DR Glossary

DR Glossary provides definitions of Depositary Receipt and market terminology
that will help you navigate through our site.

1-9 A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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1042S

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 types of 1099 forms:
1099B - Reports the proceeds from the sale or the exchange of securities
1099DIV - Reports dividend income
1099INT - Reports interest income
1099OID - Reports income from an Original Issue Discount

Securities Exchange Act of 1934

The statute establishing the U.S. Securities and Exchange Commission (SEC) and providing for the regulation of securities exchanges and OTC markets. Issuers whose securities trade in the U.S. must either register under the 1934 Act or obtain an exemption.

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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.)

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.

Administrator

An individual named in a court appointment to manage or distribute a decedent's estate when there is no will.

Administrator De Bonis Non

A person appointed by a probate court to administer the remainder of an estate which was not included in a previous administration.

Affidavit

A letter, statement or form that has been notarized (sworn).

Affidavit of Domicile

A notarized written document that affirms the legal address of a decedent.

Affidavit of Loss

A notarized form describing the circumstances of the loss of securities. This affidavit is required along with a 2% surety premium 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

Also known as an ADR. A depositary receipt is a negotiable certificate that usually represents a foreign company's publicly traded equity or debt. Depositary Receipts are created 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.)

American Depositary Share

Also known as an ADS. Securities issued by an American Depositary representing ownership interests in the deposited securities of foreign companies. One ADS may represent a fixed number, or fraction, of deposited securities, referred to as the "ratio".

Arbitrage

The act of purchasing securities on one market for immediate resale on another in order to profit from a price discrepancy. Profits taken in the securities of companies about to be bought by other companies.

Attorney In Fact

An individual who has been authorized to transact business for another person.

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B Notice

A notice sent to a taxpayer for failure to supply a certified Tax Identification Number.

Baby Bond

A convertible or straight bond having a par value of less than $1,000.

Back-End Load

A fee paid when an investment such as a mutual fund or an annuity is sold or surrendered by the owner. Some investments have declining back-end loads in which the fee is reduced every year.

Bear Market

A declining market.

Bearer Bond

Bonds that are not registered in the owner's name. The bond is negotiable by the person who possesses it - the bearer. Interest is paid to a bearer bond holder when they submit a "coupon" - a detachable stub at the bottom of the bond. Bearer bonds are no longer issued.

Beneficial Holders

Securities holders who, for safety or convenience, keep their holdings within their broker's accounts (in nominee or "street name"). These holders will not appear directly on the register of the security, but will appear in the holdings of the Depositary Trust Company (DTC) or in the nominee account of their broker. Beneficial holders enjoy the full advantages of ownership.

Bifurcated Structure

Under a bifurcated structure, Rule 144A ADRs are offered to QIBs in the US and Regulation S DRs are offered to offshore investors outside the issuer's domestic market. The two classes of DRs are offered using two separate DR facilities and two separate Deposit Agreements. The Regulation S DRs may be 'folded' or deposited into a "side-by-side" Level I DR program following temporary resale restrictions into the US when the securities are considered seasoned and no longer restricted.

Blue-Sky Laws/Exemptions

Blue-sky laws are state laws enacted to prevent the sale of securities of fraudulent enterprises by regulating the sale of corporate securities. A Blue-sky exemption enables companies with a Level-I depositary receipts program to extend the solicitation of their shares by brokers to the retail community in many states. Companies listed on a U.S. Exchange automatically receive most Blue-sky exemptions.

Board of Directors

The managers of a company, usually elected by the stockholders, who have final decision making authority for the company or corporation.

Book Entry (Book Shares)

An account of electronically held registered shares for which there are no physical certificates.

Books Closed

From time to time the depositary bank may "close the books" on an Issuer depositary receipt program pursuant to the terms of the deposit agreement. The closing of books may be done for a number of reasons including, but not limited to, a request by the company prior to a public announcement, a difference between a local record date and a DR record date, a corporate action, or a regulatory matter. The "books closed" means no deposits of additional shares will be accepted, or may mean that deposits may only be accepted upon receipt of certain legal certifications. Following the period the "books are closed," the depositary bank will usually announce that the books are open for issuance. If there is a "books closed" notice in connection with a DR Program it is advisable to contact your financial advisor or the depositary bank for additional information.

Books Open

Following the period the "books are closed," the depositary bank will usually announce that the books are open for issuance. If there is a "books closed" notice in connection with a DR Program it is advisable to contact your financial advisor or the depositary bank for additional information.

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.

Bull Market

An advancing market.

BuyDIRECTSM

A direct stock purchase and sale plan that includes allowing both existing and new investors to make an initial purchase of stock directly from the company (also known as direct purchase). The term BuyDIRECT is exclusive to the Bank of New York Mellon.

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C Notice

A notice from the IRS to the payers of earnings (such as dividends and interest) to begin backup withholding on a taxpayer (security holder). The security holder must contact the IRS directly to resolve the issue.

Call

The issuer's right to redeem bonds or preferred stock before their maturity date. The first date when an issuer may call securities is specified by the issuer when the securities are issued.

Call Option

The right to buy shares of stock at a predetermined price before a specified date in exchange for the payment of a fee called a premium. The buyer does not have to pay the full price for the stock (unless the option is exercised). In this manner, the buyer can control a larger portion of stock with less money than would be required to buy the stock itself.

