Legal Definitions - registered stock

Registered stock refers to shares of a company where the owner's name and details are officially recorded on the books of the issuing corporation or its transfer agent. This system ensures that ownership is tracked and verified, facilitating transfers and dividend payments directly to the recorded owner.

Registered stock refers to shares of ownership in a company where the name of the owner is officially recorded on the books of the issuing company or its designated transfer agent. This registration ensures that the company knows precisely who its shareholders are, allowing it to communicate with them, distribute dividends, and facilitate the exercise of shareholder rights.

Here are some examples to illustrate the concept of registered stock:

• Example 1: Receiving Dividend Payments

  Imagine a person named Sarah purchases 100 shares of "Tech Innovations Inc." stock through her brokerage account. When the transaction is complete, Tech Innovations Inc. (or its transfer agent) updates its records to show Sarah as the legal owner of those 100 shares. Later, when Tech Innovations Inc. declares a quarterly dividend, the company consults its register of shareholders and automatically sends the dividend payment directly to Sarah, because her ownership is officially recorded. If the stock were not registered, the company would not know who to pay.

• Example 2: Exercising Voting Rights at a Shareholder Meeting

  John owns shares in "Global Energy Corp." and wants to vote on the election of new board members at the company's annual general meeting. Because John's shares are registered stock, Global Energy Corp. has his name and address on file. The company sends him a proxy statement and a ballot, allowing him to cast his vote either in person or by mail. His ability to vote is directly tied to his status as a registered shareholder, as the company verifies his ownership against its official records before allowing him to participate in corporate governance decisions.

• Example 3: Transferring Ownership During a Sale

  Maria decides to sell her shares in "Phoenix Pharmaceuticals," which she has held for several years. When she instructs her broker to sell the shares, the broker facilitates the transfer. Upon the sale, the records of Phoenix Pharmaceuticals are updated to remove Maria's name as the owner and register the new buyer as the legal owner. This process ensures a clear chain of title and prevents disputes over ownership, as the company's official register serves as the definitive proof of who owns the stock at any given time. The registration makes the transfer legally binding and transparent.