You may be unfamiliar with the term “Medallion Guarantee”; unless you spend your days transferring securities like stocks and shares in the US and Canada, you wouldn’t expect to have heard of it. A medallion signature guarantee is a stamp used to confirm the legitimacy and authority of the transfer initiator formally. Read on to find out more.
What is a Medallion Guarantee?
A medallion guarantee is essentially just a stamp with a barcode. This assures an organisation or individual that the necessary paperwork has been signed by the right person (often a solicitor or another legally recognised individual entitled to handle the assets involved in the transfer of securities). It is required in cases like these, such as when ownership of the shares is transferred, a name change occurs, or the shareholder passes away.
Why do you need a Medallion Guarantee?
The medallion signature assurance, often known as the warranty, has existed for over a century. Naturally, it wasn’t always in the shape of the contemporary barcode, which debuted on February 24, 1992. The current approach aims to improve efficiency and reduce risk while introducing consistency into the securities transfer procedure. At the time of the early 1990s scheme, three signature guarantee programmes were in place: the Securities Transfer Agents Medallion Programme (STAMP), the Stock Exchanges Medallion Programme (SEMP), and the New York Stock Exchange Medallion Signature Programme.
The introduction of medallion schemes in the modern era was a response to the rise in money laundering via terrorist and other activities. Only businesses that have enrolled in a medallion programme are able to produce the barcoded stamps. This stamp requires a particular kind of ink that makes replication difficult. It is, therefore, relatively simple to determine when a counterfeit barcoded stamp has been used.
Medallions and shareholders in the UK
Even if a UK shareholder isn’t working directly with a US or North American corporation, it still makes sense for them to be aware of the medallion guarantee. This is because business mergers frequently occur, which might lead to an existing UK shareholder unexpectedly acquiring American shares. This indicates that understanding the significance of the medallion guarantee and, often, putting it to use is unquestionably necessary.
Contact Medallion Guarantee on 0203 985 9551.