Stock Power

A stock power is a legal form that authorizes the transfer of ownership of stock certificates or other registered securities from the current owner to another party. It functions as a power of attorney specifically for securities: by signing it, the owner grants someone else the authority to transfer the shares to a new owner or to pledge them as collateral for a loan. Stock powers are most commonly required when an investor holds physical stock certificates rather than holding securities in street name through a brokerage account.

Think of a stock power like a notarized bill of sale for a car title: it does not move the car, but it is the legal document that authorizes the title to change hands.

When Stock Powers Are Required

The main situations requiring a stock power are selling or gifting shares held in certificate form, transferring shares between accounts, pledging securities as collateral to a lender, and changing the name on the account due to marriage, death, or corporate restructuring. When shares are held electronically through a broker in street name, transfers are usually handled through the broker's internal system without requiring a separate stock power form. Stock powers become relevant primarily when physical certificates are involved or when a direct registration account outside a brokerage requires a paper-based transfer.

The Medallion Signature Guarantee

Most stock power forms require a Medallion Signature Guarantee, not a standard notary stamp. A Medallion Signature Guarantee is a specialized certification issued by banks, broker-dealers, and savings associations that are members of a recognized Medallion program, specifically the Securities Transfer Agents Medallion Program, Stock Exchanges Medallion Program, or New York Stock Exchange Medallion Signature Program. The guarantee certifies that the signature on the form is authentic and that the signer has the legal authority to execute the transfer. A regular notary cannot provide a Medallion Signature Guarantee, and transfer agents will reject a stock power without it.

Blank Stock Power vs. Completed Stock Power

A blank stock power is signed by the current owner but does not name the new owner or specify the number of shares at the time of signing. This gives the holder flexibility to complete the transfer later. The risk is that a stolen or lost blank stock power can be completed by whoever finds it. For this reason, when mailing a stock certificate and its accompanying stock power, best practice is to send the certificate and the stock power in separate envelopes. Losing one without the other prevents unauthorized transfer.

A completed stock power specifies all transfer details at the time of signing, which is the more secure approach when the receiving party is already known.

Sources:

• https://fastercapital.com/content/Stock-Power-Definition--Understanding-the-Basics-of-Stock-Power-Forms.html
• https://financedictionarypro.com/definitions/s/stock-power-power-of-attorney/
• https://www.bitget.com/wiki/stock-power-form