Bearer Securities

Bearer securities are financial instruments that grant their owner – the 'bearer' – all rights associated with the instrument, without the owner's name being recorded on the document or in the commercial register. Notable examples of bearer securities include bearer shares of a joint-stock company (AG), bearer bonds, and bearer participation certificates. Ownership is transferred solely through physical delivery or collective custody transfer, enabling speed, global tradability, and a high degree of anonymity. However, this anonymity has led to stricter anti-money laundering regulations: Since the Transparency Register and Financial Information Act 2020, German AGs can only issue bearer shares if they are listed on a stock exchange or can demonstrate central custody; otherwise, they must convert to registered shares. While registered shares make the shareholder visible in the share register, the holder of a bearer security remains outside official registers. For investors, bearer securities offer flexible ownership transfer and discreet asset structuring, while for companies, they provide quick access to capital markets. Legal foundations can be found in the Stock Corporation Act, Custody Act, and Banking Act. Those wishing to buy, sell, or issue bearer securities should carefully review current transparency and reporting obligations to avoid fines and reputational risks.