Capital

Wealth in the form of money or property, owned, used or accumulated in business by an individual, partnership or corporation. Any form of material wealth used or available for use in the protection of more wealth.

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.

Capital Reorganization

Any fundamental, voluntary change in the financial structure of a company.

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 1 share, a check is generally issued to the shareholder, reflecting the share price multiplied by the fraction of a share owned.

Cede & Co.

The nominee name used by the DTC (Depositary Trust Company.)

Central Securities Depositary (CSD)

The general term for an automated, local securities clearing center for settling trades and safekeeping securities for its participants.

Certificate

A written instrument that shows ownership of a designated number of shares in a corporation or a debt by the issuer (bond).

Certificate of Appointment

A legal document evidencing a person's present possession of an office or position (such as executor, administrator, personal representative, guardian, etc.)

Class Action

Legal action brought against a company by a group of individuals (the class) who allege to have suffered a financial, physical, or other loss due to malfeasance by the company. The agent's role in a class action is often to solicit a response to an issue from the potential members of the class (often shareholders). The solicitation's mailing is known as a Notice of Pendancy.

Class of Stock

Types of ownership in a corporation. The two main classes of stock are preferred and common, with each often having sub classes, such as Class A Common or Preferred Series B. The distinguishing features, which are set forth in the corporation's certificate of incorporation, include: voting rights, dividends, conversion rights and liquidation privileges.

Clearstream

The international clearing organization located in Europe, responsible for holding, clearing and settling international securities transactions. Clearstream is the combination of Cedel and the German clearing center.

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 transfer agent via electronic tape.

Common Stock

Security which represents ownership in a corporation. Common shareholders have the lowest priority claim to assets in the case of bankruptcy, but can receive a dividend and usually have voting rights.

Community Property

Property owned in common by a husband and wife, acquired during or as an incident of their marriage.

Conservator

A person who is named by the court to be legally responsible for the welfare and property of another individual.

Conversion Agent

An agent that is appointed to exchange a convertible security.

Convertible Bond

Bonds that give the investor the option to change them into stock rather than receiving a cash redemption. The terms are set at the time of issue and they include the date of conversion and how many shares the bond can be exchanged for.

Convertible Stock

Convertible stock, generally a preferred issue, is exchangeable for a set number of units 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 of 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.

Coupons

Detachable stubs attached to bearer bonds that must be presented to the paying agent for the payment of interest.

Court Appointment

A court document that officially names the individual or institution that can transact business for a decedent or incompetent individual.

Credit Date

The date when shares are issued or credited into an account or a new account is created.

Cumulative Preferred

A type of dividend payment. Payment of cumulative preferred dividends can be postponed due to insufficient earnings or other reasons and accumulate until they are paid out. The payment of cumulative preferred dividends takes precedence over the payment of common stock dividends.

CUSIP

Committee on Uniform Securities Identification Procedures. A CUSIP number is the universal security identification for each type of security. It provides banks, brokers, and exchanges with a uniform number that identifies a company through out all phases of securities processing and recording.

Custodian

1. A trustee appointed to manage assets held in the name of a minor.
2. An agent that safekeeps securities for its customers and performs dividend and interest collection services. With regard to ADRs, the custodian may be the overseas branch, affiliate or correspondent of the depositary bank and is responsible for holding the ordinary shares underlying the ADRs.

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Debenture

The most common type of bond, debentures are backed by the credit of the issuer instead of the assets of the company.

Debit Date

The date when shares are issued or debited out of an account in certificate form or cash check. All or some of the shares from an account are removed.

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.

Depositary

A Depositary is a bank that issues Depositary Shares representing the securities of a non-U.S. issuer that the Depositary custodizes in the local market. The Depositary also acts as a registrar, transfer agent and corporate action agent and cancels the Depositary Shares for withdrawal of the non-U.S. securities, all in accordance with a deposit agreement with the non-U.S. issuer for a sponsored program, and in accordance with the form of Receipt or Depositary Share for an unsponsored program.

Deposited Securities

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.

Depository Trust Company

The Depository Trust Company (DTC) is the world's largest securities depository, holding nearly $20 trillion in assets for its Participants and their customers. DTC is a national clearinghouse for the settlement of trades in corporate and municipal securities and performs asset services for its participating banks and broker/dealers. DTC's network links more than 11,000 broker/dealers, custodian banks, and institutional investors, as well as transfer agents, paying agents, and exchange and redemption agents for securities issuers. DTC is owned by members of the financial industry.

Direct Registration

A new service in the securities industry which allows shares to be owned and tracked electronically without the need for a physical certificate.

Disbursement Agent

A bank or trust company that has contracted with a client company to serve as agent on the merger of two or more companies, in which the shareholder receives cash in exchange for securities (at a price determined by the merger agreement.) The client company deposits the funds with the disbursing agent in order to pay for all securities presented under the terms of the merger. The Disbursement Agent also performs the record keeping functions associated with the transactions on behalf of the client.

Discount Broker

Limited service stockbrokers who execute buy or sell orders on securities for their customers for reduced fees and commissions.

Dissenting Holders

Shareholders of a company who exercise their legal right to challenge the fairness of a Reorganization plan filed by a company.

