Investor Services

Glossary

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- A -

Adverse claim (see also stop transfer order)

A written notice filed with a transfer agent by someone other than the registered holder indicating an interest in, or a claim against, a particular security. Once the transfer agent accepts the notice, they will not transfer the security without notifying the person filing the adverse claim. An adverse claim expires after one year unless renewed. Certain provincial corporate statutes do not provide for adverse claims. Claims against securities issued by corporations incorporated under these statutes are dealt with as stop transfers.

Agent

A person who has been appointed to act on behalf of another party. In most cases, transfer agents will require a copy of the document appointing the agent if they are being asked to take instructions from an agent instead of the registered investor.

Annual General Meeting (AGM)

Corporations are required by law to have an annual meeting of shareholders to appoint directors and auditors. If other business that requires the approval of shareholders is to come before the meeting the meeting becomes a special meeting.

Annual report

The audited financial statements and report on operations issued by a corporation to its shareholders. Publicly owned corporations are required to provide a copy to their shareholders except those who have declined in writing to receive a copy.

Ask Price

In securities markets and securities price reports, the lowest current or recorded price a security seller is willing to accept.

Authorized capital

Maximum number of shares a corporation may issue under its letters patent, articles of association or other incorporating documents. The authorized number of shares is sometimes referred to as being “unlimited.”

Affidavit of loss/Agreement of indemnity

Documents allowing use of a standardized surety bond when replacing lost, stolen or destroyed security certificates.

- B -

Beneficial owner

See non-registered shareholder.

Bid Price

In securities markets and price reports, the highest current or recorded price a buyer is willing to pay for a security.

Board lot

A standardized number of shares set by a stock exchange as a trading unit for listed shares. The number of shares in a board lot is usually based on the price per share.

Setting board lots facilitates trading because trades are executed in standard units and multiples thereof.

For example, on the Toronto Stock Exchange or TSX Venture Exchange the board lots are as follows:

Security selling price Board lot size

  • $0.005 to $0.095 1,000 shares
  • $0.10 to $0.995 500 shares
  • more than $1.00 100 shares

 

Book based shares

Traditionally shares were evidenced by physical certificates registered in the name of the holder. Increasingly, the record of ownership of shares consists of an entry in an electronic record keeping system. Shares held in electronic form with no physical certificate are called book-based shares.

Book based system

An electronic record keeping system for tracking the ownership of securities and the settlement of securities transactions. The term is mostly used in reference to the record keeping systems used by depositories such as the Canadian Depository for Securities.

Book value

The book value of a corporation is the value of the assets to which the shareholders would theoretically be entitled if the corporation was liquidated. It consists of the total assets less the corporation’s liabilities and the value of intangible assets such as goodwill. The book value of a share is the book value of the corporation divided by the number of outstanding shares.

Broker

A securities firm or an individual associated with a firm that is registered with a securities commission to trade in securities; most brokerage firms are members of a stock exchange.

- C -

Canadian Depository for Securities (CDS)

CDS is the Canadian national depository, the clearing and settlement hub that supports Canada’s equity, debt and money markets by providing a facility for its participants to hold assets and settle trades. It tracks assets and transactions on a book-based system.CDS is owned by major Canadian chartered banks and members of the Investment Industry Regulatory Organization of Canada (IIROC) and TSX Inc.

Canadian Securities Administrators (CSA)

The CSA is a forum for the 13 securities regulators of Canada's provinces and territories to coordinate and harmonize regulation of the Canadian capital markets.

Capital gain (or loss)

Profit (or loss) resulting from the sale of an asset in respect of which there may be tax implications.

Cash dividend

A per share cash payment made by a corporation to its registered shareholders.

Certificate

A printed or engraved document evidencing ownership of a security. It shows the name of the issuing corporation, the amount of the securities it represents, the name of the registered owner(s) (unless it is a bearer certificate) and the date it was issued.

Commissioner for Oaths

A person licensed by the government to take affidavits. All Canadian lawyers are commissioners for oaths and other people (e.g. bank or trust corporation officers) may be licensed as commissioners, with limited authority to take affidavits in connection with their employer’s business.

