megavideolinks
Joined: 19 Nov 2011
Posts: 86
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 Posted: Mon Dec 05, 2011 5:38 am Post subject: A Brief History of Bearer Shares |
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Bearer shares are not a new concept – in fact, studies show that originally
they were the main form of corporate ownership. Historically, bearer share
ownership was the most solid solution available, as the owner did not have to
rely upon paper records to verify ownership (remember, this was before the
Internet, or even computers, made electronic storage and transfer of
information possible). Combined with unreliable mail, bearer shares were,
ironically enough, the safest ownership tool one could find. In fact, early in the
20th century, bearer shares were often equated with cash and treated as
such, due to their high liquidity and ease of transfer.
It wasn’t long, however, until the full impact of genuinely anonymous
ownership became apparent to regulators. While initially bearer shares were
conceived to serve a perfectly legitimate function (i.e., to be a tool of
corporate ownership at a time when any sort of record was exceptionally
difficult to keep), the system was highly prone to abuse. After all, there was
little that stopped principals from engaging in illegal transactions and
downright fraud, secure behind the veil of anonymity guaranteed by bearer
share ownership. As a result, there began a concerted push by regulatory
agency to document stock ownership through regular registered shares,
creating eventually the present day situation where most companies are
owned through registered, rather than bearer, shares. Many countries –
including the United States – actually went so far as to ban the issuance of
bearer shares altogether.
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