Shareholder
Toolkit
What Shareholders Need to Know
INTRODUCTION 1
Shareholder Account Information 3
Transfer of Shares 5
Transfer Types and Security Registrations 7
Dividend Distribution 9
Escheatment 10
Restricted Stock 12
Corporate Actions 14
IRS Notices 15
Tax Forms and Descriptions 16
Tax ID Certification and W-8/W-9 Forms 22
Cost Basis 24
Lost Stock Certificate and Dividend Check 26
Direct Registration System 28
GLOSSARY 30
Common Financial Acronyms & Abbreviations 30
Financial Terms 31
Table of contents
2
Introduction
Congratulations — you’re a shareholder!
But, what does that really mean?
The realm of securities transactions and
management continues to increase in complexity
due to technological advances and regulatory
changes. Shareholders and issuers both
play important roles in ownership, but their
responsibilities differ. Many shareholders do not
know their rights and responsibilities or what it
means to be a shareholder.
Being a shareholder comes with advantages, but
you also have responsibilities
to protect your investment by maximizing the
benefits of the programs available through your
transfer agent or employer. For example, you
may have an option to reinvest dividends and
purchase stock directly through your transfer agent.
Shareholders should be aware of the importance of
logging into their account annually, the importance
of cashing their dividend checks regardless of the
amount, keeping their address current, maintaining
proof of ownership via certificate, saving your
statement in a safe place, and monitoring any
corporate action such as a merger or acquisition.
These are just a few of the key informational and
transactional items relevant to shareholders.
Ensuring that the shareholders we serve have the
right information is of paramount importance to
EQ. EQ leads a shareholder education mission to
develop content and media, including publications,
webinars and information guides designed
to provide valuable insights. We created this
Shareholder Toolkit to walk you through what it
means to be a registered shareholder. The guide
provides basic information on common terms,
responsibilities and requirements, while detailing
how shareholders can transact, inquire and manage
their accounts.
Shareholder Education: Navigating the Evolving Securities
Environment
Disclaimer: This document is intended for informational purposes only and is not intended to provide legal, investment, financial
or other advice. For specific questions, please contact your financial advisor or legal counsel.
3
What Does It Mean To Be A
Shareholder?
A registered shareholder owns stock directly with a
company. This is different from holding shares with
a broker. You may have become an owner by simply
investing in a company of your choice, participating
in a stock benefit program by your current or former
employer or inheriting the stock.
By owning a stock directly, you are engaged in
a financial relationship between yourself and the
company in which you hold shares, known as the
issuer. As in any financial relationship, there are
responsibilities on both sides. Steps are taken to
protect against theft, provide accurate withholdings
and prompt payments for annual tax filings. These
measures ensure smooth transitions of ownership
or address, safeguard the proper exercising of
stock options and preserve your investment from
inadvertent escheatment (capture) by a State
Government. You also have the right to make an
impact on the direction of the company in which
you own shares through your proxy vote. As a
shareholder, you also receive cash payments (per
share) if the company decides to pay a dividend.
Shareholder responsibilities include:
• Tax certification (Form W-8 or Form W-9
as applicable)
• Responding to letters and calls to verify contact
• Maximizing the advantages of stock benefit plans
• Programs including Dividend Reinvestment and
Direct Stock Purchase Plans
While this may seem like work, your transfer agent can assist you. EQ prepared this document to empower
shareholders, employee plan participants and investors to increase their knowledge of the industry through
education. If you are a registered shareholder, your transfer agent is responsible for the administration of your
holdings. If you own shares through a brokerage account, different rules may apply and you should consult
your brokerage firm.
To guide your journey and ease you through the various shareholder responsibilities, EQ has separated your
requirements and options into a few categories. Remember these are general guidelines and not advice. You
should always consult your own tax, financial or legal advisors for counsel on your situation.
4
Shareowners can also request an address change by calling EQ Shareowner Services customer
care at 800-356-5343. You will need to provide your social security number and account number.
If you maintain multiple addresses during the year, contact EQ Shareowner Services by one
of the above methods to request an address update before and after you travel to be certain
your mail is delivered to the appropriate location.
Shareholder Account Information
The EQ Shareowner portal was designed to provide
strong data security for shareowners.
If you are a first-time user, you can set up online
access by logging into the following website:
https://shareowneronline.com
Click “Register” at the top right-hand side of the
page and follow the prompts to create your profile
and Unique ID and password. If you have already
registered and know your Unique ID and password,
click “Login”.
You will be able to monitor the status of your
account, review your transactions, change your
address, add bank account information for direct
deposit of dividends or sale proceeds, submit
certain types of stock transfers, purchase additional
shares, request a sale of shares, or enroll in
electronic delivery to name a few. In addition,
logging into your online account at least annually
is one of the best methods to maintain appropriate
contact and avoid escheatment of your stock and/or
dividends as unclaimed property.
Account Address
It is of utmost importance to always maintain
a current address with your transfer agent. EQ
conducts various mailings on behalf of our clients
and it is the most common way we communicate
with our shareowners. Financial regulations require
that certain types of notices always be sent to a
physical address. Failure to maintain an active
address may result in mailings being returned to
us, missing scheduled dividend payments, and
overlooking important information related to your
holdings. In some cases, your account may become
dormant due to inactivity, resulting in your assets
being turned over to the state in accordance with
abandoned property laws.
If you do not have online access, you can
submit a change of address in writing to
the following address:
EQ Shareowner Services PO Box 64856
St Paul MN 55164-9442
Online Account Access at EQ Shareowner Services for
Registered Shareowners
5
What Does It Mean To Be A
Shareholder? (Cont)
Direct Deposit of Dividends/Sale Proceeds
A shareowner can advise in writing and provide the
full address if they would like their dividends mailed
directly to another financial institution. Shareowners
can also enroll in direct deposit on the portal.
What should I do if I forget my Unique
ID or password?
Navigate to https://shareowneronline.com, click
on “Login” and then click on “Having trouble
logging in?” Select the appropriate assistance
and proceed through prompts. If you answer
the security questions you set up during your
registration process correctly, your Unique ID or
password will be reset. If not, contact Shareowner
Services customer care desk at 800-356-5343 for
assistance.
Please note that Unique IDs cannot be changed. To
change your password, login to your account at the
above link and navigate to the My Profile tab which
contains password change instructions.
How can I safeguard my password?
Make passwords long, strong and a minimum of
eight (8) characters. Please note, your password
cannot contain anything similar to your previous
assigned 12 passwords and it cannot be your
Unique ID, your first name, or last name.
• Your password should be a mix of upper
and lowercase letters, numbers and symbols
• Don’t share your password
• Your password(s) should be unique and
not something that can easily be guessed
• Choose a different password for each
online account
• Write down your password and store it in a safe
place or you may make use of an electronic
password tracking app on your mobile device
Why am I not able to register my account?
There are several reasons an account cannot be registered for online access:
• The social security number / tax ID number entered does not match our records
• The account number you entered is invalid
• Certain classifications of ownership do not have online access to account information: individual
IRAs, corporate entities, non-resident US citizens and resident aliens
What should I do if I am locked out of my account?
If you have made multiple incorrect login attempts, you may be locked out of your account.
You may use the password reset link to reset your password via our easy self-service option.
6
Transfer of Shares
What is a transfer?
An exchange of ownership of property from
one party to another. Some transactions, like a
name change or custodian change may also be
considered a transfer.
What is the difference between a Registered vs.
Beneficial Shareholder?
A registered owner holds shares with the company
directly. A beneficial owner holds shares indirectly
through a bank or a broker. It is most commonly
referred to as being held in street name. The
most significant difference is that registered
shareholders receive publications and other forms
of correspondence from the Transfer Agent, while
beneficial shareholders receive communication via
their brokerage firm.
How do I transfer shares?
In order to transfer shares, certain documents
are required depending on the current
registration at the transfer agent. Typically, a
transfer of ownership with a Form W-9 must be
completed with a medallion signature guarantee
(see below). A description of the registration
types and requirements can be found in EQ’s
transfer of ownership package at https://
www.shareowneronline.com/media/1311/
stockpowertransferinstructions_dom.pdf
What happens to my shares when I die?
Upon the death of an owner, if you leave a will,
your beneficiaries will have to wait until your estate
is probated to inherit your stocks or as dictated
by other governing laws in the state in which the
shareholder was domiciled. If the registration on
the transfer agent’s records reflects a beneficiary
ownership such as a transfer on death (payable on
death or trust) the assets can be transferred to the
beneficiary listed with certain transfer documents.
What is a medallion signature guarantee?
A medallion signature guarantee verifies the
authenticity of a signature and helps to confirm
that a transfer of securities is authentic. This is done
through a stamp and signature combination. A
medallion signature guarantee is required when
securities need to be transferred from one party to
another or for any transaction that is considered a
transfer.
Where can I obtain a medallion signature
guarantee?
You can obtain a medallion signature guarantee
from a bank, savings and loan association,
brokerage firm or credit union. Go to http://www.
msglookup.com/search. html to find a guarantor.
The guarantor will typically ask for the following:
• Documentation showing the exact and complete
ownership of the security
• Documentation showing the value
of the transaction
• Documentation showing your legal authority (if
you are signing on behalf of another individual)
• Photo identification
• Proof of name change as a result of marriage,
divorce or legal name change
7
Transfer of Shares (Cont)
How do you make sure your signature
is acceptable?
The presenter of the transfer documents must sign
in their legal capacity according to the existing
registration on record at the transfer agent and not
the new registration. For example, if the existing
registration is John Doe and Jane Doe Joint Tenant,
it needs to be signed by both John and Jane. If the
shareholder is deceased, the transfer forms must
be signed by the executor/administrator of the
estate of the decedent. If the shareholder is not
deceased, but is deemed incompetent or unable to
sign, documentary evidence must be submitted to
the transfer agent supporting their role/relationship
to the shareholder. Any document requiring the
affixation of a medallion signature guarantee must
be done in the presence of the guarantor of the
medallion signature guarantee. It is important to
note that a power of attorney becomes null and
void once the maker is deceased.
Why is a W-8 or W-9 required?
This is required to certify your tax ID (U.S. holders)
or verify your country of residence (non-U.S.
holders), and avoid backup withholding upon the
liquidation of your assets. Please refer to the tax
certification section for further details.
How can I transfer and sell my shares?
If the company has a Direct Stock Sale Plan, you
can sell the shares through the company appointed
transfer agent. You will need to include a signed
letter of instruction with your transfer request and
provide the name of the security, account number
and the number of shares you would like to sell.
What is a stock certificate?
A stock certificate is documentation of a
shareholder’s ownership in a corporation. It indicates
the number of shares owned by an individual,
the par value (if any), the class of stock and date
of issuance. Original stock certificate(s) must be
presented to the transfer agent to effectuate a
transfer of ownership.
