Finally, there is thd question of transactions "cum" and "ex dividend." A dividend is payable to all stock-holders on a given date, and the purchaser who acquires the stock after that date does not receive the dividend. Hence on that date, the price ceases to be "cum" `and becomes "ex div." The same applies to bonus share issues and other privileges or rights belonging to share holders on a given date, and then the price "goes ex rights." Now the purchaser who buys "ex div." will clearly deduct the dividend from the price he was prepared to pay if he bought "cum div."; thus, if "cum div." price is 88, and the dividend, allowing for income tax, is worth 21, the "ex div." price will be 85i. Now it often happens that a holder will sell "cum div." and that the dividend will be paid before the transfer is registered. Then the dividend will be remitted to the seller, but the seller is bound to send it on through his brokers to the buyer.
Stamp duties are borne by the buyer. Bearer stocks and shares are transferred free of duty, but on issue are subject to a duty three times the duty chargeable upon their transfer at par. In scribed stocks are usually transferable free of duty, as the issuers can and usually do compound the duty by paying a tax of 2s.% per annum on the nominal value of the stock. The duty on the transfer of registered stocks and shares is normally according to a scale based on a rate of duty of f % of the price paid, the "price paid" being that paid by the final buyer and inserted on the transfer form in the space "consideration money." When stocks and shares are transferred for a "nominal consideration," e.g., from a trustee to his successor or from the holder to his bank who requires them as security for an overdraft or, in certain cases, under the terms of a will, the duty is a fixed one of ten shillings. Gifts or exchanges or bequests, where the legatee agrees to accept stock in place of cash, are subject to duty at the normal rate. (N. E. C.)
United States.—In the United States the transfer of stock (and it must be remembered that here stock does not signify ex actly the same thing that the term does in England, but more nearly has the meaning of the English term "shares") is accom plished quite simply by the transfer of the certificate of stock. (See STOCKS, SHARES.) Such transfer is governed by the Stock Transfer Acts of the several States, most of which have adopted the Uniform Stock Transfer Act. Stock certificates may pass from hand to hand by simple assignment, but in case of sale the purchaser is not a legal stockholder until the stock has been trans ferred on the books of the issuing company. When such a transfer is made the old certificate is cancelled and a new one issued. The seller of stock, whose name appears on the face of the certificate, or his authorized representative, must endorse an assignment, which is usually printed on the back of the certificate itself. Such endorsement may be in blank or to a particular person. In all such transfers made on the New York Stock Exchange, it is re quired that a member of the exchange guarantee the signature of the assignor. A bank, trust company or individual may be desig nated by the issuing corporation as its transfer agent, or its secretary or a special clerk may be given the duty and responsi bility of seeing that all transfers are properly made. The several States generally levy a tax upon the transfer of stock. The New York State stock transfer tax, which is representative, is 2 cents for each $100 or fraction thereof of stock which has a par value; and a flat tax of 2 cents per share for stock of no par value unless the actual selling value of such stock is in excess of $1 oo per share, in which case the tax is 2 cents on each $1 oo or fraction thereof of such selling value. (J. H. B.) TRANSFORMATION GROUPS: see GROUPS.