One of the most important parts of running a company is managing your shareholders. And there are many company compliance requirements that your company must follow to make sure it’s properly managed. One part of this is to understand whether your shareholders have beneficial or non-beneficial ownership.
So, when it comes to your company’s shares, what does beneficial ownership and non-beneficial ownership mean?
If someone has beneficial ownership of a share it means that you can benefit directly from the shares. If they own shares in your company but aren’t entitled to receive the benefits from them, then you have non-beneficial ownership.
A non-beneficial owner often holds a share for someone else. Some common examples of non-beneficial owners include parents who hold shares for their children, the executor of a will who owns shares on behalf of an estate, or a trustee who holds shares for the beneficiaries of a trust.
A direct benefit of a share may include:
So if you have a shareholder who is a trustee, they’re not entitled to receive the dividends of the trust. They may receive the dividends but they must hold this on trust for the beneficiaries of the trust. The trustee will be required to distribute the dividends to the beneficiaries based on the details of the trust.
Many people choose to hold their shares under a structure of non-beneficial ownership. This is because using a trust or other similar structure can be a convenient way to hold shares anonymously so details of who the beneficial owner is are not publicly available.
Shareholders who don’t have beneficial ownership of the shares they hold in your company must tell you within 14 days of holding the shares. They must tell you in writing and include the following information:
Your company must keep records of every share that it has issued in its share register. This must include information about each shareholder including:
The only exception to this is if you have shares in a listed company. In that situation, a trustee or executor of a will would be listed as the beneficial owner of the share.
Every time any of these details change, your share register must be changed to reflect this. If you’re a proprietary company with 20 or less shareholders then you must also tell ASIC about all of these changes to your share register. You can do this on the ASIC online portal or CCASA can manage this aspect of company compliance on your behalf.
If you’re a proprietary company with more than 20 members, you only need to tell ASIC about changes that affect your 20 largest shareholders for each type of share that you have. The information that you need to tell ASIC includes:
There are several ways these changes could come about, including if:
Your company, whether it’s proprietary or public, also needs to tell ASIC when you:
When it comes to shares and company compliance, there’s a lot to get your head around – but if you don’t tell ASIC about the changes to your company’s shares, your company may be fined.
That’s why many companies find it helpful to let us handle things for them. We can remind you when updates are due, or simply do it for you. Contact us to find out more about we can help you manage your company’s shares. We have company compliance offices in Melbourne and Perth.