What is a Registered Security
A registered security is either a security whose owner is kept on file with the issuer or a security whose transfer is restricted.
Registered securities can be the name given to securities whereby ownership is registered with the issuing company or their agent. This is in contrast to bearer securities. Bearer securities are deemed to be owned by whoever holds the certificate. There is not a ledger kept with the owners of the securities. With registered securities, a ledger is kept by the issuing company or agent which records the owners of all the securities. Transfer of ownership can only occur when names are changed in the ledger.
A registered security is also a security that is unavailable for sale due to restrictions placed upon it at the time of issue.
BREAKING DOWN Registered Security
Registered securities are securities where there is a ledger of the rightful owners. For ownership to change, the name in the ledger must be changed. This is the common method for handling securities. It provides the issuing company with the necessary stockholder information needed to pay out dividends and deliver notices of important company activity. It can also keep theft at a minimum since the legitimate owner of the security is recorded somewhere secure. This can help rectify a situation where the security certificates have been stolen. These securities cannot be sold or transferred to other investors unless certain criteria are met under regulations.
A registered security is also known as restricted stock.