To sell or transfer US or Canadian shares, you will usually be required to obtain something called a Medallion Signature Guarantee and this is not always easy for residents outside of the US to obtain.

Medallion Signature Guarantees are also sometimes referred to as Medallion Guarantees, Signature Guarantees, Barcoded Medallion Guarantees and Medallion Stamps. They mean the same thing.

When is a Medallion Signature Guarantee required?

In order for any person to sell or transfer North American securities (ie, stocks or shares), a Medallion Signature Guarantee is required.

Many people in the UK have shares in US or Canadian companies either as a result of acquiring shares in these companies directly or as a result of having held shares in UK companies which have subsequently been taken over by North American companies (eg, Cadbury, Tyco and IBM).

If the investor (or someone acting in the capacity of their executor, trustee or beneficiary) wishes to sell or transfer these shares, a Medallion Signature Guarantee would be required.

What is a Medallion Signature Guarantee and why is it required?

The Medallion Signature Guarantee Stamp is required by North American Transfer Agents (the equivalent of a Share Registrar in the UK) before they will agree to the sale of transfer of US or Canadian shares.

The reason for this is that the Medallion Signature Guarantee protects the transfer agent against fraud because the provider of the signature guarantee confirms that the person transferring the stock or shares is the appropriate person to deal with them.

Each Medallion Guarantee Stamp has an individual barcode that is registered to help ensure that they cannot be fraudulently used.

The guarantee itself is a barcoded stamp which is attached to the relevant paperwork and is signed by the person authorised to deal with the transfer.

Are Medallion Signature Guarantees hard to obtain?

Although many financial institutions in North America provide Medallion Stamps, they will not usually provide them directly to the general public.

It is particularly hard for Non-US residents to obtain the Medallion Signature Guarantee from US based providers and most organisations outside of the US just don’t want to take on the risk associated with providing the guarantee.

The requirement for a Medallion Stamp can therefore cause difficulties for UK based investors and for UK based personal representatives dealing with estates that contain US or Canadian stocks or shares.

How can I obtain a Medallion Signature Guarantee?

Traditionally, Medallion Signature Guarantees had to be obtained from a financial institution in North America however there are now a limited number of Medallion Signature Guarantee providers in the UK.

These UK providers will usually be able to assist you with the sale or transfer of the shares without the requirement for clearance from a US bank, and can also help with other complicated matters such as the associated paperwork, including IRS tax clearance forms.

The specific paperwork that is required will depend on what stocks, shares, or securities there are and who wants to sell or transfer them (ie, whether you are acting in your personal capacity or if you are dealing as an Executor or Trustee etc).

Different institutions will have different requirements. You should ask the Medallion Signature Guarantee provider to explain exactly what documentation will be required and how to obtain this if you do not already have it.

Author: Sara Janion

Worldwide Lawyers

DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Worldwide Lawyers directly.