A Lost Instrument Bond is required when a person or corporation has lost, mislaid or destroyed an original document that evidences ownership. Such instruments can be certificates of stock ownership, life insurance policies, common or preferred stock as well as federal, provincial, municipal or corporate bonds. The bond of indemnity, as it is also called, provides that the issuer of the replacement security will not suffer economic loss should the lost instrument turn up later.
Lost Instrument bonds fall into two groups – fixed and open penalty. The amount and type of bond required are specified by the obligee. A lost instrument bond required for replacement of stocks and bonds is usually an open penalty bond due to the fluctuation of securities. A fixed penalty bond would be used for the replacement of bonds fixed/set a dollar amount.
The principal is required to furnish an Affidavit of Loss, stating the circumstance under which the document was lost and if the document was endorsed, making it readily negotiable.
Bond Protects Against Losses
The Lost Instrument Bond guarantees that the principal or obligor (you, the certificate holder), bound in agreement with the surety, will protect the beneficiary or obligee (transfer agent and/or issuer of the stock or bond) against losses that may arise if your lost certificate surfaces and is negotiated with an intent to commit fraud.
Note: New Canada Savings Bonds provide their own bond of indemnity wording to be forwarded along to the surety with application.
Cost for Bond
Typically, the cost is 3% of the current market value of the stock or fixed income bond certificate that you are replacing.
NOTE:
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The following applies ONLY to applicants that reside and/or operate within North America
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Foreign applicants (outside North America – individual or corporate) must contact Travelers Guarantee Company of Canada directly for further instruction. Click here for contact information.
