Legal Definitions - share-warrant to bearer

A share-warrant to bearer is a physical document that certifies the holder is the rightful owner of a specific number of company shares that have been fully paid for. The unique characteristic of this warrant is that ownership of the shares is tied directly to the physical possession of the document. Therefore, simply handing over the share-warrant from one person to another legally transfers ownership of the underlying shares, without needing any further registration or paperwork with the company.

Here are a few examples to illustrate this concept:

• Private Sale of Shares: Imagine a business owner, Mr. Chen, holds a share-warrant to bearer representing 500 shares in a private company. He wants to sell these shares to his long-time business associate, Ms. Lee, without going through a formal stock exchange or extensive paperwork. Mr. Chen simply hands the physical share-warrant document to Ms. Lee. Upon receiving the document, Ms. Lee immediately becomes the legal owner of the 500 shares, as the warrant itself signifies ownership and its delivery constitutes the transfer.

• Gift or Estate Planning: Consider an elderly investor, Mrs. Davies, who wishes to gift a portion of her company shares to her granddaughter, Sarah, as a graduation present. Instead of arranging a complex transfer through a brokerage account or company registrar, Mrs. Davies retrieves a share-warrant to bearer she holds for 100 shares. She then personally presents this physical document to Sarah. By simply delivering the warrant, Mrs. Davies has successfully transferred legal ownership of the 100 fully paid shares to Sarah, making the process straightforward and immediate.

• Historical International Transfer: In the early 20th century, an investor living in London might have purchased a share-warrant to bearer for shares in a mining company based in South Africa. If this investor later traveled to New York and wished to sell those shares quickly to another investor there, they could simply hand over the physical share-warrant document in exchange for payment. This method avoided the complexities and delays of international share registration and transfer processes that would otherwise be required if the shares were registered in a specific name. The physical delivery of the warrant in New York instantly transferred ownership of the South African mining shares to the new bearer.