When a bank or trust company accepts an appointment as transfer agent, it requires certain information regarding the cor poration's organization and issues of stock. No bank can afford to undertake work of this character which might reflect unfavor ably upon its own good name. The information commonly re quired is: a certified copy of the charter, certified minutes of the organization, meetings of the incorporators, a certified copy of the by-laws, certified copies of all votes of stockholders and direc tors authorizing stock issues, a certificate from the treasurer that the stock is fully paid, a copy of the form of stock certificate issued, a record of the vote of the directors approving this form and the votes appointing the transfer agent and the registrar, a certified list of the officers and directors of the corporation and their signatures, etc.
The Stock Books and Transfer of Certificates The transfer department is the custodian of the stock books of the corporations for which it acts as transfer agent. These include the stock certificate book, the transfer book, and the stock ledger. The certificates are numbered consecutively, are signed by the proper officers of the corporation before delivery to the transfer agent, and are not issued unless countersigned by the transfer agent. The transfer agent passes upon the regularity and legality of the assignment of title to the certificate, enters the transaction in the transfer book, cancels the old certificate, and executes and delivers the new certificate.
On the back of the certificate is a blank which provides for the transfer of the stock upon sale, by constituting the new owner an attorney for the purpose of transfer. The common form of this assignment of the stock and irrevocable power of attorney is: For value received hereby sell, assign and transfer unto the shares of capital stock represented by the within certificate, and do hereby irrevocably constitute and appoint attorney to transfer the said stock on the books of the within-named company, with full power of sub stitution in the premises.
Dated Signed In the presence of The buyer will ultimately have the stock transferred to his own name, but meanwhile he has an evidence of ownership. Dividends are paid to the persons who are registered holders on the books of the company; as soon as the books are closed, by reason of the annual meeting of the stockholders, declaration of dividend, or other cause, all transactions in these stocks are "ex dividend." To "close the books" means to cease making trans fers and to prepare a list of the stockholders of record at the time of closing. The purpose is to send out notices of the meeting and proxies and to give the company an opportunity to prepare divi dend checks and not have to work on transfers at the same time. The period of closing may be as much as three weeks, and mean while the certificates will be passing from trader to trader as "bearer" certificates.
The hours for receiving stocks for transfer are, by rule of the New York Stock Exchange, from io A.M. to 2 :IS P.M., except at such times as the transfer books are closed for a dividend or for the annual meeting, when the hours are extended to 3 o'clock.
Procedure in Transfer of Certificates When a certificate is presented for transfer, it is carefully examined to see that it is signed by the duly authorized officers of the company and by the transfer agent and the registrar. It is also examined for dates, fillings, and perforation on fractional certificates. It is also important to see that there is no stop transfer lodged against the certificate and that the proper amount of state and federal tax stamps is attached.
The assignment on the reverse side of the certificate must cor respond exactly with the inscription on the certificate. The date of the assignment must be either that of the day when it was drawn or a subsequent date. When a certificate is to be trans ferred, the owner signs the irrevocable power of attorney, and the signature is witnessed and guaranteed by a member of the stock exchange, or by a bank with a correspondent in the same city, or, if this is not convenient, by a notary public whose authority is shown by an attached certificate from the county clerk. If the transfer agent knows the owner's signature, this guaranty may not be insisted upon.
The transfer department has on file cards showing specimen signatures of members of the firms who are members of the lead ing stock exchanges. These cards bear the following notation: "The persons whose signatures appear on this card are authorized to sign and indorse for this firm for any and all purposes in con nection with the transfers of stocks and bonds until a written notice of revocation has been filed with you." The owner having signed the assignment and power of at torney, in order to complete the transfer it is necessary only to fill in the name of the transferee. In general this is left blank and the certificate is in " bearer " form, that is, it is ready for transfer at any time and can pass from one owner to another by mere delivery, until some purchaser decides to have it transferred on the books of the company. If by chance the name of the attorney has been filled in and it is not desired to transfer the shares, a "power of substitution" is executed on the back of the certificate, which reads: "I hereby irrevocably constitute and appoint my substitute to transfer the within named stock under the foregoing Power of Attorney, with like Power of Substitution. Dated Signed In presence of ." The certificate is then again transferable by delivery.