A power of attorney that allows a person to transfer ownership of stock. Stock powers are commonly used in secured lending transactions. If certificated securities owned by a borrower are collateral in a loan transaction, a stock power is delivered to the secured party along with a stock certificate. When completed and signed, the stock power enables the secured party to transfer the ownership interest in the certificate from the borrower to the party named in the stock power.

The delivery of a stock certificate and blank stock power to a lender are typical conditions precedent in a secured lending transaction where stock owned by the borrower is part of the collateral. The lender's possession of the stock certificate perfects its security interest in the securities represented by the certificate.

At the time of delivery, the stock power is signed by the borrower, but it is not completed or dated. This allows the lender to sell the stock to a third party if it forecloses on the collateral in the future. If a stock power is dated, it could be rejected for being too old to be effective. If ownership of the stock is transferred at a later date following an event of default, the date and the name of the transferee is then filled in on the stock power at the time of transfer.

For more information on security interests in stock certificates, see Practice Note, Security Interests: Investment Property. For a form of stock power, see Standard Document, Stock Power.