Lost Document Bonds are required in order to obtain replacement certificates (for stock, debenture, warrant or bonds like Canada Savings Bonds), life insurance policies or other financial instruments when an individual or company loses the originals.
Lost Document Bonds are required in order to obtain replacement certificates (for stock, debenture, warrant or bonds like Canada Savings Bonds), life insurance policies or other financial instruments when an individual or company loses the originals. This bond guarantees that if the original lost document is found, it will be returned to the surety company for proper disposal and the issuer of the replacement security will not suffer an economic loss.
There are two types of lost document bonds or lost securities bonds:
Open Penalty: are used for replacement certificates of fluctuating value such as common shares.
Fixed Penalty: are used for replacement certificates of fixed value such as corporate debentures.
Examples of such can be:
Before issuing a replacement, financial institutions may require legal protection should the original and replacement still exit, in order to avoid the possibility of both being cashed, known as Double Redemption, either by accident or fraudulently.
The Lost Instrument Bond provides assurance that the issuer of the replacement security will be legally protected from economic loss should the lost document turn up later. The Lost Securities Bond allows the issuing corporation or entity to provide a replacement certificate with the documents and piece-of-mind that they are legally protected.