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 or Interest Disbursing Agent

A bank, company or individual appointed by a corporation to distribute dividend income to its shareholders (or interest to its bondholders).

Dividend Rate

The rate per share declared by a corporation's board of directors that all registered holders will receive as a dividend payment.

Dividend Reinvestment

A plan set up by corporations that allows their shareholders to automatically use their dividends to purchase additional shares of the company's stock or depositary receipts representing shares of the company's stock. Dividend Reinvestment plans vary from company to company, and may include such features as Optional Cash Payment (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.

Dividend/Interest Order

Authorization from a security holder for dividend or interest payments to be issued to an individual or entity other than the registered holder. Shareholders requesting a dividend or interest order must complete a dividend/interest order form and all registered owners must sign and have their signatures Medallion Guaranteed.

Divorce Decree

The formal court document that dissolves a marriage and lists the distribution of marital assets.

Domicile

Legal home or residence.

Dow Jones Industrial Average

DJIA. The Dow Jones is a commonly used tool to measure overall stock market performance. It is an average of the prices of 30 major industrial companies, factored to adjust for distortions.

DTC

The Depository Trust Company (DTC) is the world's largest securities depository, holding nearly $20 trillion in assets for its participants and their customers. DTC is a national clearinghouse for the settlement of trades in corporate and municipal securities and performs asset services for its participating banks and broker/dealers. DTC's network links more than 11,000 broker/dealers, custodian banks and institutional investors, as well as transfer agents, paying agents and exchange and redemption agents for securities issuers. DTC is owned by members of the financial industry.

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).

Dummy CUSIP

A number or a written description used to identify a security. Dummy CUSIPs are frequently used for securities issued prior to the use of CUSIPs. In these cases, the transfer agent establishes an internal CUSIP number to assist in the identification and processing of the issue.

DWAC

Deposit/Withdrawal At Custodian. DWAC is the automated deposit or withdrawal of securities at the DTC.

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EFT

Electronic Funds Transfer. 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

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.

Employee Stock Ownership Plan (ESOP)

An employer makes a tax-deductible contribution of company stock or ADRs to a trust account and releases the depositary receipts over time for purchase by their employees (in the case of ADRs, their U.S.-based employees), increasing employee ownership of their shares.

Employee Stock Purchase Plan (ESPP)

Participating employees purchase company stock or ADRs with post-tax income using either payroll deductions or lump-sum payments. Plans that qualify under Section 423(b) of the IRS tax code can allow employees to make purchases through a payroll deduction, and the employees may receive a discount of up to 15% from the Fair Market Value.

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.

Escrow

Money, securities or other property held by a third party until the conditions of a contract are met.

Estate

All of the property, money, securities and debts of a person at the time of death.

Estoppel

Lost Securities departments are sometimes known as Estoppel departments. Estoppel is a legal term referring to preventing an individual from asserting as true something that they had previously claimed was false or claiming something is false that they had previously asserted was true.

Euroclear

Euroclear is a settlement system for domestic and international securities transactions, covering bonds, equities, DRs and investment funds. Market owned and market governed, Euroclear provides securities services to major financial institutions located in more than 80 countries. In addition to its role as International Central Securities Depositary (ICSD), Euroclear also acts as the Central Securities Depository (CSD) for Dutch, French, Irish and UK securities. CIK, the CSD of Belgium, joined the group in January 2006 and was renamed Euroclear Belgium.

Euroclear/CEDEL Bridge

An electronic trading and settlement link between the two depositaries.

Exchange Agent

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.

Executor

Person(s) appointed in a will to administer an estate.

Expiration Date

The last date on which an offer can be accepted. Expiration dates are generally associated with tender offers, subscriptions, rights, offerings, warrants, options, etc.

Ex-Dividend Date

The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. This date set by the NYSE (and generally followed on other U.S. exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is marked with an x in newspaper listings on that date.

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Federal Inheritance Tax Waiver

Authorization by the government to transfer the U.S. securities of a non-citizen decedent without imposing any taxes.

Fiduciary

An individual or institution responsible for acting for the benefit of another on specified matters or for holding funds in trust. A Depositary is not a Fiduciary.

Flowback

The cancellation of issued ADRs resulting from net U.S. selling, reducing the liquidity of the ADRs. While a concern at one time, experience has proven that the effects are minimal.

Form 20-F

An SEC filing requirement for any non U.S. company listed on a U.S. Exchange (NYSE, NYSE Amex, NASDAQ). In broad terms, Form 20-F is a 1934 Exchange Act disclosure filing which requires a detailed description of the registrant's business, including its development during the past five years. The filing must contain financial information either prepared according to, or reconciled to, U.S. GAAP. Also required are details regarding sales and revenues which are based upon categories of activity and geographical markets as well as a management discussion and analysis of the registrant's financial conditions and results of operations. Details regarding management and itemized historical financial information must also be included. Issuers registering securities under the 1934 Exchange Act or the 1933 Securities Act are subject to the continuing reporting requirements mandated by the 1934 Act, which includes specifically for non-U.S. private issuers: annual reports and certain other reports which must be filed on a continual basis.

