What Is A Non-negotiable Security And Method Of Mortgaging Shares?

In case of non-negotiable securities the baker gets an equitable title only which to is fraught with many risks. The non-negotiable stock exchange securities are two types one is inscribe stocks and the second is registered shares.

Inscribed stocks: The inscribed stocks as the name signifies are the stocks whose amount and the name of the holder is inscribed or recorded in the books kept either with the government or with the particular bank or its agent. The holders of inscribed stocks are issued receipts of acknowledgement which are useful only as evidence but have transferred the stocks to his name or his nominee.

Registered shares: Registered shares are the shares which are issued by the joint stock companies under their seals. Bond and bearer share warrants are excluded from them. The transfer of the registered shares of each company is governed by the memorandum and articles of associating of each company.

A registered share holder for obtaining loans can mortgage his shares either by legal or equitable method.

Legal mortgage: A legal mortgage takes place when the fully paid-up shares are formality transferred from the name of the holder to the name of the bank or its nominee. Incase of legal mortgage of shares the borrower normally hesitates to offer the shares.

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