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Why Must a Bond Have a Subscribing Witness?

Original post by Eric Feigenbaum of Demand Media

Subscribing witnesses cannot validate securities instruments.

A subscribing witness is someone who is present when another person signs a document. When a signatory is not present, but for legal reasons verification of a signature is necessary, a subscribing witness's notarized statement or affidavit can in some cases validate the legitimacy of a legal document. However, in the case of investment bonds, not only are subscribing witness affidavits not needed, but the law does not allow them to certify the validity of securities.

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Reason

As binding contracts relating to people's financial investments, bonds can only be issued by primary signatories -- executives or government officials. The organization or agency issuing a bond is taking an investor's money and subjecting her to risk in exchange for a promised gain. The law does not rely on second-hand accounts when issuing securities, even when a witness may be perfectly credible.

Notarization

Subscribing witness testimonies or statements must be notarized to ensure the person making the statement is who they claim to be. In many cases, bonds -- especially private or junk bonds -- are notarized to ensure that the person issuing a legal security is a legitimate and authorized signer.

Bail Bonds

A subscribing witness may be used for the issuance of a bail bond, which is not an investment product. If a bail bond purchaser signs documents in front of a witness, but not a notary, the witness can affirm to a notary that the signature on the documents is that of the purchaser. Laws and court policies vary by jurisdiction.

Requirement

Although a subscribing witness can be used in the process of purchasing and issuing a bail bond, it's not required. In fact, legal documents are typically stronger and more likely to hold up in court when the primary signatory and a witness are both in front of a notary when executing a document.


                   

References

About the Author

Eric Feigenbaum started his career in print journalism, becoming editor-in-chief of "The Daily" of the University of Washington during college and afterward working at two major newspapers. He later did many print and Web projects including re-brandings for major companies and catalog production.

Photo Credits

  • Comstock/Comstock/Getty Images


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