Form F-1

An SEC registration statement under the 1933 Securities Act for any non-U.S. company making its first offering of securities in the United States. Form F-1 requires a description of particulars, such as: the use to which the proceeds of the offering will be applied, the names of the principal underwriters and the amount of securities underwritten by each, the underwriters' fees and the terms of the securities being registered. Other items required with the registration statement include information found in an annual report or Form 20-F, such as a description of the registrant's financial conditions and results of operations, narratives regarding directors and officers, and financial information either prepared according to, or reconciled to U.S. GAAP.

Form F-6

An SEC filing requirement for any non-U.S. company issuing Depositary Receipts. Form F-6 is the registration statement for Depositary Receipts as required by the Securities Act of 1933.

Fractional Share

Less than a full share of stock. Fractional shares generally result from either purchases from 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 their shares certificated, the issuer will generally issue a cash-in-lieu check for the value of the fractional share.

Fungible

Securities representing the same class of equity or debt that may be traded across multiple markets.

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Global BuyDIRECTSM

A direct stock purchase and sale plan that allows both existing and new investors to make an initial purchase of Depositary Receipts directly from the company (also known as direct purchase). The term Global BuyDIRECT is exclusive to The Bank of New York Mellon.

Global Depositary Receipts

GDRs, Same as ADR but typically not registered with the U.S. SEC on Form F-6, and are therefore generally restricted in terms of resales.

Global Registered Shares

Global Registered Shares are the actual (ordinary) shares of a non-U.S. company, which trade both in the home market and the U.S.. The same share certificate is used in both the U.S. and home market. Separate registrars in the U.S. and home country are maintained. In most cases, purchases occurring on a U.S. exchange would be reflected on the U.S. Registrar. Global Registered Shares may also be eligible to list on exchanges in addition to the U.S. and home country. Global Registered Shares are issued pursuant to the company's charter and generally require a charter amendment to create or modify. In the home market, material modifications to local trading settlement practices, ownership transfer procedures and certain other procedures may be necessary. Due to legal and practical considerations, a Global Registered Share structure may only be appropriate in certain jurisdictions and for a limited number of companies with unique goals.

Grantor

The person or organization that creates a Trust for the benefit of another person or organization.

Guardian

An individual or institution appointed by the court to administer the affairs of a minor or an individual declared incompetent.

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Holder

Person who is the ultimate or beneficial owner of the ADR or ADS.

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Indenture

The formal agreement between the issuer of a bond/debenture and the bondholder. The indenture lists all of the rights and obligations of the bondholder, trustee and issuer.

Inheritance Tax Waiver

Authorization by the tax department of a decedent's estate 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.

Institutional Investor

An entity such as an insurance company, investment company, mutual fund, pension fund or trust department of a bank, that invests large sums in the securities markets.

International Security Identification Number (ISIN)

An identification number for securities traded in non-U.S. markets.

Inter-Vivos Trust

A trust established during the grantor's lifetime. Also known as a living trust.

Interest

Compensation for the use of money. Bondholders receive interest payments from the bond issuer.

Intestate

Person who has died without leaving a will.

Investment Bankers

Act as underwriters for a stock offering. The underwriter buys all the public shares of a company presenting an IPO at a set price and resells them to the public (on an exchange or OTC), hopefully at a profit.

IPO

Initial public offering. A privately held company converts to being a public company by holding an initial public offering, 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.

IPO Prospectus

The prospectus for an IPO is a legal document prepared for all potential investors. It is a detailed analysis of the company's financial history, its products or services, and its management's background and experience. The prospectus also assesses the various potential risks that the company faces.

IRA

An Individual Retirement Account. A retirement plan which a person can establish for his/herself.

Issue

A specific class of security, such as common stock or Class A preferred stock. One issuer can have any number of different issues.

Issuer

The company, government, depositary or other legal entity which issues securities such as common stock, preferred stock, ordinary shares, bonds and ADRs/GDRs (issued by a foreign company).

IVR

Interactive Voice Response. An automated phone attendant that can be programmed to answer caller questions by having them respond to voice prompts, and playing back pre-recorded messages.

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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).

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Keane Tracers

A private company authorized by various clients to locate shareholders who have unclaimed properties. When the shareholders are located, Keane Tracers obtains a signed contract from the shareholder authorizing Keane to act on his/her behalf in retrieving the assets. Keane charges a percentage of the gross asset value for providing this service. Keane forwards the signed contract and any instructions to our investor relations department for processing.

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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 W-9 form and an Affidavit of Loss (to expedite processing if the shareholder has lost the securities.)

Letters Testamentary

A court document that appoints the executor or administrator to distribute the assets of an estate.

Level-I Depositary Receipts

Depositary Receipts that trade in the OTC public markets in reliance on Rule 12g3-2(b). Level I Depositary Receipts provide issuers with a simple and efficient means of building a core group of investors with minimal regulatory and reporting requirements. Level-I Depositary Receipts are traded in the U.S. OTC market and on some exchanges outside of the United States. The issuing company does not have to comply with U.S. GAAP or full Securities and Exchange Commission (SEC) disclosure. Establishing a Level-I program is generally viewed as the first step into the U.S. public equity market. The depositary shares are registered on Form F-6.