8
Transfer Types and Security
Registrations
Common transfer types include:
• Transfer from single or joint owner
• Transfer due to name change
• Transfer due to deceased owner
• Custodial transfer
Examples of Security Registrations:
• Joint Tenancy: Form of ownership where two or
more individuals hold shares as joint tenants with
rights of survivorship. When one tenant dies, the
entire tenancy transfers to the surviving tenants.
EX: JOHN BROWN & MARY BROWN JT TEN
• Tenants by Entirety: Joint ownership permits
spouses to mutually own property as a single
legal entity, with the survivor becoming the
sole owner.
EX: JOHN BROWN & MARY BROWN TEN ENT
• Tenants in Common: Form of ownership where
each tenant owns undivided interest. When one
tenant dies, their interest passes to the estate.
EX: JOHN BROWN & MARY BROWN TEN COM
• Community Property: Form of ownership required
by states that have adopted community property
laws for shares owned by husband and wife.
EX: JOHN BROWN & MARY BROWN
COMMUNITY PROPERTY
• Transfer or Payable on Death: Form of ownership
where stock is 100 percent property of owner.
When the owner dies, 100 percent ownership
is transferred to the beneficiary listed.
EX: JOHN BROWN TOD MARY BROWN
OR JOHN BROWN POD MARY BROWN
• Custodial: Form of ownership set up for the
benefit of a beneficiary and administered by a
legal guardian or custodian who has a fiduciary
obligation to the beneficiary.
EX: JOHN BROWN CUST MARY BROWN UNDER
UNIF GIFT TO MINORS ACT CA EX: ABC BANK
AGENT FOR MARY BROWN UA DTD 9-20-80
• Trust: A legal entity in which one person or
institution (trustee) holds the right to manage
a property or assets for the benefit of someone
else (trust beneficiary). The creator of the trust
is known as a grantor or settlor.
EX: JOHN BROWN, TRUSTEE THE MARY BROWN
REV LVG TR UA DTD 2/3/91
9
Transfer Types and Security
Registrations (Cont)
What are book-entry shares?
Investments with ownership recorded electronically,
such as stocks and bonds, are known as book-entry
shares. Common terms that are often used with
book-entry shares include paperless shares,
electronic shares, DRS shares, digital stock
certificates and uncertificated shares.
What should I do if I lose my certificate?
If your stock certificate is lost, accidentally destroyed
or stolen, you should immediately contact the
company appointed transfer agent and request a
stop transfer to prevent ownership of the securities
being transferred from your name. The transfer
agent will send affidavits to replace the shares which
require a Lost Securities Bond from an insurance
company.
How do I keep my shares safe?
We recommend the following:
1) Set up an online account with the transfer agent
and periodically review your ownership
2) Physical stock certificates should be held
in a safety deposit box with a financial
institution or deposited electronically
with your transfer agent for safekeeping
3) Request to convert your physical stock
certificates to book-entry shares
4) Notify your transfer agent if you are moving
to maintain a current address with agent
5) Notify your next of kin of your stock ownership
or make provisions in your will regarding your
beneficiaries
What is an inheritance tax waiver and how can I determine if one is needed?
An inheritance tax waiver is an authorization by the tax department of a deceased’s estate to transfer the
securities of the deceased without charging taxes. Most states do not require an inheritance tax waiver.
However, if the deceased resided in Puerto Rico or any states listed below, you must submit the inheritance
tax waiver to the company appointed transfer agent when transferring those shares.
• Alabama
• Hawaii
• Illinois
• Indiana
• Missouri
• Montana
• New Jersey
• New York
• North Dakota
• Ohio
• Oklahoma
• Pennsylvania
• Rhode Island
• Tennessee
To determine the specific inheritance tax waiver requirements for the states listed above, please contact the
appropriate tax authority, such as the Department of Revenue, Tax Commission, Department of Treasury, etc.
Important Note: Please ensure your address is always up to date with your transfer agent or broker to avoid
missing critical information and to prevent your property from being escheated.
10
Dividend Distribution
When a company declares a dividend, this sends a strong signal about its solid performance
and financial well-being. Companies often provide shareholders with easy options for reinvestment
to grow their investment in the company. EQ works closely with companies to create direct
stock purchase plans and dividend reinvestment strategies.
What is a dividend?
A dividend is money or stock that is paid to
shareholders, normally out of the corporation’s
current earnings or accumulated profits. It is a
distribution (usually quarterly) of a portion of the
company’s earnings, decided by the board of
directors to a class of its shareholders.
How is a cash dividend paid?
Generally, when a company declares a cash
dividend, they notify the transfer agent of the board
of directors’ decision on a record date and payable
date and the dividend rate to pay the shareholders
on their record date holdings in company shares.
Once this is completed, the transfer agent
processes the dividend on a certain record date
(this is a date that the company decides on for the
amount of shares the shareholders are holding at
that time to pay on). The transfer agent will then
send a funding letter to the company to verify and
confirm the number of shares held as of the record
date and the amount due from the company to pay
the dividend. When verified, the company will send
the funds to the transfer agent for distribution to
shareholders on the payable date provided.
How are funds distributed?
On the payable date, the funds can be distributed
in one of four ways:
1) The shareholder can have them sent, via a
physical check to the current name and address
on file
2) A direct deposit ACH sent to the bank account
on file (if allowed by the company paying the
dividend)
3) In some instances, a fee-based wire transaction
4) If a company permits and a shareholder elects
dividend reinvestment, the funds can be
reinvested into additional shares of company
stock within a shareholder’s account
Important Note: Please ensure your address is
always up to date with the transfer agent so physical
checks, statements, tax and ACH notices are sent to
the correct destination.
11
Escheatment
What is escheatment?
Escheatment is the act of reporting property
in which the rightful owner has made no claim,
engaged in no transaction or given no instruction
for a time period meeting the dormancy
determined by each state. Property that qualifies
for the escheatment process includes uncashed
company-issued checks and abandoned stock.
Escheated assets are transferred to the state for
safekeeping until the rightful owner makes a claim
on the assets.
Common forms of unclaimed property include
stocks, checking or savings accounts, uncashed
dividends or payroll checks, refunds, traveler’s
checks, trust distributions, unredeemed money
orders or gift certificates, insurance payments or
refunds, life insurance policies, annuities, certificates
of deposit, customer overpayments, utility security
deposits and contents of safe deposit boxes.
How can you avoid escheatment and keep
your property?
Stay in contact with your transfer agent by taking
the following actions:
• Vote your proxy.
• Cash all checks no matter how small. In some
states, the existence of uncashed checks in an
account may cause the property in that account
to be considered unclaimed.
• Enroll in direct deposit if it is available to you.
• Notify your transfer agent and any other financial
institutions of any changes to your contact
information, including email and any changes
of address. It’s important to do this even if you
primarily view your account information online.
• Act if you receive calls or notices asking you
to update your mailing address, email address
or other contact information. To guard against
identity theft, contact the institution directly to
verify that it requested the update.
• Consolidate small accounts to reduce
management tasks and limit the risk
of forgetting an account.
• Contact your transfer agent and other financial
institutions with at least once each year by phone,
email, in person or by logging into your online
account.
Respond to mailings from the transfer agent:
Be attentive to mailings and respond to them
promptly. Transfer agents mail several types of
letters during the year to the last known address, as
required by law. If you receive one of these mailings,
please sign it and return it as soon as possible in the
envelope provided. If you receive a mailing from a
third party and are unsure of its legitimacy, contact
the transfer agent directly.
How do I reclaim property that has been
escheated?
Once your property has been turned over to
the state you can recover it by contacting the
appropriate state. A list of contact addresses and
phone numbers can be found at: https://www.
missingmoney.com/Main/StateSites.cfm
Links to important industry sites:
• State Contact Information: https://www.
missingmoney.com/Main/StateSites.cfm
• Shareholder Services Association (SSA):
https://www.shareholderservices.org/
• Securities Transfer Association (STA):
http://www.stai.org/
• National Association of Unclaimed Property
Administrators (NAUPA): https://unclaimed.org/
• MissingMoney.com:
https://www.missingmoney.com/en/
12
Restricted
Stock
13
Restricted Stock
What does it mean to have restricted shares?
Restricted shares are securities acquired in
unregistered, private sales from the issuer or from
an affiliate of the issuer. Typically received through
Regulation D offerings, employee stock benefit
plans or as compensation for professional services.
Restricted securities are subject to resale limitations.
They typically have a restrictive legend stating that
they cannot be resold in the public marketplace
unless the sale is exempt from the SEC’s registration
requirements. This restriction is imposed by the
issuer of the securities. These shares can be issued
to you in certificate or book-entry form held
electronically by the issuer’s transfer agent.
Controlled shares are held by an affiliate of the
issuer. If a shareholder obtains securities from a
controlling individual as described above who has
been identified as an affiliate, the securities will
be considered restricted securities, even if such
securities were not otherwise restricted.
There are several types of restricted securities.
Below are common restricted securities handled
by a transfer agent:
• Private Placement: securities acquired either
directly or indirectly from the issuer or an affiliate
of the issuer in a non-public transaction.
• Accredited Investors or Compensatory Benefit:
securities acquired from the issuer subject to the
resale limitations of the Securities Act of 1933
(the Securities Act) Rule 502(d) or Rule 701(c).
How do I sell my restricted shares?
It depends on the type of restriction imposed
by the issuer of the security. Securities are not
considered restricted if the requirements of Rule
144 under the Securities Act of 1933 are met.
When this occurs, securities may be sold or
transferred by the shareholder. Rule 144 provides
common exemptions for holders to sell restricted
securities and you must meet several conditions
which include a six-month or one-year holding
period. Once you meet all the conditions of Rule
144, you cannot sell your restricted securities to
the public until the legend is removed from the
certificate or book-entry position.
• If the shares carry a 1933 Act legend, you must
obtain an opinion from the issuer’s counsel. The
counsel will consider the conditions that you have
met under Rule 144.
• If the issuer has filed a registration statement with
the SEC (Securities & Exchange Commission) and
you are listed on that registration statement, your
shares may be sold by your broker of choice as
long as the registration statement has not been
rescinded and is deemed still in effect. Your
broker will be able to direct you and provide the
necessary documents to effectuate the sale of
your shares.
• If the issuer of the security imposed a restriction
specific to certain requirements being met with
them, a letter of authorization to release the
restrictive stop must be provided from that issuer.
You may choose to sell your clean (unrestricted)
shares through your transfer agent if a plan
prospectus is in place or with any broker
of your choice.
14
Restricted Stock (Cont)
Be in the know:
1. Know your status with the issuer (affiliate or non-affiliate)
2. Understand holding periods needed prior to sale
3. Request items needed to remove restriction with the issuer
or transfer agent
4. Does a sale need to occur prior to restriction being removed?
5. Check with your broker to see if they are capable of performing a sale
How do I gain access to my locked-up shares?