Outside Canada, various jurisdictions also have commissioners for oaths

Lawyers acting as commissioners do not need to use a seal or stamp but others with restricted authority have a stamp that must be used.

Commissioners do not have authority to certify copies of documents; that must be done by a notary public.

CST requires affidavits in connection with the completion of lost certificate documents and declarations of transmission for estate transfers; both must be sworn before a commissioner for oaths or notary public.

Common shares

A class of shares that entitles holders to a share of the corporation’s ownership. In the event of the liquidation of the corporation holders of common shares rank last after the holders of debt and preferred shares. However holders of common shares control the corporation by virtue of being entitled to elect the directors and vote on other matters concerning the corporation’s operations.

Constrained shares

Constrained shares, such as shares issued by Canadian banks, insurance, broadcasting and communication corporations, have limits on the number of shares that can be either owned or voted by a single person or by non-residents of Canada.

Corporate actions

A generic term for transactions initiated by issuers that affect securities held by investors or related entitlements: e.g. takeover bids, mergers, stock splits, reverse splits, rights issues, spin-offs, stock dividends, etc. Security holders’ participation in a corporate action can be mandatory or voluntary – depending on the nature of the transaction.

Cum-dividend

When shares trade cum-dividend, a buyer will receive an upcoming dividend, until the ex-dividend date set by the market on which the shares trade. The ex-dividend date is two or three days before the record date for the dividend. The number of days is tied to the number of days allowed by the market in question for settling trades of the type of security being traded.

CUSIP number

CUSIP stands for "Committee on Uniform Securities Identification Procedures." The CUSIP number is a unique standardized nine-digit number permanently assigned to every stock and bond issue. The number identifies the corporation and class of security, and is used for processing and recording transactions of that security in Canada and the United States.

- D -

Declaration of transmission

The declaration of transmission is a document unique to transferring securities. It is an affidavit sworn before a notary public or commissioner for oaths by the deceased’s legal representatives. It provides formal evidence of the following information with respect to the securities:

  • The death of the security holder
  • The existence of legal representatives
  • The ownership of the securities and
  • The deceased’s place of residence.

For more information see the Securities Canadian Stock Transfer section of our website.

Deemed Disposition

Under certain circumstances, tax rules state that a transfer of property has occurred without a purchase or sale. For example a person may be deemed to have disposed of their assets when they die.

Under demutualization, eligible policyholders receive shares or other benefits in exchange for their ownership rights as policyholders.

Depository Trust Company (DTC)

The Depository Trust Company (DTC), established in 1973, was created to reduce costs and provide clearing and settlement efficiencies in the U.S. securities markets by immobilizing securities and making "book-entry" changes to ownership of the securities.

DTC provides custody & safekeeping services, deposit and withdrawal services, direct registration services and dividend, reorganization and proxy services for its broker-dealer participants.

DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission.

Direct Registration System (DRS)

The Direct Registration System is a facility administered by the Depository Trust Company (DTC) that provides electronic registration of eligible securities in an investor’s name directly on the books of the issuer as maintained by the transfer agent, and allows shares to be transferred between the transfer agent and the depository participant broker-dealer electronically. Through DRS, an investor can have their securities registered in their name without having a certificate issued, and can move these securities to their DTC participant broker-dealer without risk and delay associated with the use of paper certificates.

Dividend (see also "cash dividend")

A per share payment made by a corporation to shareholders, either in cash or other consideration such as shares.

Dividend reinvestment plan (DR or DRIP)

An investment program offered by some corporations that permits shareholders to buy more shares in the corporation using their dividends. Where permitted, additional cash may be contributed (see also optional cash payment and share purchase plan).

Dividend tax credit

A program under the Income Tax Act to encourage the ownership of common and preferred shares of Canadian corporations. Shareholders are allowed to add 45 per cent for eligible dividends and 25 per cent for non-eligible dividends to the amount actually received and obtain a credit against income tax payable based on the increased amount.

DRS

See Direct Registration System.