Level-II Depositary Receipts

Depositary Receipts that are listed on a U.S. exchange or NASDAQ because the non-U.S. issuer has registered the class of deposited securities under the 1934 Exchange Act and has entered into a listing agreement. These Depositary Receipt programs require a greater degree of SEC reporting than Level-I programs. The issuer must register with the SEC, reconcile to U.S. Generally Accepted Accounting Principles (GAAP) and meet the listing requirements of the U.S. Exchange on which they choose to list. At the time of listing, a Level-II Depositary Receipt issuer does not register a public offering. Typically, Level-II Depositary Receipt issuers have already entered the U.S. marketplace as Level-I issuers. The Depositary shares are registered on Form F-6 and the company registers on Form 20-F.

Level-III Depositary Receipts

Level-III Depositary Receipts are sold in a Public Offering. The issuers register the offering under the 1933 Securities Act and report under the 1934 Exchange Act. Sponsored Level-III Depositary Receipts are listed on a U.S. Exchange. The issuer must register with the SEC, reconcile to U.S. GAAP and meet listing requirements of the U.S. Exchange on which it chooses to list. The Depositary shares are registered on Form F-6, the deposited shares are registered on Form F-1 and the company registers on Form 20-F. Level-III programs typically generate the most U.S. investor interest because capital is being raised.

Listed Securities

U.S. securities listed on a U.S. stock exchange. The issuer has filed a listing application with the exchange and registered the securities with the SEC under the Securities Exchange Act of 1934.

Listing Agent

A bank designated to arrange for the listing of securities on an exchange.

Liquidation

The sale of all shares held in an account.

Living Trust

Also known as an Inter-Vivos trust, a living trust is a trust established during the grantor's lifetime.

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Market Maker

Securities dealers in the U.S. over-the-counter market standing ready to buy or sell securities for which they quote prices.

Maturity Date

Time when a debt or other obligation becomes due. With a bond it is the date that it can be redeemed.

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.

Mutual Fund

A collection of stocks, bonds or other securities owned by a group of investors and managed by a professional. When investors put money into a fund, it is pooled with money from other investors to create much better buying power then they would have investing on their own.

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Naked Owner

Under a will, a naked owner is the party who will receive what is left of a deceased Usufruct's estate after all specific bequests have been fulfilled. This type of registration is only legal in Louisiana and Texas.

NASDAQ

National Association of Securities Dealers Automated Quotation System. An electronic network which lets brokers trade from their offices all over the country. NASDAQ caters to large, mid-sized, and small growth companies. It lists close to 5,000 companies in technology, telecommunications, banking, retail and other growth sectors.

NASDAQ National Market System

A system for reporting transactions of active over-the-counter securities. These quotations, printed in most daily newspapers in the U.S., include the volume, high, low and last sale price of the day.

National Association of Securities Dealers (NASD)

Originally established in 1939 to regulate the over-the-counter market, the NASD is a consortium of brokers and dealers responsible for establishing the legal and ethical standards of its members.

NAV

Net Asset Value. For a mutual fund, it is computed by dividing the assets in the fund by the number of outstanding shares.

New York Share

A New York Share ("NYS") represents the equity outstanding in the U.S. of a company that allows for a portion of its capital to be outstanding in both the home market and the U.S. market, through more than one share registrar. A NYS is issued by a U.S. registrar and trades on a U.S. exchange, and a separate registrar is maintained in the home country. Like a DR, a NYS can be used to raise capital, to make acquisitions, and for U.S. employee stock ownership plans and dividend reinvestment plans. Legal documentation typically includes a NYS Stock Transfer Agreement, SEC Form 20-F and stock exchange listing agreement.

New York Stock Exchange (NYSE)

Founded in 1792, this is the largest and oldest organized securities exchange in the U.S. It operates as an auction market where orders are brought to the trading floor for execution. Specialists posted at various locations on the floor are assigned specific stocks for trading to centralize the flow of trades. The specialist brings external buyers and sellers together in addition to buying and selling for their own accounts. Requirements for a company to trade on the NYSE: pre-tax earnings of $1 million or more; outstanding shares of at least 1.1 million and a minimum market value of $20 million.

Nominee

Legal entity established by a custodian solely for the purpose of registering securities. A custodian will register customer securities in its nominee name for ease of handling subsequent transfers or denomination changes, interest and dividend collections and other corporate actions. The customer remains the beneficial owner.

Notice of Pendancy

A solicitation sent to the potential members of a class action suit.

NYSE Composite Index

Measures the performance of all the stocks on the NYSE broken into the following four sectors: industrial, utility, transportation and financial.

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Odd Lot

An amount of stock less than a normal trading unit (which is 100 shares).

Open End Fund

A type of mutual fund that sells as many shares as investors want. As money comes in, the fund grows. If investors sell, the number of outstanding shares drops. Most mutual funds are Open End Funds.

Optional Cash Payments

Additional funds sent in by an individual in a dividend reinvestment plan account; used to purchase additional shares.

Original Issue

Shares of stock newly issued through a public offering, an exercise of a stock option, a merger, or a special reserve set up for a special purpose.

Original Issue Discount

The difference between the price of a debt instrument (bond or debenture) and its stated redemption price at maturity.

