What Is a Medallion Signature Guarantee?
A medallion signature guarantee is one of several special certification stamps that guarantees a signature that authorizes a transfer of securities is authentic. Parties will generally require a medallion signature guarantee when an owner wants to sell or transfer securities, such as stocks or bonds, held in physical certificate form. If an owner holds securities through a broker, they will not need to obtain a signature guarantee to sell or transfer the securities.
- Medallion signature guarantees that an authorized signature to transfer securities is authentic.
- To provide a Medallion signature guarantee, an institution must be a member of one of three Medallion signature guarantee programs.
- Normally, you can obtain a Medallion signature guarantee at a financial institution where you are already a customer.
- Medallion signature guarantees are generally required when securities are held in physical certificate form.
- Yet, today individual investors rarely have physical possession of their share certificates, preferring electronic records instead.
How Medallion Signature Guarantees Work
In order to provide a Medallion signature guarantee, an institution must be a member of one of three Medallion signature guarantee programs: the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion Program, and the New York Stock Exchange Medallion Signature Program.
Normally, you can obtain a Medallion signature guarantee at a financial institution where you are already a customer. The bank may assess a small charge for this service.
A medallion signature guarantee often corresponds with a share certificate. A share certificate (or stock certificate) is a written document that serves as legal proof of ownership of a set number of a company’s shares.
This is in contrast with owning a bond, a form of debt instrument, in which a separate party loans money to a company or the government. Key information on a share certificate generally includes the following:
- Certificate number
- Company name and registration number
- Shareholder name and address
- Number of shares owned
- Class of shares
- Issue date of shares
- Amount paid (or treated as paid) on the shares
Shares may be issued in separate classes. For example, Berkshire Hathaway offers stockholders Class A (BRK.A) and Class B (BRK.B) shares. A number of other well-known companies have dual-class structures, such as Ford (F), Facebook (FB), and Groupon (GRPN). Meanwhile, some companies have multiple share classes—where Google parent company Alphabet (GOOG) has three classes of shares.
Each class offers different rights to the stockholder with regard to dividends and voting options. At times the owner of a stock certificate can give a proxy to another person to allow them to vote with said shares on matters of company policy.
If a share certificate is damaged, lost, or stolen, the company may issue a replacement certificate. In such a case, the shareholder must return the damaged document. Share certificates may either be registered or in bearer form. A bearer share certificate entitles the holder to exercise all legal rights associated with the stock.
Today individual investors rarely have physical possession of their share certificates, preferring electronic records instead.