The issuing company may impose a time-based or other company-imposed restrictive stop
on newly-issued or outstanding shares. In order to release or remove any company-imposed
restrictive stop, we require a letter from the issuer authorizing the release of their lock-up;
only the issuer of the security can provide this authorization. If it is a time-based restrictive
stop, the lapse in time must have occurred in order to gain access to your time-based
locked up shares. If shares are held in certificate form, it must be presented to the issuer’s
transfer agent in order to cleanse your shares.
15
Corporate Actions
What is a corporate action?
A corporate action is an event initiated
by a company that will bring a change to the
securities equity or debt issued by the company.
The event can be a merger, reorganization or
exchange, which require intense planning, strategy
and attention to detail. Corporate actions are
typically agreed upon by a company’s board of
directors and authorized by the shareholders.
What is an acquisition?
An acquisition is a corporate action in which
a company buys most, if not all, of the target
company’s ownership stakes to assume control
of the firm. Acquisitions are often made as part
of a company’s growth strategy when it is more
beneficial to take over an existing firm’s operations
rather than expands its own niche. Acquisitions are
often paid in cash, the acquiring company’s stock
or a combination of both cash and stock. To obtain
information on the acquisition you can visit the
company’s website or contact the information agent
or the transfer agent.
In order to participate in the voluntary offer, you
must submit both a letter of transmittal and your
certificates to the depositary agent prior to the
expiration. It is recommended to send certificates
via overnight mail or certified return receipt insured
at the market value of the shares. If your certificates
are lost, you need to contact the transfer agent to
have them replaced to participate in the offer.
What is a merger?
A merger is the combining of two or more
companies. Generally, one company offers
stockholders securities in the acquiring company
in exchange for the surrender of their stock.
The target company ceases to trade once the
merger is effective. The merger can be in the form
of cash, stock or a combination of cash and stock.
When the merger is effective the target shareholder
is entitled to the merger consideration.
In order to receive your merger consideration,
you must submit a letter of transmittal and
your certificates to the exchange agent. It is
recommended to send certificates via overnight
mail or certified return receipt insured at the market
value of the shares. If your certificates are lost, you
will need to contact the transfer agent to have them
replaced to receive your merger consideration.
What should I do if there is a corporate action?
Go to the company’s website, contact the Investor
Relations department via their toll-free number
or if you know who the transfer agent is, contact
them for further direction. With an acquisition or
merger you should receive a mailing with materials
pertaining to the corporate action.
Important Note: Please ensure your address is
always up to date with your transfer agent or broker
to avoid missing critical information and to prevent
your property from being escheated. Additionally,
ensure your account is tax certified with your broker
or transfer agent to avoid any tax withholding from
your merger considerations.
16
IRS Notices
B-Notices
B-Notices are issued by the IRS for missing or
incorrect taxpayer identification numbers (TINs),
based on the information return forms that a
transfer agent files during tax reporting with the IRS.
The official IRS names for B-Notices are CP2100 &
CP2100A. The CP2100 is issued whenever a payer
has 50 or more notices. If there are more than 250
notices the CP2100 will be given to the issuer on
a CD or DVD. A CP2100A is issued when there are
less than 50 accounts. The IRS issues B-Notices
twice per year, during the spring and then during
the fall based on the information returns filed in
the previous year. Transfer agents are required to
determine if an account is to be coded for a first
and second B-Notice. A second B-Notice is issued
when the IRS receives incorrect information for the
same shareholder, within three years after the first
B-Notice was issued. Transfer agents are required
to apply backup withholding of 28 percent within
30 days on all payments to an account with a first
or second B-Notice that remains unresolved.
B-Notices are issued to uncertified foreign accounts
that had backup withholding, but transfer agents
are not required to act on those notices.
C-Notices
C-Notices are issued by the IRS for underreporting
by a shareholder, based on the information returns
that the transfer agent and others have filed during
tax reporting. The official IRS name of C-Notices is a
CP-543 Notice. The IRS issues a C-Notice to instruct
payers that they should impose backup withholding
on dividend or interest payments to the shareholder,
because the IRS has made attempts to resolve the
underreporting with the shareholder, but they were
unsuccessful in their efforts. Unlike B-Notices, it
must be noted that C-Notices do not apply to gross
proceeds payments.
For accounts coded for a C-Notice, the transfer
agent mails a C-Notice letter to the shareholder
informing them that we have received the CP-543
Notice from the IRS and that backup withholding
will continue, until they contact the IRS and resolve
the issue.
The only cure for a C-Notice is a letter from the
IRS, instructing the payer to discontinue backup
withholding on the payments to the affected
shareholder. Once the transfer agent receives the
discontinue notice we will stop any further backup
withholding on payments.
Notices on Levy
A Notice of Levy, IRS Form 668-A(ICS) is issued to a shareholder by the IRS as a means of collecting
taxes owed. The Levy instructs the transfer agent to turn over the shareholder’s property to the IRS,
which includes selling any book shares that we control, and any uncashed checks that we have on
our system. The transfer agent issues a check for the liquidated assets of the shareholder to the
United States Treasury in order to satisfy the Notice of Levy.
17
Tax Forms and Descriptions
Typical IRS Forms
Note: Forms may change on an annual basis as per IRS rules and guidelines.
There are various forms used for tax reporting based on the type of income to be reported and whether
the shareholder is a U.S. or a foreign shareholder.
Form 1099-B
• Used to report all gross proceeds payments to U.S. shareholders and to uncertified shareholders
with foreign addresses, because there was backup withholding imposed on their payments.
• The mailing deadline for Form 1099-B is February 15 of the year following the tax year that is being
reported. If February 15 falls on a weekend or is a national holiday, the due date is the next business day.
• The IRS does offer a 30-day mailing extension that must be requested by the due date of February 15.
The current version of Form 1099-B can be found at: https://www.irs.gov/pub/irs-pdf/f1099b.pdf
Form 1099-B
2023
Proceeds From
Broker and
Barter Exchange
Transactions
Copy 1
For State Tax
Department
Department of the Treasury - Internal Revenue Service
OMB No. 1545-0715
VOID CORRECTED
PAYER’S name, street address, city or town, state or province, country, ZIP
or foreign postal code, and telephone no.
PAYER’S TIN RECIPIENT’S TIN
RECIPIENT’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Account number (see instructions)
CUSIP number FATCA filing
requirement
14 State name 15
State identification no.
16 State tax withheld
$
$
Applicable checkbox on Form 8949
1a Description of property (Example: 100 sh. XYZ Co.)
1b Date acquired 1c Date sold or disposed
1d Proceeds
$
1e Cost or other basis
$
1f Accrued market discount
$
1g Wash sale loss disallowed
$
2
Short-term gain or loss
Long-term gain or loss
Ordinary
3 If checked, proceeds from:
Collectibles
QOF
4 Federal income tax withheld
$
5 If checked, noncovered
security
6 Reported to IRS:
Gross proceeds
Net proceeds
7 If checked, loss is not allowed
based on amount in 1d
8 Profit or (loss) realized in
2023 on closed contracts
$
9
Unrealized profit or (loss) on
open contracts—12/31/2022
$
10
Unrealized profit or (loss) on
open contracts—12/31/2023
$
11 Aggregate profit or (loss)
on contracts
$
12 If checked, basis reported
to IRS
13 Bartering
$
Form 1099-B
www.irs.gov/Form1099B
Form 1099-B
There is a de minimis
rule for Forms 1099-B,
stipulating that transfer
agents are not required to
mail, or report aggregated
annual income of less than
$20.00. (related to the
sale of fractional shares).
18
Form 1099-DIV
• This form is used to report dividend income to U.S. shareholders.
• There is a de minimis rule for Form 1099-DIV, stipulating that transfer agents are not required to mail,
or report aggregated annual income of less than $10.00.
• The mailing deadline for Form 1099-DIV is January 31 of the year following the tax year that is being
reported. If January 31 falls on a weekend or is a national holiday, the due date is the next business day.
• The IRS offers a 30-day mailing extension that must be requested by the due date of January 31.
The current version of Form 1099-DIV can be found at: https://www.irs.gov/pub/irs-pdf/f1099div.pdf
Form
1099-DIV
(Rev. January 2022)
Dividends and
Distributions
Copy 1
For State Tax
Department
Department of the Treasury - Internal Revenue Service
OMB No. 1545-0110
For calendar year
20
VOID CORRECTED
PAYER’S name, street address, city or town, state or province, country, ZIP
or foreign postal code, and telephone no.
PAYER’S TIN RECIPIENT’S TIN
RECIPIENT’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Account number (see instructions)
1a Total ordinary dividends
$
1b Qualified dividends
$
2a Total capital gain distr.
$
2b Unrecap. Sec. 1250 gain
$
2c Section 1202 gain
$
2d Collectibles (28%) gain
$
2e
Section 897 ordinary dividends
$
2f Section 897 capital gain
$
3 Nondividend distributions
$
4
Federal income tax withheld
$
5 Section 199A dividends
$
6 Investment expenses
$
7 Foreign tax paid
$
8
Foreign country or U.S. possession
9
Cash liquidation distributions
$
10
Noncash liquidation distributions
$
11 FATCA filing
requirement
12 Exempt-interest dividends
$
13 Specified private activity
bond interest dividends
$
14 State 15
State identification no.
16 State tax withheld
$
$
Form 1099-DIV (Rev. 1-2022)
www.irs.gov/Form1099DIV
Tax Forms and Descriptions (Cont)
19
Tax Forms and Descriptions (Cont)
Form 1042-S
Department of the Treasury
Internal Revenue Service
Foreign Person’s U.S. Source Income Subject to Withholding
Go to www.irs.gov/Form1042S for instructions and the latest information.
2023
UNIQUE FORM IDENTIFIER
AMENDED
AMENDMENT NO.
OMB No. 1545-0096
Copy A for
Internal Revenue Service
1 Income
code
2 Gross income
3 Chapter indicator. Enter “3” or “4”
3a Exemption code
3b Tax rate .
4a
Exemption code
4b Tax rate .
5 Withholding allowance
6 Net income
7a Federal tax withheld
7b Check if federal tax withheld was not deposited with the IRS because
escrow procedures were applied (see instructions) . . . . . .
7c Check if withholding occurred in subsequent year with respect to a
partnership interest . . . . . . . . . . . . . .