Over The Counter Market (OTC)

A common term utilized to describe the market for shares that are not traded on any of the U.S. Exchanges. Regulated by the NASD, the OTC market is comprised of a network of broker/dealers who complete transactions via telephone or computer rather than in a centralized marketplace. The OTC brokers are usually referred to as "market-makers" for the particular security they are transacting. A number of OTC issuers are listed in the "pink sheets"( a weekly NASD publication covering OTC securities and their market-makers) and/or the "Electronic Bulletin Board", an on-line version of the pink sheets for companies registered under the 1934 Exchange Act.

Owner

Person in whose name a security is registered on the books of the Registrar or Depositary. Also referred to as a Registered Owner or Holder.

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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.

Pink Sheets

The colloquial name given to the OTC market where Level-I Depositary Receipt trade. The name is derived from the sheets of pink paper upon which the indicative quotes and the names of the market-makers for the stock were once printed.

PORTAL

Private Offering, Resales and Trading through Automated Linkages. A screen-based automated trading system providing security descriptions and pricing information. PORTAL was developed by the NASD to support the distribution of private placements and to facilitate liquidity in the secondary trading of Rule 144A securities.

Power of Attorney

Instrument authorizing a person to act legally for another either generally or in a specified manner.

Preferred Stock

A less risky form of stock ownership, but also with potentially less reward. Preferred stock holders can have fixed dividends that may not increase when the dividends for the common stock increase.

Pre-Release

An ADR, or issuing an ADR, secured by cash collateral rather than deposited securities. Pre-release ADRs are used by brokers who need to settle cross border trades.

Private Placement

A securities offering that is not registered with the SEC and therefore is not available to the general public. Private placements are sold to sophisticated investors with resales to Qualified Institutional Buyers (QIBs) permitted by Rule 144A.

Probate

Court procedure by which 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.

Proxy

The authority or instrument that transfers a shareholder's voting rights to an agent of the shareholder. Proxy may also mean the person empowered to act as agent to vote in place of the shareholder. Depositary Receipt holders: Foreign companies seek the participation of ADR/GDR holders in their Annual General Meetings through distribution of proxies or voting instruction cards which detail the various resolutions to be voted on at the meeting. Technically, voting instruction cards are not proxy cards since Depositary Receipt holders do not own shares directly. They simply instruct the Depositary on how to vote its proxy.

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Qualified 423(b) Plan

An ESPP plan named for the IRS tax code section that provides preferential tax treatment to employers that offer these plans. Qualified 423(b) plans allow the employee to purchase shares as a payroll deduction at a discount (up to 15%) from the fair market value.

Qualified Institutional Buyer (QIB)

Investors eligible to participate in the Rule 144A market, primarily institutions that manage at least $100 million in securities including banks, savings and loans, insurance companies, investment companies, public employee benefit plans, employee benefit plans under ERISA, or an entity owned entirely by qualified investors. Also included in this area are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.

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Ratio

The number of underlying shares (whether multiple or fractional) represented by a single ADS.

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 Bond

Bond whose ownership is recorded on the bond and on the records of the issuing organization or their agent.

Registered Owner

The individual or organization who owns a security. Investors who elect to hold their shares directly, rather than through a brokerage are considered "registered owners". Share positions for registered owners will appear on the books of the registrar/depositary.

Registrar

The agent who maintains records of ownership of all stock and bonds issued by a company/issuer.

Registration

The format or legal title showing a security's ownership.

Regulation S (Reg. S)

Regulation S clarifies the conditions under which offers and sales of securities outside the United States are exempt from SEC registration requirements. Regulation S was adopted by the SEC in 1990 in conjunction with the adoption of Rule 144A. These measures, taken together, significantly enhance the liquidity of a private placement or global offering.

Restricted Securities

1. Shares of stock in a corporation that are not freely transferable. See also Stock Legend.
2. A security not registered with the Securities and Exchange Commission under the 1933 Securities Act and, therefore, may not be sold publicly in the U.S.

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. The shareholder must surrender their certificates in a reverse split, and new ones will be issued to them. (Example: a 1 for 2 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.)

Rights Offering

Distribution to existing shareholders of rights to purchase additional shares as part of a primary offering. A company uses a rights offering when it raises capital by selling new shares to existing shareholders rather than to the entire investment community. The number of rights a shareholder receives is based on the number of shares the holder owns. Rights offerings are generally public offerings unless offered only to sophisticated investors or QIBs in a private placement.

Road Show

A public relations/marketing event in the securities industry which acts as an informational forum between the issuer and potential investors to generate interest in the issuer's shares. Road shows generally occur in the 30 day period preceding an offering of Depositary Receipts.

Roth IRA

A non deductible IRA, effective for tax years after December 31, 1997. Taxpayers receive no up-front tax deduction for annual IRA contributions (up to $2,000 individual, $4,000 for joint filers). However, if distributions are taken after the five-taxable year period (beginning with the first year that a contribution was made to a Roth IRA) and the taxpayer is at least 59 1/2 on distribution, all investment earnings in the Roth IRA are exempt from federal income tax. No tax is due upon withdrawal.

Round Lot

A unit of trading, generally 100 shares. On the NYSE the unit of trading is generally 100 shares. In some inactive stocks, the unit of trading is 10 shares.

