Bond power refers to an instrument available in the United States that allows the current owner to transfer ownership of registered bonds to a lender. The title of the bonds serves as a form of collateral. The function of bond power is to give a person or party the power of attorney in order to make changes or identify bondholders in the record that is kept by the issuer of the said bonds. It performs a similar function to that of the assignment form on a bond certificate. However, since bond power allows trade and sale, it is considered more useful than the assignment form. Bond power may also be referred to as the assignment separate from certificate, as the bond power holds more authority than a regular endorsement found on the back of the bond.
The person or entity who is recognized as the registered holder must be the one to endorse the bond for it to be transferred. If this is not possible, a duly appointed representative can do this. If several entities have to sign, several bond powers may have to be used.
There are several other situations when bond power may be used. For example, if there is more than one owner of the bond but the signature of one of the co-owners is missing, it may be necessary to make use of bond power to show that the co-owner who has not signed also holds ownership of the bond. Bond power may also be used in case of mistakes, erasures, or any alterations in the bond or an earlier bond power.
