Registered Security: What it is, How it Works

By
James Chen
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James Chen, CMT is an expert trader, investment adviser, and global market strategist.

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Updated April 30, 2022
Reviewed by Julius Mansa
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Amanda Jackson
Amanda Jackson
Fact checked by Amanda Jackson
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Amanda Jackson has expertise in personal finance, investing, and social services. She is a library professional, transcriptionist, editor, and fact-checker.
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What is a Registered Security?

A registered security is either a security whose owner is kept on file with the issuer or a security whose transfer is restricted.

Registered securities can be the name given to securities whereby ownership is registered with the issuing company or their agent. This is in contrast to bearer securities. Bearer securities are deemed to be owned by whoever holds the certificate. There is not a ledger kept with the owners of the securities. With registered securities, a ledger is kept by the issuing company or agent which records the owners of all the securities. Transfer of ownership can only occur when names are changed in the ledger.

In the United States, most securities for sale on a "national securities exchange" such as NYSE, are registered with the Securities and Exchange Commission (SEC). The SEC exempts registration in some cases. For example, private offerings of shares made to a select group of investors does not require registration of securities with the SEC. Registered securities with the SEC are subject to financial disclosure and reporting regulations.

A registered security is also a security that is unavailable for sale due to restrictions placed upon it at the time of issue.

Key Takeaways

  • Registered securities are securities whose ownership is registered with an issuing company or agent, which maintains a ledger with the details.
  • They are different from bearer securities, whose ownership lies with the bearer and which do not have a centralized ledger associated with them.

Understanding Registered Securities

Registered securities are securities where there is a ledger of the rightful owners. For ownership to change, the name in the ledger must be changed. This is the common method for handling securities. It provides the issuing company with the necessary stockholder information needed to pay out dividends and deliver notices of important company activity.

It can also keep theft at a minimum since the legitimate owner of the security is recorded somewhere secure. This can help rectify a situation where the security certificates have been stolen. These securities cannot be sold or transferred to other investors unless certain criteria are met under regulations. A registered security is also known as a restricted stock.

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  1. U.S. Securities and Exchange Commission. "Registration Under the Securities Act of 1933." Accessed March 21, 2021.

  2. U.S. Securities and Exchange Commission. "Frequently Asked Questions About Exempt Offerings." Accessed March 21, 2021.

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