Rule 12g3-2(b)

An exemption from supplying information under the 1934 Exchange Act. To qualify for this exemption, the issuer (or a government or agency of its country) must furnish the SEC, on a continuing basis, copies of information, pertinent to investors, that the issuer makes public in its own country, files with a stock exchange or distributes to its security holders.

Rule 15C211

Under SEC Rule 15C211, a U.S. securities broker or dealer may not publish a quotation for any security unless certain information concerning the issuer is available and the broker or dealer has a reasonable basis for believing that the information is accurate. The information requirement is satisfied, in simple terms, if:
A) a Securities Act registration statement (F-6, F-1) has been filed within the last 90 days,
B) the issuer is complying with filing requirements and has in its records the issuer's most recent annual report,
C) the issuer is complying with Rule 12g3-2(b),
D) the broker or dealer has on record information relating to the issuer, its securities, its business, products and facilities. Management information, financial statements of the issuer and certain other data must also be on record.
Form 15C211, also known as Form 211, refers to the specific filing form a broker/dealer must provide containing the information necessary to publish a quotation on the company.

Rule 144A

SEC rule permitting Qualified Institutional Buyers (QIBs) to trade privately-placed securities without one or two years holding requirement, thereby substantially increasing the liquidity of those securities.

Russell 2000

This index measures the smallest 2,000 of the 3,000 largest publicly traded companies.

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Secondary Market

The market where existing securities are traded among investors through an intermediary, such as an organized exchange like the NYSE, NYSE Amex and Nasdaq.

Securities Act of 1933

The "truth in securities act" requires among other things, the distribution of prospectuses and the filing of registration statements prior to the public sale of certain securities. The statements disclose substantial information on the issuer and the issue. All sales of securities in the U.S. must either be registered under the '33 Act or be exempt.

Securities Act of 1934

Regulates national securities, listing securities, purchase and sale of securities via an exchange and the creation of the Securities and Exchange Commission.

Securities and Exchange Commission (SEC)

Created in 1934, the SEC is empowered to issue regulations and to enforce provisions of the federal securities laws and its own regulations, including regulations governing the disclosure of information in connection with securities being offered for sale to the public. The SEC is also responsible for regulating the activities of securities traders. The SEC sees that investors are fully informed about securities being offered for sale and prevents misrepresentations, deceit and other types of fraud involved with securities transactions.

Security

A broad term that refers to stocks, bonds and other investment tools.

Series

The designation assigned to multiple issues of preferred stock or multiple classes of common stock issued by the same corporation, such as "Series A."

Single-Listed DRs

A Single-Listed Depositary Receipt is a DR whose underlying share is not publicly traded in the issuer's home market. The DR is listed and traded only in the DR market, and cancellation will not result in delivery of a locally listed ordinary share.

Small Estate Affidavit

A notarized document which states the value of the estate and the individual who can distribute the proceeds from the estate.

Sole Proprietorship

A business owned by one individual.

Specialist

A member of a securities exchange who is a market maker in one or more securities listed on the exchange floor to whom other members go when they wish to transact or leave an order. Specialists are expected to maintain a fair and orderly market in securities in which they make a market.

Sponsored ADR

The depositary receipt program is established at the direction of the issuer and in accordance with a deposit agreement between the issuer and the depositary bank.

BNY Mellon collects fees from DR holders pursuant to the terms and conditions of the DRs and the deposit agreement under which they are issued. From time to time, BNY Mellon may make payments to the issuer to reimburse and / or share revenue from the fees collected from DR holders, or waive fees and expenses to the issuer for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the DR program. BNY Mellon may also transact with affiliated brokers and dealers.

STA

Securities Transfer Association.

Standard & Poors 500

S&P 500. A weighed average of influential stocks used to gauge overall market performance.

Stock

An equity security issued by a corporation. Some classes of stock may convey (1) a "preferred" right to a fixed dividend, (2) a "preferred" right to payment upon liquidation, and (3) a right to convert to another class of stock.

Stock Acquisition

A mutually agreed upon merger of two companies in which the holders of the companies being acquired receive the acquiring company's stock in exchange for their shares.

Stock Dividend

Distribution of profit to shareowners in the form of additional shares of stock, proportionate to the shareowner's holdings.

Stock Legend

Also called restricted stock. Shares with a stock legend cannot be sold, exchanged or transferred unless certain requirements are met. The stock certificates will have the legend printed on their face, which describes the conditions of the restrictions. Generally legend stock is issued to and held by officers or directors of a company.

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 2 for 1 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 2 for 1 split they will own 20 shares valued at $50 per share.)

Stock/Bond Power

A form used to execute the transfer of a security.

The Street

The colloquial name for brokers, many of whom have or had offices on Wall Street. "To hold one's shares in street name" means the Depositary Receipt holder chooses not to have the Depositary Receipt registered in his or her name, but rather keeps it in a broker's account within the DTC.

Street Name

Also known as nominee name. A type of account maintained by large institutions to safekeep 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.

Subscription

Offer given to existing shareholders to buy newly issued securities before the new securities are offered to others. The subscription price is set below the prevailing market price.

Successor Custodian

A person who succeeds or follows another custodian.

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 provisions for the appointment of successor trustees.

Surety Premium

The fee paid by a shareholder to cover the required insurance for replacing lost securities or by the estate of a deceased shareholder transferring shares without benefit of probate. The surety premium required in either case is generally 2% of the market value of the shares.

