Bearer Instruments: introduction: what is a bearer instrument by usage?
Where a document is not in the usual form of a bearer instrument but is nevertheless used for the purpose of transferring the right to stock and delivery of that document is accepted by usage as sufficient for the purpose of transferring the stock, whether it constitutes a legal transfer or not, such a document becomes what is known as a ‘bearer instrument by usage’.
Such a document is treated as
- transferring the stock which it represents on delivery of the document; and
- issued by the person by whom or on whose behalf it was first issued, whether or not it was at that time capable of being used for transferring the right to the stock without being executed by the holder of the stock.
References to stock includes securities and any interest in, or any fraction of, stock or any dividends or other rights arising out of stock and any right to an allotment of or to subscribe for stocks.