- E -

Employee share plan (ESP)

A benefit plan under which employees can participate in the ownership of their employer by purchasing shares, usually through payroll deductions.

Equity (see also shareholder equity)

Ownership interest of common and preferred shareholders in a corporation, and the difference between the assets and liabilities of a corporation.

Escrow

An agreement under which securities, cash or documents are held by a third party, usually a trust company, until a certain event occurs or a condition is met upon which the property is released.

Ex-dividend

When shares trade “ex-dividend” a buyer will not receive an upcoming dividend after the ex-dividend date set by the market on which the shares trade. The ex-dividend date is two or three days before the record date for the dividend. The number of days is tied to the number of days allowed by the market in question for settling trades and the type of security being traded. (See Cum-dividend).

Executor

A person appointed in an individual’s will to administer his or her property in accordance with the will after his or her death.

- F -

Financial intermediary

An institution such as a trust company, a bank, life insurance company, investment dealer or stockbroker that handles financial transactions for others, including receiving cash for investing on their behalf.

Fractional shares

A shareholding amounting to less than one whole share (e.g. 0.0125 shares).

- G -

General power of attorney

See Power of attorney

Grey market (see also OTC and unlisted securities)

A term used to describe the "if, as and when issued" market for newly authorized, but as yet, unissued and unlisted securities (see also if, as and when trading).

Once securities are approved for distribution to the public, but before they are actually distributed, they trade on an “if, as and when issued” basis over the counter until they are actually issued. This phrase in the contract for any trades protects the dealer against delay in receiving the certificates.

- I -

Indemnity

An agreement whereby one person agrees to protect another from loss or damage in certain circumstances by agreeing to assume the liability for the loss or damage.

Initial public offering (IPO)

The first offering of securities for sale to the public by a corporation whose securities have not previously been publicly traded.

Insider

Under the securities laws of most jurisdictions, insiders usually include all directors and senior officers of a corporation and anyone owning more than 10 per cent of the voting shares. Insiders are so named because they may be presumed to have access to inside or material non-public information about the corporation. Insiders are required to report trading in the shares of the corporation to the securities commissions, which in turn make the information public.

Investment

The use of money with the expectation of making more money, by earning income, increasing capital or both.

Investment advisor

A licensed professional engaged in giving investment advice on securities, for a fee.

Investment dealer

A securities firm or an individual (sales person) associated with one, registered with a securities commission to deal in securities. Most investment dealers are members of the Investment Dealers Association of Canada.

Investor

One who acquires securities with the expectation of a positive return.

IPO

See Initial public offering.

Issue

Corporations issue securities of different types and categories, e.g. common shares, preferred shares, first preferred shares, bonds, debentures, notes, etc. Each type or category is known as an issue and has an issue description that distinguishes it from the other types or categories of securities issued by the same corporation.

Issue can also refer to the act of distributing securities.

Issued and outstanding

The total number of shares issued to shareholders that in the aggregate, cannot exceed the authorized amount.

Issuer

A corporation that sells shares, debt instruments or other securities to investors.

- J -

Joint registration

The type of registration used when securities are held in the names of two or more persons.

Justice of the Peace

A lower level magistrate in certain court systems, who has authority to act upon minor offences, commit cases to a higher court for trial, perform marriages and take affidavits. CST requires sworn affidavits in connection with the completion of lost certificate documents and declarations of transmission for estate transfers. Usually affidavits are sworn by commissioners for oaths or notaries public but they can also be sworn by justices of the peace.

You can contact justices of the peace through courthouses or government websites.

- L -

Letters probate

Letters probate is the name used in some jurisdictions for the court document confirming the appointment of a person’s executors. Letters probate are called a certificate of appointment as estate trustee in other jurisdictions. For more information, see the Securities Transfers section of our website

Liabilities

Debts of a corporation, usually divided into current liabilities (those due within one year) and long term liabilities (those due in one year or beyond).

Limited liability

The shareholders’ liability in the event of the bankruptcy of a limited liability corporation can not exceed the money they have invested in the corporation's shares.

Limited power of attorney

See Power of attorney.

