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What is Bond Power?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 12 September 2016
  • Copyright Protected:
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    Conjecture Corporation
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Sometimes known as an assignment separate from certificate, a bond power is a legal form that is used to transfer ownership of registered bonds from a current owner to a new owner. In areas of the world where this type of document is in active use, the bond power makes it possible to transfer that ownership without requiring the endorsement of the bond certificate. The exact format of the document will vary, depending on requirements that are determined by local laws and regulations.

While the data needed to prepare a bond power will vary from one setting to another, there are a few types of information that are normally included. The names of the current bondholder and the recipient are rarely omitted from the document, although there are situations where aliases or other data may be substituted. The date that the transfer is to take place is also often found in the bond power detail, along with a basic description of the bond that is being transferred. In nations where required, the document may also have the place for signatures of the two main parties, as well as room for the stamp and signature of a notary public.

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Along with making it unnecessary for the transfer to involve endorsing a the bond certificate, the bond power also makes sure that the new owner is provided with the same level of protection against default as the previous owner. In the event that the issuer of the bond should fail to pay off the bond issue as promised, the terms of the document make it possible for the holder to take legal action and recover the loss by laying claim to the securities that underwrite the bond. While there are no guarantees that the holder would completely recover the amount of the initial investment, the bond power does help to ensure at least a portion of the loss is offset by the sale of those assets pledged as collateral for the bond itself.

With most examples of the bond power, the document provides for the appointment of an attorney or other legal professional to function as the bond trustee during the transfer process. This helps to minimize the potential for the interests of either party in the transfer from failing to comply with the terms outlined in the purchase or transfer agreement. Utilizing the services of an attorney also ensures that the process is handled in a manner that meets the legal standards for the area where the transfer is conducted.

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