Securityholder lists: Overview, definition, and example
What are securityholder lists?
A securityholder list is a detailed record of all individuals or entities that hold securities in a particular company or financial instrument. Securities can include stocks, bonds, or other financial assets issued by the company. The list typically includes the names, addresses, and the number of securities held by each holder. This list is important for companies to manage shareholder communications, distribute dividends, and ensure compliance with regulatory requirements. Securityholder lists are often maintained by a company's transfer agent or a third-party service provider.
For example, in a publicly traded company, the securityholder list would include all shareholders of the company's stock, providing the company with necessary information for sending out annual reports, proxy materials, and dividend payments.
Why are securityholder lists important?
Securityholder lists are important because they ensure that a company can properly communicate with its investors and meet legal obligations related to securities ownership. These lists help facilitate voting in shareholder meetings, dividend distribution, and other essential processes related to shareholder rights.
For businesses, maintaining an accurate securityholder list is critical for regulatory compliance, corporate governance, and effective communication with investors. For investors, the securityholder list ensures that they receive important information regarding their holdings, such as voting rights, dividends, and other corporate updates.
Understanding securityholder lists through an example
Imagine a corporation with 500 shareholders. The company’s transfer agent maintains a securityholder list, which includes the names, contact information, and number of shares held by each shareholder. When the company prepares for its annual general meeting (AGM), it uses this list to send out invitations to all shareholders, along with proxy voting materials and other necessary documents.
In another example, a bond-issuing company must maintain a securityholder list of bondholders for the purpose of sending out interest payments and annual reports. If the company plans to redeem bonds before maturity, the list ensures that all bondholders are notified according to the terms of the bond issuance.
Example of a securityholder list clause
Here’s how a securityholder list clause might appear in a corporate governance or securities agreement:
"The Company shall maintain an up-to-date securityholder list that includes the names, addresses, and number of securities held by each securityholder. The list shall be available for inspection by securityholders upon request, in compliance with applicable laws and regulations. The Company shall use this list for the purposes of distributing dividends, sending notices for shareholder meetings, and other communications as required by the Company’s Articles of Incorporation."
Conclusion
Securityholder lists are essential tools for maintaining transparency, communication, and compliance with legal and regulatory requirements in the management of securities. They enable companies to effectively communicate with investors, ensure proper distribution of dividends, and facilitate the voting process for corporate decisions.
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.