HOW DOES THE NEW RULE 144 AFFECT ME AND MY RESTRICTED STOCK?
The SEC amended the Rule 144. The standard 1 year and 2 year holding periods are no longer in effect. Your restricted stock, no matter when it was issued, is now subject to the amended Rule 144 effective February 15, 2008. This document explains in detail how the new RULE 144 affects you and your restricted stock. Click here to read more >
What is DTCC?
Answer: The Depository Trust & Clearing Corporation (DTCC) is an American post-trade financial services company providing clearing and settlement services to the financial markets. It performs the exchange of securities on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.
What is CDS?
Answer: The Canadian Depository for Securities Limited is Canada's national securities depository, clearing and settlement hub, CDS supports Canada's equity, fixed income and money markets, handling over 50 million securities trades annually. CDS settles over 13 million cross-border transactions with the U.S. annually.
What does the company need to do when we have a change in directors/officers?
Answer: Advise us immediately of any change to the directors and officers of the corporation. This document provides us with a clear direction as to who can act on behalf of the company. The company can advise us of any changes to the list by executing and emailing a Certificate of Incumbency and a Certified List of Officers and Directors to New Horizon Transfer along with new signature samples for the certificates.
What are my company's obligations in providing information to its shareholders?
Answer: The following must be provided to shareholders:
- Notice of the time and place meeting
- Form of proxy
- Information circular, the contents of which will be dictated by the nature of the business to be brought before a meeting Y/E Financial Statements
- Quarterly financial statements, unless a supplemental mailing list request form has been supplied to all shareholders, in which case, only those shareholders who reply are required to receive statements.
What is a CUSIP number?
Answer: CUSIP stands for Committee on Uniform Securities' Identification Procedures. A CUSIP number specifically identifies a particular security. This number is particularly important within the broker community in that brokers make all identification of securities by the CUSIP number. All issuers are required to obtain a CUSIP for each security issued.
What is ISIN?
Answer: An International Securities Identification Number (ISIN) uniquely identifies a security. Securities for which ISINs are issued include bonds, commercial paper, stocks and warrants. The ISIN code is a 12-character alpha-numerical code that does not contain information characterizing financial instruments but serves for uniform identification of a security at trading and settlement. Securities to which ISINs can be issued include debt securities, shares, options, derivatives and futures. To read more of the structure it is defined in ISO 6166.
NOBO's and OBO'S
Answer: National Instrument 54-101 provides Issuers with the option to mail meeting material directly to their Non-Objecting Beneficial Owners (NOBOs). NOBOs are beneficial owners who have indicated that the Issuer can know who they are. Beneficial securityholders have the option of being an Objecting Beneficial Owner (OBO) which means that their contact and ownership information must remain private. Beneficial securityholders are investors who hold their securities through an Intermediary. The Intermediary, in turn, typically holds the securities through a depository, such as the Canadian Depository for Securities (CDS), so the name of the beneficial securityholder does not appear on the share register. National Instrument 54-101 allows an Issuer to mail material directly to their NOBO securityholders, by requesting record date securityholder information from the Intermediaries following the process set out in National Instrument 54-101. Reliable requests NOBO shareholder information on your behalf and manages the tabulation all votes received.
What Does Restricted Stock Mean?
Answer: Restricted stock must be traded in compliance with special SEC regulations. These regulations are outlined under Section 1244 of the Internal Revenue Code. Insiders are given restricted stock after merger and acquisition activity, underwriting activity, and affiliate ownership in order to prevent premature selling that might adversely affect the company. Restricted stock cannot be sold without registration with the SEC (under the Securities Act of 1933) or some other special exemption.
How do I determine if an old security still has value?
Answer: Corporations frequently undergo changes. Name changes, acquisitions, and mergers to name a few. Your broker may be able to provide you with current information on a particular stock.
What is a "registered owner"?
Answer: The registered owner of shares is the shareholder of record on the books of the corporation, generally kept by the transfer agent. The registered owner may be an individual, a trust, a broker, etc. Registered owners receive communications, proxies, dividends, etc. directly from the corporation through the transfer agent. A registered owner differs from a "street name" owner.
What is "street name"?
Answer: Securities held in a broker account and registered in the name of the broker or other institution is referred to as being "in street name." As the manager of a public company, you will see the broker, for example, as the registered shareholder of your stock. One broker position will represent any number of individual owners (beneficial owners), most of whom will remain anonymous to you.
What is a "Guarantor"?
Answer: A Guarantor is a financial institution (commercial bank, broker, etc.) which is a member of a Medallion Guarantee program and guarantees that the signature on a certificate or stock power is genuine, that the person signing is the appropriate person to endorse the security and the signer has the legal capacity to do so.
