Bearer bond

The bearer bond is a security that represents one claim against an issuer and is issued with a view to its transmission as a bearer bond, in which the owner of the certificate is not named by name.

Legal

The legal position of bearer bonds is expressly regulated in the law in § § 793 et seq. Since the law generally says little about bearer securities, the provisions relating to bearer bonds may be applied by analogy to bearer instruments, such as bearer shares. Ownership of bearer bonds is transferred informally by agreement and transfer to the rules of property law acquisition ( § § 929 ff BGB). The legal definition of § 793 paragraph 1 sentence 1 BGB says that each owner by the debtor may request the promised performance, as long as the debtor does not act with intent or grossly negligent ignorance. There is therefore a legal presumption that the owner of a bearer bond is also their owners. The possession of the paper and the rights vested are so closely linked that the respective bearer of the certificate is also the creditors of the issuer. In § 794 paragraph 1 BGB even the obligation for all bearer provision of § 935 para 2 BGB is confirmed, the debtor must also provide to the holder of stolen, lost or otherwise without the will of the debtor in circulation unexploded bearer bonds. The obligation of the issuer is triggered solely by the presentation of the document ( § 793 para 1 BGB). The exhibitor may therefore refuse a payment only if the issue of the certificate was invalid, objections of the instrument result (about lack of maturity) or objections directly against the owner present ( § 796 BGB).

The debtor has the bond will be issued upon payment ( § 797 BGB ), which the bearer bond - makes for securities - in addition to in § 798 BGB regulated cancellation ( at your lost or destroyed certificates) method in the squad. Dispensable is the four-year term for presentation of coupons from bearer bonds ( § 801 para 2 and 3 BGB).

Marketability

All bearer securities have a particularly high marketability because of their informal transferability. This marketability is an essential feature for the marketability of securities, so that investors remained in the possession of bearer bonds at any time through the stock exchange. This marketability is an essential criterion for investment companies, so that the deposits of savers are invested in investment at any time assessable and alienable securities ( § 8 paragraph 1 KAGG version). Because of their fungibility are bearer bonds in the market, the predominant form, such as government bonds.

Account for authorization

The issue of bearer and order bonds subject for a long time a legal approval of title by the Federal Minister of Economics ( § 795, § 808a BGB). The authorization requirement in force until December 1990 was the Federal Minister of Finance is a certain responsibility for the functioning of the capital market. The provisions had been settled that the federal government had to approve the issuance of bearer and order bonds, if this seemed necessary to safeguard the functioning of the capital market or the protection of the currency. These provisions have been repealed in December 1990 for the purpose of capital market liberalization. Since then the issue of bonds is not subject to public law restrictions, in particular there is no public approval by more that can serve as a legal basis for subsequent interventions and changes in the terms of issue of issued bonds.

Issuers of bearer bonds

As issuers of bearer bonds issuable companies come from the Banking Industry, trade and traffic in question. Emission Able companies are formally especially when their bearer bonds to the regulated exchange trading according to § § 32 et seq Exchange Act have been approved. Public debt of the Federation, the Special Fund of the Federation and the Länder are automatically allowed by § 37 of the Exchange Act for trading and require no approval process. Admitted to trading bearer bonds meet only the technical requirements for trading; a seal of approval for a permanent credit rating of the bond debtor is not involved. Rather, the investor - for example by consulting with banks - to examine the repayment risk of the bonds at any time. It will also help ratings from rating agencies that regularly publish issuer ratings.

Types of bearer bonds

In case of bank bonds, corporate bonds and government securities shall be tested in respect of their ability to always make sure that they were issued as bearer bonds ("bonds to bearer "). Convertible bonds, cash bonds and certificates are bearer bonds. While savings bonds regularly belong to the order bonds, mortgage bonds of the mortgage lenders may be issued in registered form; Savings certificates and savings bonds are registered bonds generally.