What Is a Letter of Transmittal Related to Stocks?

by Molly Sawyer ; Updated July 27, 2017
Stocks are issued as book entry shares or as paper certificates.

A letter of transmittal accompanies stock certificates when they are sent by a stock holder to a broker/dealer or transfer agent, or by a stock issuer to a stock holder. The letter provides written instructions for handling the stock, such as if a transaction or registration change is desired. Check with the receiving agent or broker/dealer for specific letter of transmittal requirements. Some provide form letters to use when sending a stock certificate.

Actions Performed With A Letter of Transmittal

Transmittal letters facilitate a variety of transactions related to the underlying stock. The stock can be sold or exchanged, deposited into an investment account or donated to a charity. A letter can instruct the agent to change the registration on a stock -- for example, when individual assets are retitled into a trust. The issuer of a stock might send a letter of transmittal to shareholders detailing corporate restructuring or stock splits. In this case, the letter would also include instructions for completing the certificate to take part in the offering.

Photo Credits

  • jim pruitt/iStock/Getty Images