What is a "Medallion Guarantee"?
Answer: A Medallion Guarantee is a stamp and signature on a stock certificate or stock power. A Medallion Guarantee is obtained from an eligible institution, such as a commercial bank, broker, trust company, etc. It provides transfer agents assurance that the person signing a stock certificate or stock power is the authorized individual.
What is a "Transferee"?
Answer: The Transferee is the new registered owner of shares. Typically, the transferee will be identified in the Assignment section of a stock certificate or on a stock power which accompanies stock submitted for transfer.
What happens if a shareholder loses a stock certificate?
Answer: You should report a lost certificate to New Horizon Transfer as soon as possible (604-876-5526), if we are the agent for the security involved. Please try to provide the certificate number and the share amount. We will place a "stop" on the certificate to prevent its transfer and provide you with paperwork required to obtain a replacement certificate. You may download the appropriate paperwork from this web site. You need to complete the Affidavit of Lost Securities and have it notarized and the Lost Security Surety Bond form. Note: Please understand that downloading this form does not constitute notification to New Horizon Transfer. To report a lost stock certificate you must contact us in writing at: 215-515 West Pender Street, Vancouver, BC V6B 6H5.
My legal name has changed, how do I make changes from my old name?
Answer: If you are a registered owner, to change the name that appears on the certificate you must:
- Complete the reverse side of the certificate
- Place your signature on the signature line, exactly as it appears on the face of the certificate.
- Have your signature guaranteed by a Schedule I Canadian Chartered Bank, or financial institution that is a member of a recognized Medallion Signature Guarantee (STAMP) Program.
What is Rule 144?
Answer: Rule 144 of the Federal Securities Act of 1933 concerns restricted securities. Stock issued directly by an issuer or acquired by an insider or control person is always restricted in nature unless there is an exemption, registration, or other safe harbor that allows the stock to be free-trading. Rule 144 provides a way for shareholders to sell stock that is restricted, once certain provisions are met.
Important: The information on this page is based on the assumption that the issuer has either never been a shell or, if so, has complied with Rule 144(i)(2).
If you are eligible to release the legend from your shares under Rule 144, you have two options depending on the Issuers policies (that might be in place).
Option 1: Broker
You can submit your certificate(s) to your broker for 144 processing. In most cases, your broker will assist in gathering the required documents, and then arrange for us to release the legend from your shares so that free-trading stock can be deposited directly into your brokerage account. (Please note: Insiders must follow this option.)
Option 2: Direct
You can submit your certificate(s) to New Horizon transfer directly for legend removal if you are a non-insider/non-affiliate of the issuing company. We will arrange for a free-trading stock certificate to be sent to the destination of your choice (usually your home, office, or broker).
Either way, we require the following documents:
- Original Stock Certificate(s)
- Representation Letter
- Legal Opinion
- Instruction/Delivery Letter
- Applicable Fees
- Form 144 (for insiders/affiliates ONLY)
What are the more common types of security registrations?
Individual Registration - This registration gives sole ownership to the single individual and requires that the person’s legal name be used.
Joint Tenants With Rights Of Survivorship - This registration is used when two or more individuals have equal claim to the assets. Should one of the parties die, ownership of the assets passes to the surviving tenants.
Joint Ten Tenants In Common - This registration allows an appropriate portion of the assets to pass to the estate of the holder upon the holder’s death rather than to the surviving tenant.
Custodial Registration - A custodial registration requires the names of the custodian and the beneficial owner who is a minor.
Why do I require a signature guarantee (Medallion guarantee)?
Answer: A signature guarantee is required to transfer a security as it provides the transfer agent and the company with some proof that the registered owner of the security wishes to transfer the security and to relinquish ownership.
There are two acceptable ways to guarantee a security:
- A signature guarantee from a Schedule I Canadian Chartered Bank. This form of guarantee is represented by a stamp from the financial institution and is signed by an officer who guarantees that the signature is genuine. The officer must also provide his/her bank identification number.
- The second acceptable form of guarantee is to have a financial institution (broker, dealer, etc.) place a Medallion Signature Guarantee supported by a recognized Security Transfer Association Medallion Program indicating that the signature is genuine.
I have my securities offshore, how do I have my signature guaranteed?
Answer: If you reside offshore, you can have your signature guaranteed by a representative at a local branch of a Schedule I Canadian chartered bank and he/she can make arrangements to have the security over guaranteed in Canada by the same bank or go to www.MSGlookup.com
How are shares transferred to an individual or joint tenant?
