Delivery of the securities: Overview, definition, and example
What is delivery of the securities?
Delivery of the securities refers to the point in a transaction when the seller officially transfers ownership of stocks, bonds, or other financial instruments to the buyer. It usually happens after payment is made and marks the moment the buyer actually receives what they paid for—either physically (like paper certificates) or electronically (through a brokerage or clearing system).
It’s the final step that completes a securities transaction, confirming that the buyer now owns the investment.
Why is delivery of the securities important?
In investment or fundraising deals—especially those involving company stock—it’s not enough to just sign an agreement. The deal isn’t truly done until the securities are delivered. That’s what gives the buyer legal ownership and the rights that come with it, such as voting, dividends, or resale.
For companies raising money, delivering securities on time builds trust and ensures legal compliance. For investors, it protects their rights and confirms they’re officially on the books. If delivery is delayed or mishandled, it can lead to legal issues, penalties, or disputes over who owns what.
Understanding delivery of the securities through an example
Let’s say your company raises funds by issuing shares to a group of investors. Once the investors sign the subscription agreement and send their payments, your company needs to deliver the securities—in this case, company stock.
This might mean issuing digital shares through a cap table platform, entering their names into the company’s shareholder register, or transferring shares through a brokerage system. Only after delivery do the investors officially own the stock and gain any associated rights.
If the company fails to deliver the securities, the deal is incomplete—and the company could be in breach of contract.
An example of a delivery of the securities clause
Here’s how a delivery clause might appear in a securities purchase agreement:
“Subject to receipt of the Purchase Price, the Company shall deliver the Securities to the Purchaser within five (5) business days of the Closing Date, either in book-entry form or as electronic certificates, as directed by the Purchaser.”
Conclusion
Delivery of the securities is the moment a deal becomes real—it’s when ownership officially changes hands. Whether you’re an investor or a company issuing shares, timely and accurate delivery is essential to closing the loop on a transaction.
It protects everyone involved, ensures compliance with securities laws, and confirms that the buyer now holds the rights tied to the investment. Without delivery, the deal remains incomplete—no matter what the paperwork says.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.