Definition: A bond certificate is a document that states the details of the bond including the bond issuer’s name, the bond par value or face amount, the interest rate, and the maturity date. Bond certificates are in effect a receipt for the bondholder that shows evidence of the bond ownership as well as the terms of the bond.
What Does Bond Certificate Mean?
When companies begin the bond issuing procedures, they must have the state and federal authorities approve their bond authorization issuances. Then companies can have bond certificates printed for each bond they are authorized to issue.
Example
Although it is always a good idea for bondholders to get the bond certificates of any bonds they own, it’s not always required. For instance, a registered bond is documented by the issuing company and the bondholder is recorded in the company records. This bond holders don’t have to physically possess the bond certificate in order to prove they own the bond. The bond issuer will have a record of all the bondholders on file. If a bondholder sells his registered bonds, he must notify the issuing company to update their records.
Many bond certificates are unregistered and do not have the bondholder’s name printed on the front. These certificates are called bearer bonds. Bearer bonds must be locked away and secured because their title transfers with ownership. In other words, a bearer bond is exactly like cash. The person in passion has the title. If someone stole bearer bond certificates, they could try to collect interest payments or even sell them back to the issuing company.
