Although both Notary and Medallion Guarantee services require verification of signatures, they differ significantly in terms of their purposes, legal implications, and acceptance in the context of U.S. securities transfers. It is essential to understand these differences, especially for anyone trying to manage American stocks from outside the United States. This blog covers the key differences between the two.
The Notary Public: Confirming Signature and Identity
A Notary Public is a licensed attorney designated by a government agency with recognition worldwide. It is the oldest legal profession in the nation. Anyone conducting business abroad or purchasing or selling property abroad may depend on a UK notary to deliver documents that are accepted in the foreign nation. A notary public will act as an unbiased witness when documents are being signed with the aim of preventing fraud.
Important traits of a public notary service include:
- To verify the signer’s identity, the notary will want a current government-issued photo ID.
- Usually, the notary must be present and act as a witness when the signer signs the document.
- The notary’s role is to verify that the signature is genuine and free from coercion. They do not attest to the document’s legality or content.
- In most cases, a notary’s liability for a false signature is relatively small and is typically capped at a small sum.
- Notaries are widely distributed and can be found in a variety of establishments, including UPS stores, banks, and law firms.
- The commission of a notary public is typically associated with a particular state or nation. A notary’s seal can be certified as authentic for use overseas by international agreements.
- A notary stamp can be used on a variety of legal documents, including affidavits, wills, real estate deeds, and powers of attorney.
The Medallion Signature Guarantee
A Medallion Signature Guarantee is a specific type of signature validation used just for securities transactions in the U.S. It is a stamp applied to documents such as transfer instructions, bond powers, or stock powers. A medallion guarantee ensures the signer’s legal competence and authority to complete the transaction, in contrast to a notary, who merely confirms identity.
Important features of a guarantee for a medallion signature:
- If the signature proves to be fraudulent or unauthorised, the guaranteeing institution—typically a bank, credit union, or brokerage house participating in a Medallion Signature Guarantee Program—assumes full financial responsibility for any resulting losses.
- Due diligence is conducted by the organisation offering the guarantee to ensure the signer is who they claim to be and that they are mentally and legally capable of transferring the securities.
- These guarantees can only be issued by financial institutions that are participants in one of the three approved Medallion Signature Guarantee Programs: the New York Stock Exchange Medallion Signature Program (MSP), the Securities Transfer Agents Medallion Program (STAMP), or the Stock Exchanges Medallion Program (SEMP).
- Depending on their program membership level, the guaranteeing institution typically assumes liability for sums ranging from $250,000 to over $10 million. This high degree of risk emphasises how careful one must be before making a guarantee.
- Any transfer of physical stock certificates, ownership change, or liquidation of assets from an estate or trust must include a medallion signature guarantee, according to U.S. transfer agents. For some transactions, they won’t accept a standard notarised signature.
In Conclusion
Medallion signature guarantees and notary publics both entail the verification of signatures, but they serve distinct functions and carry varying degrees of liability. A mere notary public stamp is entirely inadequate for the high-stakes world of U.S. securities transfers since a medallion signature guarantee’s strong financial guarantee and extensive due diligence are essential.
Contact Medallion Guarantee on 0203 985 9551.