Global Securities Markets: Navigating the World's Exchanges and OTC Markets

AGENCY

An agent is someone with whom a principal contracts to perform a service for the principal at the principal's direction. An agent is frequently someone who can commit his principal (e.g., bind the principal to a contract). When you ask your broker to obtain 100 shares of Underwater Aircraft stock for you, the broker acts as your agent and you are the principal. An attorney-in-fact (as opposed to an attorney-at-law) is the principal's appointed agent. An example of the appointment of an attorney-in-fact is embedded in the stock power presented in Figure 1.4. A stock power is a physical piece of paper typically attached to the physical certificate used to legally transfer ownership of the certificate from one person to another. In the day of paper certificates, this power of assignment was required by the transfer agent to transfer all physical stock certificates after the original issuance by the corporation. When presented to the transfer agent, the records as to securities ownership of the company were changed, the old certificate was cancelled and a new one was issued, and the new owner became a registered holder with all the rights of ownership, including the right to vote and receive dividends (in the case of a stock) or to receive interest payments (in the case of bonds).