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T + 3

Trade + 3. A rule that requires all purchases and sales of securities to be settled by the 3rd business day following the trade.

Tax Basis

Also known as Cost Basis, it is the price at which the investor purchased his or her securities. The tax basis is required to calculate capital gain or loss after the securities are sold.

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.

TEFRA

Taxpayer Equity and Fiscal Responsibility Act. Legislation passed by Congress in 1984 that requires taxpayers to provide their correct TIN (Tax Identification Number) to financial institutions who report income from securities to the Internal Revenue Service. The TIN number is certified by completing a W-9 form. Failure to provide a certified TIN number can result in a withholding penalty of 31%.

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.

Tender Offer

An offer to purchase enough of a company's stock to gain controlling interest. A tender offer is made directly to the shareholders and does not require approval from the management of the company.

Termination

A termination is a request to end participation in a dividend reinvestment plan account. Generally the shareholder will request either that all book shares be sold, or that all book shares be issued in certificate form (and the fractional share sold.)

Testamentary Trust

Trust established by a will.

Tombstone Ads

The proposed IPO of a company is publicized through ads in the financial press. The ads are known as Tombstones because of their traditional black border and heavy print.

Trade Date

The date that the purchase or sale of securities is made.

Transfer

The conveyance of right, title 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. A transfer agent is often a commercial bank or trust company, although some large corporations act as their own agent.

Transfer on Death

TOD. A form of registration that allows the registered owner to designate a beneficiary.

Treasury Shares

Shares of a corporation, issued and later re-acquired by the corporation, held as an asset of the corporation.

Trust

Property right held by one person for the benefit of another.

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Unclaimed Properties

Also called abandoned property, it 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.)

Underwriter

An underwriter buys all the public shares of a company presenting an Initial Public Offering (IPO) at a set price and resells them to the public (on an exchange or OTC), hopefully at a profit.

Unitary Structures

Under a unitary structure, a single class of DRs is offered both to QIBs in the US and to offshore purchasers outside the issuer's domestic market, in accordance with Regulation S. All DRs are governed by one Deposit Agreement and all are subject to deposit, withdrawal and resale restrictions.

Unlisted Securities Market

There are two types of markets for unlisted securities: the OTC "pink sheet" market and private markets (e.g., 144A). Unlisted securities refer to any security that has not been admitted for trading on a U.S. Exchange (NYSE, NYSE Amex, NASDAQ). However, in practice, the term is generally used to describe OTC securities rather than privately placed securities.

Unrestricted Securities

A security which (has been registered with the Securities and Exchange Commission and therefore) may be sold publicly in the U.S.

Unsponsored ADR

An ADR program for which no deposit agreement is entered into between a depositary bank and the issuer. An unlimited number of depositary banks may issue the depositary receipts evidencing ownership of the underlying ordinary shares held in custody in the issuer's home market.

BNY Mellon may pay a rebate to brokers in connection with the deposit of shares for the issuance of unsponsored DRs; brokers may or may not disclose or pass back some or all of such rebate to the DR investor. BNY Mellon may also transact with affiliated brokers and dealers.

U.S. Payable Date

For Depositary Receipts, the date on which U.S. holders are paid the dollar dividend or the date on which the stock dividend is distributed. For dividends declared in currencies other than U.S. dollars, the U.S. payable date is generally 10 days from the payable date in the home country, to allow for currency exchange.

Usufruct

The right to enjoy the benefits of something owned by another.

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Value-Line

The most widely distributed independent investment information service, it tracks the performance of 1,700 common stocks.

Vest

The time when all or a portion of the stock options granted are available to the optionee for exercise.

Voluntary Contribution

Additional funds sent in by an individual in a dividend reinvestment plan account, used to purchase additional shares. Also known as an Optional Cash Payment.

Voting Instruction Cards

A notice in card form containing the voting issues to be discussed at a shareholder's meeting. The cards are prepared by the depositary in conjunction with the Company and sent to Depositary Receipt holders upon receipt of notice from the Company that it is conducting a meeting where issues to be voted on will be discussed. The notice is sent only if the Company's are voting shares and if the U.S. Exchange, the Deposit Agreement or the Company requires that votes be solicited.

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W-8 Form

A form used by non-US citizens to certify that they are not citizens and are therefore not liable for taxation on income from dividends, interest, sales, etc.

W-9 Form

IRS form used to certify Tax Identification Numbers for investors in securities under the 1984 TEFRA Act.

Waiver of Probate

An affidavit required for the transfer of securities from estates that have not been probated. The estate must pay a 2% surety premium for insurance on the transfer.

Warrants

A security issued by a corporation that gives the holders the option to buy a specific amount of stocks or bonds at a specified price and time.

Will

Written instrument by which a person makes disposition of his/her property, to take effect upon his/her death.

Wilshire 5000

The broadest index, the Wilshire 5000 tracks all stock traded on the OTC and the exchanges (including the S&P 500.)

Withholding

Monies that payers are required to withhold from dividends, interest payments or sales. A paying agent will withhold for a number of reasons, including the 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%. All funds withheld are turned over to the IRS.


© 2014 The Bank of New York Mellon Corporation. Depositary Receipt business and services are conducted through The Bank of New York Mellon.