8 Tax withheld by other agents
9
Overwithheld tax repaid to recipient pursuant to adjustment procedures (see instructions)
( )
10 Total withholding credit (combine boxes 7a, 8, and 9)
11 Tax paid by withholding agent (amounts not withheld) (see instructions)
12a Withholding agent
’
s EIN
12b
Ch. 3 status code
12c
Ch. 4 status code
12d Withholding agent
’
s name
12e Withholding agent
’
s Global Intermediary Identification Number (GIIN)
12f Country code 12g Foreign tax identification number, if any
12h Address (number and street)
12i City or town, state or province, country, ZIP or foreign postal code
13a Recipient
’
s name 13b Recipient
’
s country code
13c
Address (number and street)
13d City or town, state or province, country, ZIP or foreign postal code
13e Recipient’s U.S. TIN, if any
13f Ch. 3 status code
13g Ch. 4 status code
13h Recipient’s GIIN
13i
Recipient
’
s
foreign tax identification
number, if any
13j
LOB code
13k Recipient
’
s account number
13l Recipient
’
s date of birth (YYYYMMDD)
14a
Primary Withholding Agent
’
s
Name (if applicable)
14b Primary Withholding Agent
’
s EIN
15 Check if pro-rata basis reporting
15a
Intermediary or flow-through entity’s EIN, if any
15b
Ch. 3 status code
15c
Ch. 4 status code
15d
Intermediary or flow-through entity’s name
15e
Intermediary or flow-through entity’s GIIN
15f Country code 15g Foreign tax identification number, if any
15h Address (number and street)
15i City or town, state or province, country, ZIP or foreign postal code
16a Payer
’
s name 16b Payer
’
s TIN
16c Payer
’
s GIIN
16d
Ch. 3 status code
16e
Ch. 4 status code
17a State income tax withheld 17b Payer
’
s state tax no. 17c Name of state
For Privacy Act and Paperwork Reduction Act Notice, see instructions.
Cat. No. 11386R
Form 1042-S (2023)
Form 1042-S
• This form is used to report all income to foreign shareholders. There are specific codes used to define
the type of income.
• The mailing deadline for Form 1042-S is March 15 of the year following the tax year that is being
reported. If March 15 falls on a weekend or it is a national holiday, the due date is the next business day.
• The IRS does offer a 30-day mailing extension that must be requested by the due date of March 15.
The current version of Form 1042-S can be found at: https://www.irs.gov/pub/irs-pdf/f1042s.pdf
20
Form 1099-INT
(Rev. January 2022)
Interest
Income
Copy 1
For State Tax
Department
Department of the Treasury - Internal Revenue Service
OMB No. 1545-0112
For calendar year
20
VOID CORRECTED
PAYER’S name, street address, city or town, state or province, country, ZIP
or foreign postal code, and telephone no.
PAYER’S TIN
RECIPIENT’S TIN
RECIPIENT’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
FATCA filing
requirement
Account number (see instructions)
Payer’s RTN (optional)
1 Interest income
$
2 Early withdrawal penalty
$
3 Interest on U.S. Savings Bonds and Treasury obligations
$
4 Federal income tax withheld
$
5 Investment expenses
$
6 Foreign tax paid
$
7
Foreign country or U.S. possession
8 Tax-exempt interest
$
9
Specified private activity bond
interest
$
10 Market discount
$
11 Bond premium
$
12
Bond premium on Treasury obligations
$
13
Bond premium on tax-exempt bond
$
14
Tax-exempt and tax credit
bond CUSIP no.
15
State
16
State identification no.
17 State tax withheld
$
$
Form 1099-INT (Rev. 1-2022)
www.irs.gov/Form1099INT
Form 1099-INT
• This form is used to report interest income to U.S. shareholders. There is a de minimis rule for Form
1099-INT stipulating that we do not have to mail, or report aggregated annual income of less than $10.00.
• The mailing deadline for Form 1099-INT is January 31 of the year following the tax year that is being
reported. If January 31 falls on a weekend or it is a national holiday, the due date is the next business day.
• The IRS offers a 30-day mailing extension that must be requested by the due date of January 31.
The current version of Form 1099-INT can be found at: https://www.irs.gov/pub/irs-pdf/f1099int.pdf
Tax Forms and Descriptions (Cont)
21
Tax Forms and Descriptions (Cont)
Form 1099-MISC
• This form is used to report miscellaneous payments to U.S. shareholders. The mailing deadline
for forms 1099-MISC is January 31 of the year following the tax year that is being reported,
for any firms reporting Employee Compensation in Box 7.
• The mailing deadline is February 15 of the year following the tax year that is being reported
if not reporting Employee Compensation in Box 7. If January 31 or February 15 fall on a weekend
or are a national holiday, the due date is the next business day.
• The IRS does offer a 30-day mailing extension that has to be requested by the due dates
of January 31 or February 15. The current version of Form 1099-MISC can be found at:
https://www.irs.gov/pub/irs-pdf/f1099msc.pdf
Form 1099-MISC
2021
Miscellaneous
Information
Copy 1
For State Tax
Department
Department of the Treasury - Internal Revenue Service
OMB No. 1545-0115
VOID CORRECTED
PAYER’S name, street address, city or town, state or province, country, ZIP
or foreign postal code, and telephone no.
PAYER’S TIN RECIPIENT’S TIN
RECIPIENT’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Account number (see instructions) FATCA filing
requirement
1 Rents
$
2 Royalties
$
3 Other income
$
4
Federal income tax withheld
$
5 Fishing boat proceeds
$
6
Medical and health care payments
$
7
Payer made direct sales
totaling $5,000 or more of
consumer products to
recipient for resale
8
Substitute payments in lieu of
dividends or interest
$
9
Crop insurance proceeds
$
10 Gross proceeds paid to an
attorney
$
11 Fish purchased for resale
$
12 Section 409A deferrals
$
13 Excess golden parachute
payments
$
14 Nonqualified deferred
compensation
$
15 State tax withheld
$
$
16 State/Payer’s state no. 17 State income
$
$
Form 1099-MISC
www.irs.gov/Form1099MISC
22
Annual Meeting Planning Guide TIMELINE
IRS Form 3921
• This form is used to provide employees with information relating to incentive stock options (ISOs) that were
exercised during the calendar year.
• Employers provide one Form 3921 for each exercise of ISOs that occurred during the calendar year.
Tax Forms and Descriptions (Cont)
21
TAX FORMS AND DESCRIPTIONS (CONT.)
IRS Form 3921
• This form is used to provide employees with information relating to incentive stock
options (ISOs) that were exercised during the calendar year.
• Employers provide one Form 3921 for each exercise of ISOs that occurred during
the calendar year.
IRS Form 3922
• This form is used to report the transfer of stock acquired through an Employee
Stock Purchase Plan (ESPP) under Section 423(c).
• The form is for informational purposes only and is not entered into your return.
Form 3921
(Rev. October 2017)
Exercise of an
Incentive Stock
Option Under
Section 422(b)
Copy B
For Employee
Department of the Treasury - Internal Revenue Service
OMB No. 1545-2129
This is important tax
information and is
being furnished to the
IRS. If you are required
to file a return, a
negligence penalty or
other sanction may be
imposed on you if this
item is required to be
reported and the IRS
determines that it has
not been reported.
CORRECTED (if checked)
TRANSFEROR’S name, street address, city or town, state or province,
country, and ZIP or foreign postal code
TRANSFEROR’S TIN EMPLOYEE’S TIN
EMPLOYEE’S name
Street address (including apt. no.)
City or town,
state or province,
country, and ZIP or foreign postal code
Account number (see instructions)
1 Date option granted
2 Date option exercised
3 Exercise price per share
$
4 Fair market value per share
on exercise date
$
5 No. of shares transferred
6 If other than TRANSFEROR, name, address, and TIN of
corporation whose stock is being transferred
Form
3921 (Rev. October 2017)
(keep for your records)
www.irs.gov/Form3921
Form 3922
(Rev. September 2016)
Cat. No. 41180P
Transfer of Stock
Acquired Through
an Employee
Stock Purchase
Plan Under
Section 423(c)
Copy A
For
Internal Revenue
Service Center
Department of the Treasury - Internal Revenue Service
File with Form 1096.
OMB No. 1545-2129
For Privacy Act and
Paperwork Reduction
Act Notice, see the
current version of the
General Instructions for
Certain Information
Returns.
2626
VOID CORRECTED
CORPORATION'S name, street address, city or town, state or province,
country, and ZIP or foreign postal code
CORPORATION'S federal identification number
EMPLOYEE’S identification number
EMPLOYEE’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Account number (see instructions)
1 Date option granted
2 Date option exercised
3 Fair market value per share
on grant date
$
4 Fair market value per share
on exercise date
$
5
Exercise price paid per share
$
6 No. of shares transferred
7 Date legal title transferred
8 Exercise price per share determined as if the option was
exercised on the date shown in box 1
$
Form 3922 (Rev. 9-2016)
www.irs.gov/form3922
Do Not Cut or Separate Forms on This Page — Do Not Cut or Separate Forms on This Page
IRS Form 3922
• This form is used to report the transfer of stock acquired through an Employee Stock Purchase Plan (ESPP)
under Section 423(c).
• The form is for informational purposes only and is not entered into your return.
21
TAX FORMS AND DESCRIPTIONS (CONT.)
IRS Form 3921
• This form is used to provide employees with information relating to incentive stock
options (ISOs) that were exercised during the calendar year.
• Employers provide one Form 3921 for each exercise of ISOs that occurred during
the calendar year.
IRS Form 3922
• This form is used to report the transfer of stock acquired through an Employee
Stock Purchase Plan (ESPP) under Section 423(c).
• The form is for informational purposes only and is not entered into your return.
Form 3921
(Rev. October 2017)
Exercise of an
Incentive Stock
Option Under
Section 422(b)
Copy B
For Employee
Department of the Treasury - Internal Revenue Service
OMB No. 1545-2129
This is important tax
information and is
being furnished to the
IRS. If you are required
to file a return, a
negligence penalty or
other sanction may be
imposed on you if this
item is required to be
reported and the IRS
determines that it has
not been reported.
CORRECTED (if checked)
TRANSFEROR’S name, street address, city or town, state or province,
country, and ZIP or foreign postal code
TRANSFEROR’S TIN EMPLOYEE’S TIN
EMPLOYEE’S name
Street address (including apt. no.)
City or town,
state or province,
country, and ZIP or foreign postal code
Account number (see instructions)
1 Date option granted
2 Date option exercised
3 Exercise price per share
$
4 Fair market value per share
on exercise date
$
5 No. of shares transferred
6 If other than TRANSFEROR, name, address, and TIN of
corporation whose stock is being transferred
Form
3921 (Rev. October 2017)
(keep for your records)
www.irs.gov/Form3921
Form 3922
(Rev. September 2016)
Cat. No. 41180P
Transfer of Stock
Acquired Through
an Employee
Stock Purchase
Plan Under
Section 423(c)
Copy A
For
Internal Revenue
Service Center
Department of the Treasury - Internal Revenue Service
File with Form 1096.
OMB No. 1545-2129
For Privacy Act and
Paperwork Reduction
Act Notice, see the
current version of the
General Instructions for
Certain Information
Returns.
2626
VOID CORRECTED
CORPORATION'S name, street address, city or town, state or province,
country, and ZIP or foreign postal code
CORPORATION'S federal identification number
EMPLOYEE’S identification number
EMPLOYEE’S name
Street address (including apt. no.)