Liquidation

The process of converting a corporation’s property and assets into cash, and distributing the proceeds to the shareholders after payment of all debts.

Liquidity

The ease with which a security can be converted to cash without any price discount. Liquidity is dependent on the amount of a given security available in the market and the number of investors interested in buying and selling the security.

Listed stock (listed security)

The security of a corporation that is traded on a stock exchange.

- M -

Market value

A security’s last reported sales price, typically available in newspapers or on online financial sites.

Medallion guarantee (see also Signature guarantee)

A type of signature guarantee issued under signature guarantee programs in place in Canada and the United States where the guarantee is backed by insurance. Financial services corporations can apply for the necessary insurance, pay the premium and, if approved, receive a special stamp to enable them to provide signature guarantees within the limits of their insurance policy.

- N -

NCI

See Non-certificated issue.

Negotiable

A certificate representing a security transferable by delivery, which, in the case of a registered certificate, means that it has a completed securities transfer form attached with the signature guaranteed.

No par value (n.p.v.)

A term used to describe shares that have no stated face value.

Nominee

A corporation or person that holds securities belonging to others, to facilitate transfers and trading.

Non-certificated issue or issuance (NCI)

A share position on the shareholder register when there is no certificate; holder information and balances are held electronically. NCI shares are a form of book-based shares (see also Book based shares).

Non-probated estates

A non-probated estate means that you don’t have a document issued by the court and naming the people who are authorized to deal with the deceased person’s assets. You may have a will, but it needs to be confirmed by the court before it becomes a probated estate. Read more about non-probated estates.

Non-registered shareholder (Beneficial Owner)

An owner or holder of shares held through an intermediary and not recorded in the name of the holder on the shareholder register, which is kept by the corporation or its transfer agent.

Notary public

A person licensed by the government to take affidavits, and certify copies of documents so that they can be treated as originals. Usually lawyers are Notaries Public and very occasionally other people may be too. Notaries Public have wider powers than Commissioners for Oaths (who essentially can only take affidavits) and use a seal when they sign documents.

Québec does not have notaries public. There are legal specialists called notaries who have exclusive rights in connection with real estate transactions and the administration of wills, but they are not the same as notaries public in other provinces.

- O -

Odd lot

A number of shares that is not equal to or an even multiple of a board lot (see Board lot).

Offer

The price at which an individual is willing to sell.

Ontario Securities Commission (OSC)

The regulatory body responsible for administering the Securities Act in Ontario (see Securities Act).

Optional cash payments (OCP)

Some dividend reinvestment plans and employee share purchase plans allow participants to contribute extra funds (optional cash payments) to invest in securities, along with their dividends.

Over-the-counter (OTC) Market

A market for unlisted securities maintained by brokers, who may or may not be members of a stock exchange.

- P -

Par value

A stated face value expressed in a currency that is printed on a security.

Payable date

A date on which a payment is due to be made to the person entitled, e.g. the date on which a dividend is paid to shareholders.

Power of attorney (PA)

A power of attorney is a legal document signed by a living person, or corporation, giving to a named party or parties certain powers to act on their behalf. The powers can be unlimited (general power of attorney), or limited (limited power of attorney), as specified in the document. A person normally appoints an attorney to act on their behalf as a matter of convenience, generally because they are unavailable, by reason of travel or incapacitation, other than incompetency.

Pre-authorized chequing

The process whereby a person authorizes and directs another individual or corporation to automatically withdraw a specified amount of money from their bank account at predetermined intervals.

Preferred shares

A class of shares that entitles the holder to certain rights and privileges ranking ahead of the rights of the holders of common shares, including preference as to payment of dividends and, in the event of the liquidation of the corporation, the right to be paid in full ahead of common shareholders. However, preferred shares do not normally carry voting rights.

Private corporation

A corporation whose shares have not been distributed to the public. There are usually limits on the maximum number of shareholders. Also transfers of shares require approval by the directors.

Probate

Abbreviation of letters probate.

Probated estates

A probated estate means that you have a document issued by the court naming the people who are authorized to deal with the deceased person’s assets.

