For Release: Tuesday, May 24, 2005
Contact: SIA Corporate Communications (202) 216-2000
DELAWARE'S NEW RULES ENABLING ELECTRONIC STOCK OWNERSHIP WILL
BENEFIT INVESTORS
Legislation Eases Path For
Paperless Environment
NEW YORK, NY, May 24, 2005
-- The Securities Industry Association congratulated Delaware
Governor Ruth Ann Minner and both houses of the legislature for the adoption of
HB 150.HB 150 gives all publicly held
companies that are incorporated in Delaware the right to issue stock in
electronic form only.Gov. Minner
signed the bill on May 17, and it will be effective August 1.
As of that date, the affected companies will not be required
to issue physical certificates.A company's
board of directors can determine that all stock be issued in electronic form
only.
Delaware was one of only five remaining states and
territories that included this requirement in its laws, but is the state of
incorporation for a significant percentage of publicly traded companies in the
United States.
"This represents a major advance in the securities
industry's efforts to achieve an industrywide paperless environment," said SIA
Executive Vice President Don Kittell.
"Delaware's action will encourage companies to promote safer and more
efficient alternatives to physical certificates."
SIA supports the use of book-entry stock ownership, where
the issuers record all details of ownership electronically.This can be done by having the securities
held in the investor's account at the broker-dealer, known as "street name."
Another alternative is the use of the Direct Registration System, where
investors can have their positions electronically recorded by the issuer or at
their transfer agent.
According to Kittell, elimination of physical certificates
will save investors and the industry an estimated $250 million that is spent on
issuing certificates."Investors whose
holdings are in book-entry form have all the advantages of ownership, without
the worries of safeguarding paper certificates," said Kittell.
Passage of the legislation marks the culmination of a
multi-year effort by SIA."Delaware's
action will help publicly traded companies improve their service to investors,"
said Keith Utsey, SIA vice president, managing director and counsel, State
Government Affairs."We are also
encouraged that similar legislation has been sent to Gov. Matt Blunt of
Missouri for his signature and another bill was unanimously passed in the
Louisiana House."
"SIA will continue to work with The Depository Trust &
Clearing Corporation and the markets to encourage the elimination of physical
certificates," said Kittell.The
association produced The Securities Industry Immobilization and
Dematerialization Implementation Guide. (http://www.sia.com/stp/pdf/SIADematerializationImpGuide.pdf)
to provide broker/dealers, issuers, and transfer agents with information about
transferring to book-entry only stockownership.
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The Securities Industry Association brings together the
shared interests of nearly 600 securities firms to accomplish common
goals.SIA's primary mission is to
build and maintain public trust and confidence in the securities markets.At its core:Commitment to Clarity, a commitment to openness and understanding
as the guiding principles for all interactions between investors and the firms
that serve them.SIA members (including
investment banks, broker-dealers, and mutual fund companies) are active in all
U.S. and foreign markets and in all phases of corporate and public
finance.According to the Bureau of
Labor Statistics, the U.S. securities industry employs nearly 800,000 individuals,
and its personnel manage the accounts of nearly 93-million investors directly
and indirectly through corporate, thrift, and pension plans.In 2004, the industry generated an estimated
$227.5 billion in domestic revenue and $305 billion in global revenues.(More information about SIA is available at:
www.sia.com.)
