Direct Registration System (DRS)
What is DRS (Direct Registration System)?
The Direct Registration System (“DRS”) is a service offering by the Depository Trust Company (“DTC”) which provides registered shareholders of the issuer with the option of holding their assets (shares) on the books and records of the Transfer Agent in book-entry form instead of a physical stock certificate. DRS allows shares to be transferred between a broker dealer and the Transfer Agent electronically. DRS shares are held in the name of the registered shareholder and are represented by a DRS Transaction Statement or DRS Advice. DRS shares cannot be lost thus avoiding the cost and effort involved in replacing lost certificates. The shareholder retains full ownership of the shares as well as all the traditional voting rights and privileges of being a stock owner.
What is a DRS Statement or DRS Advice?
A DRS Statement or Advice replaces the physical stock certificate and evidences ownership of the security.
What are some of the benefits of issuing DRS shares?
- Reduces the risk associated with physical securities processing of paper, including turnaround delays, mail losses and risks associated with stolen, forged or counterfeit securities.
- Facilitates secure electronic transfer of stock between the shareholder’s broker and Continental and therefore gives the shareholder the opportunity to trade at any time and not risk “missing the market” because of delays associated with the handling of physical stock certificates.
- Facilitates electronic processing of new issuances of stock associated with corporate actions (such as stock splits, reverse splits, mergers etc.);
- Immediate cost savings to the issuer from the elimination of printing, storage, insurance, and postage to mail certificates to shareholders;
- Reduction in administrative costs attributable to lost certificate processing and related shareholder inquiries and correspondence;
- Potential savings in the time and expense associated with the research and processing of unexchanged certificates from any corporate action;
- Supports the industry’s move to a dematerialized security environment and shortened settlement timeframes.
Are there any costs for holding DRS shares?
No. Stockholders are not charged any fees by Continental to hold their shares in DRS form.
How will a shareholder know how many shares they own?
The shareholder will receive a Direct Registration Transaction Advice or Statement anytime there is activity in their account. This Advice is evidence of ownership of the shares instead of a physical certificate.
Can shares that are in certificate form be converted to DRS shares?
Generally, yes. Certificated unrestricted shares may be converted to DRS shares at anytime, by submitting the stock certificate(s) to Continental by hand or by mail to:
Continental Stock Transfer & Trust Company
Attn: Stock Transfer Department
17 Battery Place, 8th Floor
New York, NY 10004
The certificate should not be signed. We recommend that the certificate(s) be sent via certified mail, return receipt requested and insured for 2% of the value of the shares. The shareholder will receive a Direct Registration Transaction Advice when the transaction is complete. If you have any questions about this process, call Continental at 212.509.4000, ext 541.
Can shares held in DRS form and certificate form be combined?
Yes, follow the above instructions for converting your shares in certificate form to DRS form. The shares in certificate form will be added to the shareholder’s DRS account balance and they will receive a transaction advice when the transaction is completed.
Can a shareholder receive a stock certificate for their DRS shares?
If permitted by the issuer, the shareholder at anytime may request that a physical stock certificate be issued for a portion or all of their DRS shares by submitting their DRS Advice or a formal letter requesting a certificate to be issued together with a $25 fee to the address indicated above. Shareholders may call Continental at 212.509.4000, ext. 541 if there are any questions.
How are DRS shares transferred?
The requirements for transferring DRS shares are the same as shares held in certificate form except that with DRS shares, there is no certificate to surrender. In order to transfer shares you will need to complete a Stock Power Form. Visit our Shareholders Forms page to download the form, or call Continental at 212.509.4000, ext 541, to request one. Remember, prior to submitting a transfer request, a shareholder must obtain a Medallion Signature Guarantee on a Stock Power for any transfer request of shares. A Medallion Guarantee ensures that the individual signing the request for transfer is the owner or authorized representative. It can be obtained from a participating financial institution, including banks and brokerage firms.
How are DRS shares delivered to a shareholder’s broker?
DRS allows a shareholder to authorize their broker to send an electronic instruction to Continental to debit DRS shares from their account at Continental and deliver them electronically to their account at the brokerage firm. To effect such transactions, the broker will need to include the following information in its instructions, most of which can be found on your Direct Registration Transaction Advice: the shareholder’s Transfer Agent (Continental’s) Account Number, Social Security or Taxpayer Identification Number, the full name on the account and the number of DRS shares to be delivered. Continental will honor such requests from any broker participating in DRS.
How does a shareholder know that DRS shares are safe and cannot be transferred without their consent?
The shareholder’s written consent and the execution of a Stock Power with their medallion guaranteed endorsement are required by Continental to transfer shares to any third party. The only exception is if shares are being transferred to the shareholder’s broker via the DRS system. If the shareholder chooses to supply their broker with their DRS account information, the broker is responsible for obtaining the shareholder’s instructions and the proper documentation required to effect a sale and/or transfer.