If the deceased person left a will, then the people authorized will be the executors or trustees named in the will. If the person did not leave a will, the people authorized will be the administrators appointed by the court.

To determine if you have one of the documents mentioned above, here are some of the names they may have:

  • Certificate of Appointment as Estate Trustee
  • Letters Probate
  • Letters of Administration
  • Letters Testamentary

Read more about probated estates.

Prospectus

A legal document containing financial and other information about securities offered for sale to the public including information about the issuer, the risks, expected returns, and business objectives of the issuer. A prospectus allows members of the public to judge whether or not they wish to buy the securities.

Proxy or proxy form

A document signed by a registered security holder authorizing someone else to represent them at a corporation meeting, and to vote their securities. The proxy may also contain direction as to how the securities are to be voted. The word proxy can also refer to the person appointed.

Public corporation

A corporation whose shares have been issued to the public through a securities offering, and are publicly traded on an exchange or over the counter.

- R -

Record date

This date is set by issuers to determine which shareholders will receive entitlements such as dividends, or the right to vote at a shareholder meeting. A holder must be registered on the books of the corporation on the record date to receive the entitlement.

Registered retirement savings plan (RRSP)

A savings plan registered with Canada Revenue Agency in which contributions to the plan are tax deductible (with specific limits) and earnings within the plan are exempt from tax until withdrawn from the plan prior to, or at maturity of the plan, provided the plan holds qualified investments.

Registered shareholder

The owner or holder of a corporation's stock whose name is recorded in the shareholder register kept by the corporation or its transfer agent.

Registrant

A term used to refer to a stock broker or investment dealer, either an individual or a corporation, registered to deal in securities under the Securities Act of a province or territory.

Registrar

Generally, a trust company appointed by a corporation to account for and maintain control of the number of shares issued and outstanding. This role includes accounting for cancellations, conversions, splits, and redemptions. In most cases, the transfer agent is also the registrar.

Restricted Shares

Shares that have restrictions on their sale or transfer.

Reverse Split

A consolidation of outstanding securities to effect a re-organization of capital. For example in a one for five consolidation, each shareholder would receive one share for every five shares they hold.

Rights

An entitlement given to shareholders to buy additional shares at a pre-determined price (usually slightly below the market price). Rights are issued to registered shareholders as of a given record date, usually on the basis of one right for each share held A specific number of rights at a stated subscription price entitles the shareholder to purchase a new share. Rights have an expiry date usually four to six weeks after they are issued. Share purchase warrants are similar to rights but usually have a longer term extending to years (in some cases) and are often issued in conjunction with other securities.

- S -

Securities

A general term applied to investments issued by corporations, governments and others, such as shares, debt instruments, rights, warrants, etc. Securities can also refer to the document that evidences ownership of the investment. This general descriptive term covers stock certificates, bonds, debentures, notes, warrants and similar documents, all of which can be sold and transferred from one party to another.

Securities Act

A provincial act (each province has its own) administered by the Securities Commission in each province that sets down the regulations under which securities may be issued to the public.

Securities Exchange Commission (SEC)

A regulatory body established by the United States Congress, to protect investors in the U.S. The SEC administers the U.S. Securities Act of 1933 and other legislation.

Securities transfer form

A standard form used to transfer securities from one person to another also known as a(n irrevocable) stock power of attorney. The securities transfer form must be signed by all the registered holders of the securities, and their signatures must be guaranteed. For more information, see the Securities Canadian Stock Transfer section of our website.

Shares (stock)

A type of security that represents a part ownership interest in a corporation's property, assets, and business.

Shareholder

An individual, corporation, or other party that holds shares in a corporation.

Shareholder equity (see also equity)

Ownership interest of common and preferred shareholders in a corporation and the difference between the assets and liabilities of a corporation.

Share purchase plan

An investment program that allows shareholders to acquire additional shares in a corporation by making optional cash payments (see optional cash payments).

Signature guarantee

A signature guarantee is the device used by transfer agents to assure themselves that a transfer is authorized by the proper person(s). The signature guarantee is given by a financial services corporation and assures the transfer agent that the person(s) signing the transfer is (are) the registered holder(s) named on it.

