Home >> Dictionary Of Banking >> Companies to Guarantee Guaranty >> Coupon

Coupon

coupons, sheet, payment, attached and payable

COUPON. (From Fr. caliper, to cut.) Literally a piece cut off.

A coupon is a warrant for the payment of interest. It is usually attached to a bond or debenture, and requires to be cut off when the time has arrived for its presentment for payment. Where the interest on debentures and bonds is paid by means of coupons, a sheet of coupons is supplied. The sheet contains a series of coupons, there being a coupon with a different date for each pay ment of interest, quarterly or half-yearly, as the case may be, for several, and, in cases of large coupon sheets, for many years to come. Where no date of payment appears upon the coupons, they are payable on advertised dates. If the date of payment falls upon a Sunday or a bank holiday, they are payable on the succeeding business day.

A curious example of the dates of payment is found in the case of certain Chinese bonds, the coupons of which are advertised as being payable " on the first day of the third and ninth moon of the Chinese calendar." Where many bonds with coupons attached are held, a banker keeps a coupon diary, in which are entered particulars of the cou pons falling due upon the various dates. Coupons are generally sent up to London, by a country banker, for collection, say, three or four weeks before they are due. In order to prevent them getting lost, they should be pinned to a ticket or slip. There should be a separate ticket for each different security, which should quote the number of coupons attached, and give particulars of them. The

coupons should be sorted in numerical order and according to amounts.

Where coupons are numerous, a coupon cutter is the most expeditious way of cutting them off.

When the last coupon has been detached, the part of the sheet which remains is called the " talon," and it is forwarded to the address given thereon to be exchanged for a fresh sheet of coupons. A " talon " is not, however, attached in all cases.

Coupons are not credited to a customer's account until an advice of the amount realised has been received. This custom has been adopted because of the differences which often arise in the deduction of the income tax.

Where the coupons are payable either in this country or abroad, the customer's instructions should be taken as to whether he wishes them to be sold or collected.

In the event of any coupons being lost, notice should be given to the bank where they are payable. The banker will no doubt exercise care before paying them, but he cannot really refuse to pay them, unless an order to do so is received from the customer who gave the instructions for the bank to pay the coupons.

A coupon is exempt from stamp duty The exemption is contained in Section 40, Finance Act, 1894 :—" Coupon or warrant for interest on a marketable security, being one of a set of coupons. whether issued with the security or subsequently issued in a sheet." A coupon attached to a scrip certificate is not exempt.