City or town, state or province, country, and ZIP or foreign postal code
Account number (see instructions)
1 Date option granted
2 Date option exercised
3 Fair market value per share
on grant date
$
4 Fair market value per share
on exercise date
$
5
Exercise price paid per share
$
6 No. of shares transferred
7 Date legal title transferred
8 Exercise price per share determined as if the option was
exercised on the date shown in box 1
$
Form 3922 (Rev. 9-2016)
www.irs.gov/form3922
Do Not Cut or Separate Forms on This Page — Do Not Cut or Separate Forms on This Page
23
Tax ID Certification
and W-8/W-9 Forms
Tax Certification
All U.S. shareholders are required to submit a Form
W-9 to certify their Tax Identification Number (TIN).
A TIN is either a Social Security Number (SSN) for
individuals or an Employer Identification Number
(EIN) for entities. The transfer agent is required to
impose *backup withholding (currently 28 percent)
on payments
to un-certified U.S. shareholders and to deposit
those tax amounts with the IRS in a timely manner.
IRS Form W-9
The Form W-9 is a request for TIN and certification.
The transfer agent as a reporting/paying agent
is required by the IRS to collect a Form W-9 or
Form W-8 from each shareholder.
IRS Form W-8
The IRS issued several versions of Form W-8 to be
used by foreign shareholders for tax certification.
The specific form submitted depends on the type
of shareholder.
Form W-8 BEN
W-8 BEN Form is used by individuals. The form is
valid starting on the date the form is signed and
ending on the last day of the third succeeding
calendar year, unless a change in circumstances
made anyinformation on the form incorrect.
Form W-8 BEN: https://www.irs.gov/pub/irs-pdf/
fw8ben.pdf
Form W-8 BEN-E
Form W-8 BEN-E is used by entities. The form is
valid starting on the date the form is signed and
endingon the last day of the third succeeding
calendar year, unless a change in circumstances
made any information on the form incorrect.
Form W-8 BEN-E: https://www.irs.gov/pub/irs-pdf/
fw8bene.pdf
If an account is held by a non-resident alien or a
foreign entity, the transfer agent must have a W-8
on file. This information is required for U.S. tax
withholding purposes on income earned in your
account. Any uncertified shareholder is subject to
backup withholding.
Important: The IRS requires those who are not
defined as U.S. citizens or resident aliens to use
the appropriate Form W-8 in place of a Form W-9.
24
W-9 Form W-8 BEN Form
Filed by U.S. Persons
Certifies the individual is the beneficial
owner of the account
Provides withholding agent with SSN/TIN
for reporting purposes
Certifies that the individual is a non – U.S. person
Does not expire unless individual
has a change in circumstance
Expires on the last day of the third succeeding
calendar year after it is signed
Ex: Form W-8 BEN signed on September 30, 2019,
remains valid through December 31, 2022
Tax ID Certification
and W-8/W-9 Forms (Cont)
What are long-term gains or losses?
A long-term capital gain or loss results from the sale
of shares that have been owned for longer than 12
months at the time of sale. The long-term capital
gain or loss amount is determined by the difference
in value between the purchase price and sale
price. Long-term capital gains often receive more
favorable tax treatment than short-term gains.
What are short-term gains or losses?
A short-term capital gain or loss results from the
sale of shares that you have owned for less than
12 months. Short-term capital gains or losses are
determined by the net profit or loss when the shares
are sold.
W-9 vs. W-8 Summary
Voluntary withholding on dividends and gross proceeds from registered shares:
U.S. shareholders can request that the company-appointed transfer agent withhold tax from their payments,
although they are properly certified and not subject to withholding. The following conditions must be met for
voluntary withholding to occur:
• The transfer agent must receive a written request from the shareholder to withhold their dividend
payments. This request can either be a signed letter that is mailed to the transfer agent or it can
be an email from the shareholder to the transfer agent.
• The voluntary withholding request must state the percentage that the shareholder wants withheld
from their dividend payments.
• This request will remain in effect until the shareholder submits a written request to stop the voluntary
withholding.
• The transfer agent will deposit all voluntary withholding amounts with the IRS in a timely manner.
25
Cost Basis
What is cost basis reporting and when was it
implemented?
The term cost basis reporting refers to the original
value of an asset for tax purposes (usually the
purchase price), adjusted for events such as wash
sales, stock splits, dividends and return of capital
distributions. This value is used to determine the
capital gain or loss when an asset is discarded. On
October 3, 2008, legislation was passed under
the Emergency Economic Stabilization Act of
2008 that had a substantial impact on many areas
of the financial services industry. As part of the
legislation there are more stringent requirements
on financial intermediaries such as issuers, transfer
agents, brokers, banks and mutual funds, to report
customers’ cost basis in securities transactions to
both their customers and the IRS. Recognizing
financial institutions’ need to adapt their systems
and processes to comply with the new rules, the law
takes a phased approach, requiring them to report
cost basis for:
• Stock acquired on or after January 1, 2011
• Regulated investment companies (RIC) and
dividend reinvestment plans (DRIP) shares
acquired on or after January 1, 2012
• Financial instruments such as debt securities and
options acquired on or after January 1, 2014
What is a covered security?
A covered security is a specified security acquired
for cash on or after the applicable effective date as
per IRS Code §1.6045 (g)(3)(A).
When is cost basis applicable?
The Emergency Economics Act of 2008 came into
effect on January 1, 2011, it mandated brokers and
transfer agents to maintain cost basis of shares.
Shares acquired prior to that date are considered
non-covered, because record of cost basis was
not maintained. In addition, shares acquired via
employee restricted plans are defined by the IRS
as non-covered. There is no exchange of cash for
the restricted award, therefore cost basis may not
be maintained for shares acquired via vesting of
restricted awards/units.
Can EQ provide historical cost basis information?
EQ can provide cost basis information for covered
securities starting January 1, 2011, the effective
date of the new cost basis reporting legislation.
EQ will not provide historical cost basis information
prior to this date.
Does EQ utilize the DTCC CBRS services to
transfer cost basis information?
Yes. EQ is a DTCC limited participant and utilizes
DTCC CBRS for transferring cost basis information
to and from participating brokers.
For more information on DTCC CBRS, click here.
26
How will 1099-B reporting change and will this
require a new version of IRS Form 1099-B?
As a result of the 2011 cost basis reporting
requirements, the only additional modifications
to the Form 1099-B are the addition of Box 1d
stock or other symbol and Box 1e quantity sold. In
order to streamline shareholder reporting, EQ has
produced a combined Form 1099-B, which details
every covered and uncovered sales transaction for
a particular company on a single form. In effect, a
shareholder will receive one combined Form 1099-B
for each group of transactions for a company, rather
than one form for each separate sales transaction.
The boxes on the IRS Form 1099-B are denoted
on the combined form for ease of use. All other
required information on the combined Form 1099-B
remains the same, except for symbol and quantity
sold as previously noted. Please reference the IRS
site for updated information.
I currently receive an Form 1099-B when I
receive a proceed check. Will the Form 1099-B
still be provided with the proceeds check?
The Form 1099-B currently distributed with proceed
checks (Check/1099 Combo) will no longer be
distributed when sales are made throughout the
year. After the tax reporting year, EQ will only
provide Form 1099-B at year-end. For example,
taxable transactions in 2016 produce a 2016
1099-B, which is mailed by February 15, 2017.
Were there any changes for S corporations under
the updated legislation?
Yes. In the past, no broker or transfer agent
reporting on Form 1099-B was required for
corporate customers, including S corporations.
The updated legislation requires broker and
transfer agents to begin Form 1099-B reporting
for S corporations (other than a financial institution)
for sales of covered securities acquired on or after
January 1, 2012.
What is a wash sale?
A wash sale occurs when you sell stock or securities
at a loss and then replace the stock or security
within 30 days. You cannot deduct losses from sales
of stock or securities in a wash sale under IRS rules.
For more information on wash sales, refer to the IRS
regulations and IRS Publication 550 – Investment
Income and Expenses.
What is lot relief and what methods does EQ
support?
Lot relief is a method of computing the cost basis
of an asset that is sold in a taxable transaction. EQ
supports FIFO (First-In-First-Out) and specific lot
identification. As of January 1, 2012, EQ continues
to support average cost for RICs and DRIP accounts.
What is the current status of the cost basis
reporting implementation at EQ?
As the next phases of cost basis reporting
become effective, financial institutions will
continue to adapt their systems and processes to
comply. EQ is compliant and is actively working
on implementing cost basis reporting solutions to
comply with future phases of the legislation.
Where can I access the cost basis reporting
regulations passed under the Economic
Stabilization Act of 2008?
To view the full act, please visit the IRS site.
Cost Basis (Cont)
27
Lost Stock Certificate or Check
What is a stock certificate?
Documentation of a shareholder’s ownership in
a corporation. Certificates indicate the number
of shares owned by an individual, their par value
(if any), the class of stock and date of issuance.
What should I do if I lose my certificate?
If your stock certificate is lost, accidentally destroyed
or stolen, you should immediately contact your
transfer agent and request a stop transfer to prevent
ownership of the securities from being transferred
from your name to another’s. The transfer agent
may send affidavits to replace the shares which
require the purchase of a Lost Securities Bond from
an insurance company.
What is a surety bond?
A bond that guarantees payment if the second party
fails to meet the terms of a contract. The surety
bond protects the first party against any losses that
result from the second party’s failure to meet the
obligation. There are three parties involved:
• The Principal: the business or individual who will
be performing a contractual obligation
• The Obligee: the party who receives the
obligation, which is normally a government entity
• The Surety: who guarantees the principal’s
obligations will be performed
What is a surety premium?
A surety premium is a fee paid by a shareholder to
cover insurance for replacing lost securities or by
an estate of a deceased shareholder who transfers
shares without probate.
How do I replace my lost certificate
with EQ?
A shareholder can access their account online via
shareowneronline.com or contact our Shareholder
Services department to report their certificate
lost, stolen or destroyed. Upon receipt of the
communication, the Lost Securities department
will mail, fax or email Affidavits of Loss forms
for completion. The forms will require notarized
signatures of all shareholders along with the
quoted surety premium. Additional documents and
information may be required.
What is a replacement check?
When a check is created and sent to a shareholder
(e.g.: a cash dividend, a proceeds check for the sale
of shares, escheatment, corporate action or IPO
closing, etc.) it can sometimes be lost, misplaced
or damaged. In such an event, the shareholder can
request a replacement check for the funds.
How do I obtain a replacement check with
EQ?
There are several ways in which a shareholder can
request a replacement check. The shareholder can
go online to www.shareowneronline.com or contact
EQ’s Shareholder Services department via phone
or mail. Once the notification is made a request
is sent to the check replacement department for
processing. When it reaches the department, the
proper banks and departments are notified so no
excess funds are distributed. The request can take
up to 48 hours to be processed. Once completed
and the new check is created it is mailed via the
U.S. Postal Service. Additional documents and
information may be required
once you contact the transfer agent.