By giving the signature guarantee, the guarantor warrants to the transfer agent the following: (a) the signature of the shareholder is genuine, (b) the signer was an appropriate person to endorse the certificate, and (c) the signer has the legal capacity to sign (see also Medallion Guarantee).

Single purpose RRSP

An RRSP in which the owner is only allowed to hold one specific type of investment e.g. the shares of one corporation.

Special meeting

A special meeting is one at which shareholders are being asked to vote on a special resolution. Where the term "special resolution" is not defined under corporate law for a reporting issuer, it means a resolution that is required to be passed by at least two-thirds of the votes cast.

Split

A division of a corporations outstanding shares into a larger number of shares. For example, in a 2-for-1 split, a corporation with one million shares outstanding would have two million shares outstanding. With a split, the number of shares outstanding increases, but a shareholder's proportional ownership remains the same.

Stock (Shares)

See Shares

Stock Broker

A corporation or individual who acts as an agent in buying and selling of securities and charges a commission for their services. Stock brokers are usually members of a stock exchange.

Stock dividends (see also dividend)

Stock dividend payments are made to shareholders in the form of additional common stock. Such a payment increases the number of shares each holder owns.

Stock exchange

A recognized and regulated organization where security trading takes place.

Stock exchange symbol

An abbreviation for a security traded on a stock exchange.

(SPOA) (also irrevocable power of attorney (IPOA))

A legal document used to transfer ownership of securities from one person to another, now known as a securities transfer form. This form must be signed by all the registered holders of the securities and their signatures must be guaranteed. For more information, see the Securities Canadian Stock Transfer section of our website.

Stop Canadian Stock Transfer Order

A written notice from individuals or other parties to the effect that they have an interest in, or a claim against, a particular security.

Street Certificate

An endorsed share certificate registered in the name of a stock broker, who is a member of a stock exchange. Such certificates are accepted in trading without the necessity of being transferred.

Street name

Securities registered in the name of a broker, instead of their client, are said to be held in street name which facilitates trading without requiring transfers of ownership of the certificates.

Surety bond

An insurance policy required so that a replacement security can be issued for one that has been lost, stolen or destroyed. Typically an investor wishing to replace a certificate under a surety bond must also remit a small percentage of the market value of the security as an insurance premium.

- T -

Take-over bid

An offer made to security holders of a corporation to purchase voting securities of the corporation which, with the securities the offeror already owns, will exceed 20 per cent of the outstanding voting shares of the target corporation.

Canadian Stock Transfer

A change in the ownership of shares by virtue of either the physicial delivery of shares from the seller to the buyer or the appropriate entries being made in the share register or a book based system.

Canadian Stock Transfer agent

The transfer agent is the corporation appointed to keep records of all registered security holders and to transfer ownership of securities. To determine the transfer agent for securities, first check the securities certificate, which will usually show the transfer agent’s name. Failing that, you can check the issuing corporation’s annual report or website.

Transferee

The person to whom the transferor assigns (sells) the security.

Transferor

The registered owner that assigns (sells) a security to another individual (the transferee).

Treasury shares

Authorized but un-issued shares of a corporation.

- U -

Underwriting

A transaction pursuant to a formal agreement whereby one or more investment dealers agree to purchase securities issued by a corporation for resale to the public.

Unlisted

A term used to describe a shares not listed on a stock exchange but traded on the over-the-counter market.

- V -

Voting Rights

The rights attached to most securities to vote on certain issues at security holder meetings. The voting rights attached to common shares give those shareholders the greatest control over the corporation by virtue of being able to elect the directors of the corporation.

- W -

Warrants (also share purchase warrants)

A certificate that provides the holder the right over a specified period of time to purchase shares of a corporation at specifically stated prices. Warrants are often attached to new debt or share issues, in order to make them more attractive to prospective purchasers.

Warrants are similar to rights except that the latter have a shorter term and are not issued in conjunction with other securities.

- Y -

Yield

The rate of return (e.g. dividends or interest) on an investment usually expressed as a percentage.

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