associated with a deadline date.
Transfer: The authorization by a shareowner to reregister their account to another person(s) or entity.
Transfer Agent: A professional agency employed by a corporation to handle the transfer of certificates, conversion of securities, mailings to stock holders, payment of dividends, stock subscriptions, and maintain the books of a corporation.
Trust: An arrangement that authorizes one or more people (the trustees) to safeguard and administer the assets such as property and money of another person (the beneficiary).
Trustee: The person who manages assets for a trust property, retirement plan, or bankruptcy.
U - Z
Uniform Gifts To Minors Act (UGMA): State legislation permitting the irrevocable gift to minors of ownership of securities without the need of trust instrument or other legal documents.
Uniform Transfers To Minors Act (UTMA): A law pertaining to residents of certain states. For the first time under this law, custodianships may be set up by wills or trusts. It is expected that this law will ultimately replace the Uniform Gifts to Minors Act. A key difference is that under the Uniform Transfer to Minors Act, the donor does not have to be a living individual.
* You need Adobe® Reader® to read PDF files. Download Adobe Reader for free.