Important Note: Please ensure your address is
always up to date so checks are printed and sent
to the correct destination. You should cash checks
regardless of the dollar amount.
28
Direct Registration
System
29
Direct Registration System (DRS)
What is a Direct Registration System (DRS)?
A DRS records shares of stock in book-entry
form. Book-entry means the issuer’s transfer
agent maintains your shares without the need
for a physical stock certificate. Shares held in
uncertificated book-entry form have the same rights
and privileges as shares held in certificate form.
What are the benefits of DRS?
Holding shares in book-entry form through DRS
has many benefits. DRS helps reduce the risks and
costs associated with storing stock certificate(s)
and replacing lost or stolen certificate(s). It also
enables electronic share transactions between the
broker/dealer and transfer agent. DRS reduces
overall administrative costs to the issuer and its
shareholders.
What documents will I receive showing my
shares held through DRS?
You will receive a DRS Transaction Advice form
following each transaction involving your shares.
How do I transfer shares to or from
my brokerage account or sell shares?
If you wish to transfer or sell your shares you will
need to transfer them to your brokerage account,
contact your broker and provide him or her with
your DRS account information (which appears on
the Transaction Advice form you receive when you
become a participant in DRS). Your broker will then
electronically initiate the transfer of your book-entry
shares based on your instructions.
How do I transfer shares held through DRS
to a new owner?
Shares can be transferred to a new owner by
contacting the appointed transfer agent. The
instructions to transfer must include a medallion
signature guarantee (see details below).
What will it cost me to hold my shares through
DRS?
You will not be charged for holding your shares
through DRS. You should contact your brokerage
firm to determine its fees if you transfer your shares
to or sell your shares through a brokerage account.
Book-Entry Share Ownership Through A
Direct Registration System
30
Direct Registration System
(DRS) (Cont)
How do I know my book-entry shares are safe and can’t be transferred
without my consent?
Your written consent with a medallion signature guarantee is required
by the company-appointed transfer agent to transfer shares to any third
party other than your broker. If you choose to supply a broker with your
DRS account information, your broker is responsible for obtaining instructions
and documentation for any transfer or sale.
What is a medallion signature guarantee and how do I obtain one?
A medallion signature guarantee is a statement (stamp and signature)
given by a financial institution such as a commercial bank, credit union,
brokerage firm, etc., that is a member of the Securities Transfer Association
Medallion Program (STAMP), New York Stock Exchange Program or Stock
Exchange Medallion Program (SEMP, MSP). The medallion program is not
a notarization. To obtain a medallion signature guarantee visit a financial
institution that participates in the medallion program.
31
Glossary
Common Financial Acronyms & Abbreviations
The financial industry is full of acronyms. Here are some of the most commonly
used ones you may come across.
ACH
Automatic Clearing House: the way in which electronic
transfer of funds take place.
ADP
Automatic Data Processing
AMEX
American Stock Exchange
CTA
Co-Transfer Agent
CUSIP
Committee on Uniform Securities Identification
Procedure: CUSIP # is a nine-digit, alphanumeric number
that identifies securities.
DPP or DSPP
Direct (Stock) Purchase Plan
DR
Dividend Reinvestment
DRP or DRIP
Dividend Reinvestment Plan
DRS
Direct Registration System
DTCC
The Depository Trust & Clearing Corporation
EFT
Electronic Funds Transfer
ESOP
Employee Stock Option Plan
ESPP
Employee Stock Purchase Plan
IPO
Initial Public Offering: when a company first becomes a
stock company publicly trading on the market.
IR
Investor Relations
IRA
Individual Retirement Account
IVR / AVR
Interactive Voice Response / Automated Voice
Response: a telephony system that interacts with callers,
gathers information and routes calls to the appropriate
department or recipient.
JT TEN
Joint Tenants: a type of ownership where two or more
people own property together, each with equal rights and
obligations. Upon an owner’s death, that owner’s interest
in the property is transferred to the survivors without the
property having to go through probate.
LLC
Limited Liability Company: a type of legal entity where
risks to owners are limited by law.
LP
Limited Partnership
LT
Letter of Transmittal
NASDAQ
National Association of Securities Dealers Automated
Quotation System
NYSE
New York Stock Exchange
OTC
Over The Counter: stock that is purchased without a
broker
PTA
Prior Transfer Agent
RPO
Returned by the Post Office
32
Financial Terms
SEC
Securities and Exchange Commission
STA
Securities Transfer Association
T + 2
Transaction Date (for sale of stock), plus two days
settlement to clear
TA
Transfer Agent
TEN COM
Tenants In Common: a type of stock ownership
of an asset by two or more people who share a specific
portion of ownership rights in an asset and upon the
death of a tenant in common, that share
is transferred to the estate of the deceased tenant.
TEN ENT
Tenants by the Entirety: a type of stock ownership of an
asset by two or more people and upon the death of a
tenant, the asset immediately becomes the property of
the remaining owner or owners.
TIN
Tax Identification Number (in some circumstances can
be Social Security Number) – see language under Tax
Identification Number
TOD/POD
Transfer On Death/Payable On Death
YTD
Year To Date
1042-S
A tax form provided to foreign owners of American
securities to report the dividend or interest earnings for
the calendar year.
1099
A series of tax forms provided to taxpayers by financial
institutions to report income to the Internal Revenue
Service. There are four common types of 1099 forms:
• 1099-B — Reports the proceeds from the sale or the
exchange of securities
• 1099-DIV — Reports dividend income
• 1099-INT — Reports interest income
• 1099-MISC — Reports miscellaneous income
Abandoned Property
Also called Unclaimed Property, abandoned property
is stocks, bonds or any other holdings or payments
for which the registered owner has not demonstrated
ownership, interest or awareness during a set length of
time (determined by the state of residence.)
Account Balance
Net of debits and credits at the end of a reporting period.
The term applies to a variety of account relationships.
For our purposes, it is the balance/amount of shares that
currently appears on our system.
Account Executive (AKA Account Administrator) The
role of an account executive / administrator is to advise
and counsel our corporate clients. They act as the liaison
between the corporation and our transfer services.
Accrued Dividend
Any dividend that has been declared and paid by
the corporation, but has not been received by the
shareholder.
ACH
Automated Clearing House. ACH (also referred to as EFT)
refers to the automatic electronic deposit or withdrawal
of funds from an account. Many shareholders have their
dividend payments made through ACH directly into their
personal accounts.
Acquisition
When a company takes over controlling interest in
another company. (See Merger)
Administrator
An individual named in a court appointment to manage
or distribute a decedent’s estate when there is no will.
ADP (Automatic Data Processing)
ADP acts as an intermediary to perform proxy services
for banks and brokers. ADP distributes proxy material to
beneficial owners, tabulates the returned proxies, and
provides the Corporation or its tabulator compiled reports
of the tabulation results. ADP also distributes quarterly
reports and other company information to the beneficial
owners.
33
Affidavit of Domicile
A notarized written document that states the legal
residence of a decedent. This is also known as an
Affidavit of Residence.
Affidavit of Loss
A sworn statement describing the details and
circumstances of the lost securities that attests to the
fact that a shareholder is not in possession of his/her
certificate. The affidavit of loss must be notarized and be
completed in duplicate. This affidavit is required before
a bond of indemnity can be issued and the securities
replaced.
Affidavit of Non-Receipt
A notarized form affirming that the shareholder never
received the securities mailed by the transfer agent.
Age of Majority
The age when a minor legally becomes an adult and can
control their assets. The age of majority is not the same
for all states; it is determined by state statutes.
American Depositary Receipt or ADR
Also known as an ADR or GDR. A depositary receipt is
a negotiable certificate that usually represents a foreign
company’s publicly traded equity or debt. When a
broker purchases the company’s shares on the home
stock market and delivers them to the depositary’s local
custodian bank, which then instructs the depositary bank
to issue Depositary Receipts. Depositary Receipts may
trade freely, just like any other security, either on an
exchange or in the over-the-counter market. Also known
as GDRs (Global Depositary Receipts).
Assignment
The transfer of ownership from one party (the assignor)
to another (assignee), generally relating to a document
with the authorization and instructions pertaining to
the transfer of the ownership of property. On stocks
and bonds, the assignment is executed by completing
the area on the reverse side of the certificate or by
completing an irrevocable stock or bond power.
Attorney In Fact
An individual who has been authorized to transact
business for another person.
Beneficial Owner
The person or company who is the actual owner of
securities that are registered in the name of a bank
or broker. The entity who receives all the benefits of
ownership, including cash flow, even though title to a
security may be in another name. Title is frequently held
in a name other than that of the beneficial owner for
safety or convenience of transfer.
Beneficiary
A person to whom an inheritance passes as a result
of being named in a will, or the person, company or
organization for which a trust exists.
Bond of Indemnity
A bond of indemnity protects corporations, transfer
agents and their clients from any liabilities incurred if
the original certificate(s) is/are presented for value in
the future. A bond of indemnity can also be obtained
independently from your own insurance provider or
an insurance company of your choice.
Book-Entry (Book Shares)
An account of electronically-held registered shares
for which there are no physical certificates.
Book-Entry Delivery
A method of transferring securities through computerized
entries, which may eliminate the need for physical
securities.
Broker
A person who negotiates the exchange (buying or selling)
of securities and receives a commission or fee. Brokers are
required to be licensed and their activities are regulated
by the Securities and Exchange Commission.
Broker Dealer
An entity engaged in buying and selling securities both
for its own account and for the accounts of others.
Capital Gain/Loss
The difference between an asset’s purchase price and
selling price. It is a gain when the difference is positive
and it is a loss when the difference is negative.
Cash Acquisition
A cash acquisition is a mutually-agreed upon merger
of two companies in which the stockholders or the
company being acquired receive cash for their shares.
Cash-In-Lieu
Payment for a fractional share. The calculations of
some exchanges result in fractional shares, and since a
certificate is rarely issued for less than one share, a check
is generally issued to the shareholder, reflecting the share
price multiplied by the fraction of a share owned.
Certificate
An instrument that evidences ownership in a corporation
or debt of the issuer. The printed document issued by a
corporation as evidence of ownership to its holder; each
certificate represents a specific principal/share amount.
NYSE and AMEX listed corporations must have their
certificates steel engraved on special paper to thwart
counterfeiters. Many companies no longer issue physical
certificates.
34
Certificate of Appointment/Court Appointment
A legal document evidencing a person’s present
possession of an office or position (i.e., executor,
administrator, personal representative or trustee).
A dated document issued by the court naming an
individual to act on behalf of an estate. These are
also known as Letters of Testamentary.
Certified Copy
A statement by court or authorized party that the copy
is a true and correct copy and is still in full force and in
effect. In other words, a transfer agent or issuer is safe in
acting on the document when it is presented in support of
a request to transfer securities.