Answer: To transfer shares for which we are an agent to an individual or a joint tenant, provide New Horizon Transfer with the following: The certificate which must be properly endorsed by the registered owner or accompanied by a properly endorsed stock power -Medallion Signature Guarantee. A letter of instruction which provides the full name, address and mailing information with courier info and the correct payment.
When do I require a Corporate Signing Resolution?
Answer: A Corporate Signing Resolution is required to transfer a security that is registered in the name of a company. The Corporate Signing Resolution identifies the individual(s) who has been given the authority to sign on behalf of the corporation. The resolution must be dated within 6 months of the date the certificate is presented for transfer and specimen signature(s) must also be provided. The individual endorsing the certificate must be different from the person certifying the corporate resolution unless there is only one signing officer. A signature or a Medallion STAMP guarantee is also required when a resolution is presented with the certificate.
What is the difference between having a security registered in my name or having a broker or financial institution hold the security on my behalf?
Answer: There are both advantages and disadvantages in holding securities in either form. If you have a security registered in your name, you directly receive any dividends, shareholder communications and other entitlements. You are also able to attend and vote in person or by proxy at any shareholders meeting. The disadvantage is that by holding securities in your name, it may take longer to sell or dispose of your security.
If you buy securities from a broker or other financial institution, the securities are not registered in your name but in the broker or financial institution. You are entitled to receive dividends, shareholder communications and other entitlements through your broker. You are also able to attend and vote at shareholders meetings but you can only do so by using your voting instruction form if by mail or by advising your broker you wish to attend whereby the broker will designate you as having a proxy. Should you wish to have your securities registered directly in your name, instruct your broker at the time of purchase. Ensure you register your securities in your legal name.
How do I transfer my certificates to another individual? And what if the shares are registered in the name of a corporation?
Answer: There are many variables that may affect specific transfers, but, in general, if the certificate is registered in your name, here are the steps to follow (if you are delivering your shares to a broker because you have sold them or otherwise disposed of them, the requirements will be similar but you should check to see if they have any individual requirements):
Print on the reverse side of each certificate exactly how you wish the new certificate to be registered or provide signed written instructions along with the certificate. Sign the reverse side in the exact way the registration appears on the face of the certificate
Complete a Stock Power of Attorney form (in a similar manner as described above as the form is similar to what appears on the back of a share certificate)
and attach it to the certificates. You must sign the reverse of the certificate or a stock power of attorney in the appropriate place and have your signature guaranteed by a Canadian chartered bank or a member/participant in a recognized medallion signature guarantee program There is an additional requirement for shares registered in the name of a corporation. A resolution that is dated, or has been signed, within the last 6 months that appoints one or more persons to sign on behalf of the corporation must be delivered with the certificate (or stock power of attorney) signed by the person or persons with the appropriate medallion signature guarantee. Note the resolution must be certified by someone other than the person designated in the resolution unless there is only one signing officer for the corporation. If there is only one signing officer for the corporation, the resolution must state that the person signing the resolution is the "sole signing officer".
I have shares registered in the name of a trust, what are the transfer requirements?
Answer: There are two situations depending on whether the trustee is named in the registration, or the certificate is in the name of the trust itself. A certificate should never be registered in the name of an entity if there is no agreement or legal documents creating the entity and providing for the administration of the assets held by the entity.
If the trustee appears on the certificate then all that is required are the normal transfer requirements for an individual, if the trustee is a person. The trustee would endorse the certificate as the trustee and have his or her signature guaranteed. If the trustee is a corporate entity, then we would require documents identifying those who could sign on behalf of the corporation; the individual(s) named would have to endorse the certificate and have his/her (their) name(s) guaranteed.
If the certificate is in the name of the trust, then the agreement or document (the original or certified copy) creating the trust must be presented with the transfer request, and the appropriate parties named in the trust document must endorse the certificate and have their signatures guaranteed.
I am the executor of an estate, how do I transfer certificates held in the name of the deceased?
Answer: This form is to be used by an Executor or Administrator of the estate to transfer securities registered in the name of the deceased to the Estate of the Deceased or to a Beneficiary of the Estate. The Declaration must be sworn before a Judge, Justice of the Peace, Notary or any person that is permitted to take affidavits to be used in Provincial or Federal courts.
The original certificate must be provided with the completed Declaration and the Certificate must be endorsed by the executor and guaranteed by a Schedule I Canadian Bank or a financial institution that is a member of a recognized Medallion Signature Guarantee Program.
The form must be accompanied with an original or notarized Copy of the Letters Probate or a Probate Bond of Indemnity. To transfer the securities to the beneficiary, the executor must complete the registration panel indicating that the securities are to be transferred directly to the beneficiary.