Bearer Shares and Nominative Shares: Their Differences

When establishing a company’s shares or deciding to invest in a company by purchasing shares, you need to understand the differences between nominative and bearer shares. You will find that both of these share types have advantages and disadvantages. The type that you choose will depend on the benefits that you want most.

Nominative Shares

Nominative shares offer two major advantages that you should consider. Perhaps most importantly for some investors, these shares name the person who owns them. If you purchase nominative shares, then the share certificates state that you are the owner. This offers a greater level of security because no one else can claim to own your shares.

The second major advantage involves registration. When you purchase nominative shares, you do not need to register them as public documents. This gives you privacy as well as security.

The downside of nominative shares, however, is that they are more difficult to transfer to other people. Since they name their owners, you have to follow an endorsement process to transfer them to someone else.

When establishing a company’s shares or deciding to invest in a company by purchasing shares, you need to understand the differences between nominative and bearer shares.

Bearer Shares

Bearer shares do not have the owner’s name printed on them. This offers some advantages and disadvantages. These shares are extremely easy to transfer. You can just give them to another person without filling out any paperwork. That’s all it takes.

The disadvantage, however, is that anyone could claim ownership to bearer shares. If you lose yours, then the finder can take possession. Someone could also steal the bearer shares and claim ownership.

In Panama, you get an additional advantage from bearer shares. Most governments require owners to give their original certificates to banks or lawyers. In Panama, however, owners can retain the original certificates without a trustee. That gives you added privacy and prevents others from learning about your assets.

DelValle & Delvalle is a Panama Law Firm with years of experience in the purchase of bearer shares and nominative shares for both national companies and offshore corporations.

It is always wise to seek the legal counsel of experienced Panama attorneys at law when it comes to the choice of shares for a corporation.

Don’t hesitate to contact us in case you need further information about the difference between nominative shares and bearer shares.