Closed End Fund
A type of mutual fund that raises money only once and
offers a fixed number of shares that are traded on an
exchange. Closed-end funds fluctuate in response to
investor demand as well as to changes in the value of the
fund’s holdings.
Co-Transfer Agent
A co-agent acts as an alternate agent and can transfer
securities. The co-agent delivers the records of all
transfers to the principal transfer agent via electronic tape.
Common Stock
Common stock is a security issued by a corporation
representing an ownership in the corporation. Common
stockholders have the lowest priority claim to assets in
case of bankruptcy, but can receive a dividend and usually
have voting rights. The price of common stock varies with
the supply and demand for the stock. The dividend per
share varies with the corporation’s profitability.
Conservator
A person who is named by the court to be legally
responsible for the welfare and property of another
individual.
Consolidation
Two or more accounts belonging to one shareholder
that are to be combined into a single account. Also,
the process of combining two or more security holder
accounts that may have been created by variances in
registration or address.
Conversion
The cancellation of preferred stock, convertible bonds or
debentures or an acquired company’s stock in exchange
for another kind of security. The exchange rate may
change from time to time, either by prearrangement or
because subsequent stock splits or stock dividends. The
movement of a corporation’s security holder records from
one transfer agent to another.
Convertible Stock
Convertible stock, generally a preferred issue, is
exchangeable for a set number of another type
of security, often common stock.
Corporate Resolution
A legal document bearing the seal of the corporation
from the state in which it is incorporated. The corporate
resolution contains the names and signatures of company
officers who have the authority to sign for financial
transaction on behalf of the firm.
Cost Basis
Cost basis is the price at which the investor purchased his
or her securities. The cost basis is required to calculate
capital gain or loss after the securities are sold.
Court Appointment
A written document issued by the court that officially
names the individual(s) or institution that can transact
business for the beneficiary. A dated document issued
by the court naming an individual to act on behalf of
an estate. Generally, this document which names the
executor, administrator or personal representative. Also
known as Letters of Testamentary.
Court Order
A direction of the court on some other matter incidental
to the main proceeding which adjudicates a preliminary
point or directs some step in the proceedings.
CUSIP
A nine digit number used to facilitate transactions of
the securities industries. The first six digits identify
the company, the following two digits represent the
issue, and the final digit is a control number to ensure
the accuracy of the other eight numbers. The word
CUSIP stands for the Committee on Uniform Securities
Identification Procedures.
Custodian
A person or institution legally charged with the
responsibility of safeguarding the property of another.
Custodian for Minor
A Trustee under the Uniform Gifts to Minors Act, which
set up rules for the distribution of assets held in the name
of the child. The act provides for a so-called custodian of
assets. A supervisor of property belonging to or held in
the interest of another. Often supervision is for minors or
persons unable to handle their own affairs.
Cut Off Date
The date assigned in the unclaimed property law in most
states for determining the items of property that must be
turned over to the state. (Uniform Act Sec. 11(d))
35
Decedent
A person who has died.
Declaration Date
The date on which the Board of Directors declares an
annual meeting record and meeting date, or a dividend
record and payable date.
Declared Dividends
Dividends approved to be paid at a future date
by a corporation’s Board of Directors.
Deposit/Withdrawal At Custodian (DWAC)
DWAC processing through the Depository Trust Company
allows a DTC participant to transfer shares into and out of
the DTC position through the transfer agent. The DWAC
process is handled by our DTC unit and initiated by the
broker.
The Depository Trust & Clearing Corporation (DTCC)
DTCC is a securities depository which accepts deposits
of eligible securities for custody, executes book-entry
deliveries and records book-entry pledges of securities
in its custody, and provides for withdrawals of securities
from its custody. A large clearing house for banks, brokers
and institutions which allows participants to keep their
holdings of eligible securities on deposit in computerized
book-entry accounts. DTCC holds the underlying
securities in its own vault, or that of a qualified Transfer
Agent, in its nominee name of Cede & Co. DTCC and
other securities depositories facilitate the settlement of
securities trades at the end of each day without physical
movement and reissuance of stock certificates.
Direct Registration System (DRS)
The DRS records shares of stock in book-entry form.
Book-entry means the issuer’s transfer agent maintains
your shares without the need for a physical stock
certificate. Shares held in uncertificated book-entry form
have the same rights and privileges as shares held in
certificate form.
Direct Stock Purchase Plan (DSPP)
A DSPP enables interested first time individual investors
to purchase a company’s stock directly from the company
or without direct intervention of a broker. EQ has the
ability to administer such plans. They are handled by our
Dividend Reinvestment department. The administrator
of the plan also ensures safekeeping of the shares by
registering them directly on the books of the company
making it possible for shareholders not to hold physical
stock certificates.
Dividend
A proportion of net earnings paid periodically by the
corporation to its stockholders as a return on investment.
Not all corporations pay dividends to their holders; most
corporations that pay dividends do so quarterly.
Dividend Rate
The rate per share declared by a corporation’s board of
directors that all registered holders are entitled to receive
as a dividend payment.
Dividend Reinvestment
A plan set up by a company that allows its shareholders to
automatically use their dividends to purchase additional
shares of the company’s stock. Dividend Reinvestment
plans vary from company to company and may include
such features as optional cash payments (sending
additional funds to purchase shares); partial investment
(reinvesting a portion of the dividend and receiving cash
for the balance); and safekeeping (depositing certificate
shares with the agent). Many dividend reinvestment plans
charge nominal fees for the purchase or sale of shares.
Divorce Decree
The formal court document that dissolves a marriage
and lists the distribution of marital assets.
Domicile
Legal home or residence.
Due Diligence Letter
A letter sent as a final attempt to locate a holder before
property held (unclaimed or abandoned) is transferred
to the original issuer or to the state of the last known
address. A Due Diligence letter is required by some states
prior to escheatment (the process of turning
over unclaimed funds to the issuer or state).
Effective Date
The section of a fact sheet that refers to the start date
of a particular reorganization appointment.
Electronic Funds Transfer (EFT)
Also known as ACH, EFT refers to the automatic
electronic deposit or withdrawal of funds from
an account. Many shareholders have their dividend
payments made through EFT directly into their
personal accounts.
Employee Stock Option Plan (ESOP)
A plan under which employees of a company are issued
stock options—the right to purchase shares of the
company’s stock at a set price. Option plans vary widely:
some are offered only to the officers of a company;
some are offered to all employees (broad-based plans);
some plans vest (the options become exercisable by the
employees) based on the stock reaching a certain share
price; others vest after a certain period of time
has elapsed.
36
Employee Stock Purchase Plan (ESPP)
Employees of a company offering an ESPP are permitted
to purchase shares of the company’s stock directly
through the company, often by payroll deductions.
Plans that qualify under Section 423(b) of the IRS tax
code can make purchases through payroll deduction
and may receive a discount of up to 15 percent from
the Fair Market Value. Non-qualified ESPPs have fewer
restrictions, but do not come with the tax advantages of
qualified plans.
Endorsement
Writing on an instrument by which all rights, title and
interest in such instrument is assigned and transferred
by a registered owner or its authorized agent.
Equity
A shareholder’s ownership of a company.
Erasure Guarantee
A guarantee by an accredited guarantor organization
of any erasure or alteration in a transfer instrument
(such as a stock power or the back of a certificate)
to ensure its integrity.
Escheatment
The process of turning abandoned or unclaimed
properties over to the state or original issuer. The time
that property must be unclaimed or abandoned varies
from state to state, as does whether the property will
revert to the state of the last known address or to the
original issuer.
Estate
All of the property, money, securities and debts
of a person at the time of death.
Executor or Executrix
An individual or trust institution nominated in a will and
appointed by a court to settle the estate of a deceased
person. Also known as an executrix if the individual
is female.
Fiduciary
A person or company who holds in trust the property
of another person or company, or who holds a special
relationship of trust with regard to the company.
For example, a company director as fiduciary has an
obligation and responsibility to manage the assets of the
company. An individual or trust company charged with
the duty of acting for the benefit of another party, within
the scope of the relationship between them. Fiduciary
registrations will have such words as Executor (EX),
Administrator (ADM), Trustee (TR) and Guardian (GDN).
Final Order of Distribution
The appointment and division, under authority of the
court, of the remainder of the estate of an intestate, after
payment of the debts and charges, among those who are
legally entitled to share in the same.
Fractional Share
Less than a full share of stock. Fractional shares generally
result from either a purchase within dividend reinvestment
accounts or from calculations from transactions such
as exchanges and tenders. Fractional shares can be
maintained in book-entry accounts, but if the holder
wants to have their shares certificated, the issuer will
generally issue a cash-in-lieu check for the value of the
fractional share.
Guaranteed Signature
Provided by a financial institution; a signature guarantee
signifies that the person signing the document is who
they claim to be, and that the financial institution backs
that guarantee by a bond it has posted as a guarantor.
Individual Retirement Account (IRA)
An IRA allows a person to save money for retirement
in a tax-advantaged way.
Inheritance Tax Waiver
Authorization by the tax department of a decedent’s state
to transfer the securities of a decedent without imposing
any taxes. We are required by some states to collect an
inheritance tax waiver from the estate representative
before transferring securities.
Initial Public Offering (IPO)
A privately held company converts to a public company
by holding an initial public offering of shares, generally
offered by one or more underwriters (depending on the
size of the offering.) There are significant regulatory and
disclosure documents that a company must file prior to
going public.
Joint Tenancy
A form of ownership by two or more persons
concurrently, whereby upon the death of any tenant the
title remains with the surviving tenants, and ultimately in
the last survivor. Also referred to Joint Tenancy with Right
of Survivorship (Jt Ten WROS).
Legal Opinion
(1) Statement as to legality, written by an authorized
official such as a city attorney or an attorney general.
(2) Statement as to the legality of a municipal bond
issue, usually written by a law firms specializing in
public borrowings. It is part of the official statement,
the municipal equivalent of a prospectus. Unless
the legality of an issue is established, an investor’s
contract is invalid at the time of issue and he cannot
sue under it. The legal opinion is therefore required
by a syndicate manager and customarily accompanies
the transfer of municipal securities as long as they are
outstanding.
37
Letter of Administration
A certificate issued by the court showing the appointment
of the administrator of an estate. Also known as Letters
of Testamentary.
Letters of Testamentary
A certificate issued by the court confirming the
appointment of an executor of an estate.
Letter of Transmittal
The letter of transmittal is a letter sent to the shareholders
of a company that is going through a spin-off, merger,
or exchange which explains what the shareholders need
to do to participate. It includes a form that shareholders
must complete and return with the securities in order to
receive cash-in-lieu payment or exchanged securities. The
Letter of Transmittal (or LT) includes a Form W-9 and an
Affidavit of Loss (to expedite processing if the shareholder
has lost the securities).
Limited Partnership
Two or more partners who conduct a business jointly, and
in which one or more of the partners is liable only to the
extent of the amount of money that partner has invested.
Limited partners do not receive dividends but have access
to income flow and expenses.
Market Value
The current price of a security as indicated by the latest
trade recorded.
Medallion Guarantee
The type of signature guarantee required for the transfer
of securities. The guarantor (who must belong to a
medallion program), by affixing a medallion seal, certifies
that (a) the signature was genuine; (b) that the signer
was the appropriate person to make the endorsement;
and (c) that the signer had the legal capacity to sign.
The guarantor assumes financial responsibility should
the endorsement turn out to be fraudulent. Medallion
program members include most large U.S. financial
institutions, such as banks, brokerages and credit unions.
Merger
A combination of two or more companies. Merging
companies appoint an exchange agent to exchange all
outstanding shares of one or both companies for shares
in the newly formed company or for cash.
Minor
An individual who is not of legal age. Legal age varies
from state to state. In most states the legal age is 18. In
others it is 21.
Net Asset Value (NAV)
For a mutual fund, it is computed by dividing the assets
in the fund by the number of outstanding shares.
Non-Probated Estate
An estate that has not been administered
in a probate court.
Notary Seal
Provided by a notary public; a notary seal signifies that
the party signing the document has sworn the contents
of the document to be truthful and accurate.
Notice of Meeting
A legal one-page notice to security holders stating details
of the shareholder meeting — the date, time and place.
This page is normally included on the front of the proxy
statement.
Odd Lot
An amount of stock less than a normal trading
unit (which is 100 shares).
Optional Cash Payments
Additional funds sent in by an individual in a dividend
reinvestment plan account, used to purchase additional
shares.
Partnership
Two or more persons (or organizations) who join their
resources in business, sharing both rights and obligations.
Payable Date
The date on which a corporation makes dividend
payments or interest payments to a Holder. Dividend
payments are generally mailed one or two days prior to
the payable date.
Paying Agent
Receives funds from the issuer and pays dividends or
interest to the entitled stock or bond holders.
Personal Representative
An individual appointed by the court to distribute
the assets of an estate.
Power of Attorney
Instrument authorizing a person to act legally
for another either generally or in a specified manner.
Probate
A court procedure where a will is determined to be valid
or invalid; probate also refers to the administration of the
estate of a decedent, supervised
by a probate court.
38
Proxy
The authority or instrument that permits a shareholder’s
voting right to be granted to an agent of the shareholder.
(a) A proxy card is the voting instrument created by the
issuer and sent to the shareholders for the purpose
of casting their votes at the shareholder meeting.
This card is used by the transfer agent for tallying
votes on directors, auditors and other management
and shareholder proposals. This card also assigns the
right to vote shares by the proxy committee for other
matters that may be voted upon at the shareholder
meeting. For brokers and intermediaries (like ADP) it
is the card or form which is sent to beneficial or street
name owners.
(b) Legal proxy is a power of attorney executed by a
broker, nominee or individual empowering another
party (usually an individual) to vote shares at a
shareholder meeting.
(c) A person who is properly authorized to cast a vote.
Proxy Statement
A booklet containing, among other disclosures, the
description of the proposals to be voted upon at a
shareholder’s meeting, the names and brief biographies
of nominees for directorships and a summary of their
salaries and benefits. The content of the proxy statement
is prescribed by SEC rules and regulations.
Proxy Solicitor
A specialist firm hired to gather proxy votes.
A proxy solicitor can be extremely helpful when
non-discretionary proposals are on the proxy card.
Rate
The per-share cash amount declared by the corporation
and paid to shareholders as of a designated record date.
Also, an exchange ratio used when converting
one security into another.
Record Date
The date on which an investor must be a registered
owner of a company’s stock to be entitled to the
dividend. The record date is generally 15–20 days
prior to the payable date. The board of directors
announces the record and payable dates and the
dividend rate on the declaration date.
Registered Owner
The individual or organization who owns the securities.
The name in which a security is registered as stated on
the certificate itself or on the books of the paying agent.
All principal and interest payments are made to the
registered holder regardless of beneficial ownership
on the record date.
Registration
The format or legal title showing a security’s ownership.
Restricted Stock
Shares of stock in a corporation that are not freely
transferable. See also Stock Legend.
Reverse ACH
Also known as Reverse EFT. Reverse ACH allows
shareholders enrolled in dividend reinvestment to make
automatic purchases by deducting a set amount directly
from their checking or savings account.
Reverse Stock Split
A decrease in the corporation’s total number of
outstanding shares accompanied by a proportionate
increase in the value per share. Shareholders must
surrender their certificates in a reverse split, and new ones
will be issued to them. (Example: A one for two reverse
stock split — if the holder owned 10 shares valued at $25
per share, after the split they will own 5 shares valued at
$50 per share).
Safekeeping
Providing basic secure storage for securities, deeds and
contracts. These documents are accepted for deposit
and receipts are issued. Documents are delivered back to
the depositor on demand. The storage and protection of
customers’ securities provided as a service by a bank or
institution acting as agent for the customer.
Securities Act of 1933
The truth in securities act requires the filing
of a statement and the use of a prospectus.
Securities Act of 1934
Regulates national securities, listing securities, purchase
and sale of securities via an exchange and the creation
of the SEC.
Securities and Exchange Commission (SEC)
The SEC regulates the activities of securities traders.
The SEC ensures that investors are fully informed
about securities being offered for sale and prevents
misrepresentations and other types of fraud involved
with securities transactions.
Shareholder
A person owning shares of stock in a company.
Small Estate Affidavit
A notarized document which states the value
of the estate and the individual who can distribute
the proceeds from the estate.
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Spin-Off
The restructuring of a company that occurs when part of
the corporation is severed for the purpose of creating
a separate operating company and shares in the new
company are distributed to shareholders of the parent.
Stock Dividend
Distribution of profit to shareowners in the form
of additional shares of stock, proportionate to the
shareowner’s holdings.
Stock Split
An increase in the corporation’s total number of
outstanding shares accompanied by a proportionate
decrease in the value per share. Example: In a two for one
stock split, the shareholder receives an additional share
for every share that they owned on the split’s record date.
If the holder owned 10 shares valued at $100 per share,
after a two for one split they will own 20 shares valued
at $50 per share.
Stock/Bond Power
A form that when properly filled out will provide the
necessary information for transfer of a stock. A stock
power is used when the owner is not available or
when a large number of certificates are involved.
Stop Transfer Notation
A block placed against a security reported as a
non-receipt or lost, stolen, destroyed or misplaced, so
it cannot be transferred. There are also temporary stop
notations as well that are placed against a security for
a variety of reasons, i.e., documents were mailed under
separate cover or special mailing instructions.
Street Name
Also known as nominee name. A type of account
maintained by large institutions to safe keep the securities
of individual investors. A brokerage, for example, will
maintain all of the holdings of its individual client investors
in one large street name account so that they can make
trades and transfers quickly and easily. Also known as
nominee name.
Successor Trustee
A trustee who follows or succeeds an earlier trustee and
who generally has all the powers of the earlier trustee.
Trust instruments generally make provision for the
appointment of successor trustees.
Survivor
The living owner named in the registration of securities.
T + 2
Trade +two days. A rule that requires all purchases and
sales of securities to be settled by the second business
day following the trade.
Taxpayer Identification Number (TIN)
A nine-digit number under which American citizens
and institutions report income for taxation purposes.
For individuals, it is their Social Security Number. Legal
entities such as corporations and trusts are assigned
a TIN for tax reporting.
Tenancy by the Entirety
Joint ownership of real property by a husband
and wife, with the survivor becoming the sole owner.
Tenancy in Common
Shared ownership of property by two or more persons
with the interest of each tenant passing on to his/her
heirs upon his/her death.
Transfer on Death (TOD)
A form of registration that allows the registered owner
to designate a beneficiary.
Trade Date
The date that the purchase or sale of securities is made.
Transfer
The conveyance of right, title and/or interest in property
from one person to another.
Transfer Agent
A transfer agent is appointed by a company to maintain
records of its stock and bond holders, to cancel and issue
certificates and resolve problems arising from lost, stolen
or destroyed certificates, and disburse dividends for
dividend-paying companies. A transfer agent is often
a commercial bank or trust company, although some
large corporations act as their own agent.
Trustee
A person or organization appointed to manage
the property of a trust. An agent appointed to administer
and keep the records of an employee stock plan or a
publicly traded bond issue or similar kind of investment.
Uniform Gift to Minors Act (UGMA)
A statute adopted by most states to govern ownership
and determine transferability of a gift of securities to
a minor.
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Form W-8
This form, which is similar to a W-9, is used as a written
declaration by a shareholder that he/she is not a citizen
of the United States of America and not subject to
taxation here. In a reorganization foreign holders
are required to complete this form to receive
full compensation on a merger, redemption, or
recapitalization plan. If they do not complete this form
to identify themselves as not subject to U.S. tax laws,
the IRS requires that taxes be withheld.
Form W-9
This is a form used by the IRS as a result of TEFRA
(Taxpayer Equity and Fiscal Responsibility Act) passed
by Congress in 1984. Under this legislation, the taxpayer
must supply the correct TIN to financial institutions who
report income from stock, bonds and other securities
to the IRS. Every eligible taxpayer is supplied with a
Form W-9, which must be filled out with the correct
TIN information, signed and returned. Taxpayers who
fail to supply EQ with the TIN numbers are subject to a
withholding penalty of 31 percent of the proceeds
of their reportable transactions.
Waiver of Probate
A notarized form that contains most of the same
information contained in the small estate affidavit. In
addition, the form states an insurance bond premium
amount (two percent of the value of the stock) which is
required to transfer the stock. The premium is calculated
in the same way that we calculate a loss security bond.
The bond is a protection for the transfer agent in case
other heirs or creditors try to make claim on the stock
after it has been transferred. We will send waivers
whenever the estate is not probated.
Withholding
Monies that payers are required to withhold from
dividends, interest payments or sales. A paying agent will
withhold for several reasons, including failure of a security
holder to certify his/her TIN or if they are instructed to do
so by the IRS. The withholding rate for and uncertified
TIN is 31 percent. All withheld funds are turned over to
the IRS.
Year to Date (YTD)
The time span from the beginning of the calendar
year through the present day. Fiscal YTD would
apply to a company’s fiscal year.
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CONTACT US FOR
MORE INFORMATION:
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© 2023 Equiniti Trust Company, LLC
ABOUT EQ
EQ are specialists in helping you better understand and manage the ownership
of your company through critical events across the corporate lifecycle. As trusted
advisors, we provide strategic insight and operations expertise through our core
business units in Private Company Services, Transfer Agent Services, Employee Plan
Solutions, Proxy Services, and Bankruptcy. Globally we serve 6,700 clients (47%
of the FTSE 100 UK and 35% of the S&P 500), with over 30 million shareholders,
through 6,500 employees in 5 markets around the world.
