What Is Holder of Record?
Let me explain what a holder of record is: it's the name of the person who is the registered owner of a security, and that person has all the rights, benefits, and responsibilities that come with ownership.
Key Takeaways
- A holder of record is the person who is the registered owner of a security and who has the rights, benefits, and responsibilities of ownership.
- For a stock, the holder of record typically has shareholder voting rights and receives dividend payouts, if there are any.
- For a bond, the holder of record owns the bond and receives the principal and interest payments.
- Holders of record may be recorded in a register of shareholders or similar type of ledger.
Understanding Holder of Record
As the holder of record for a stock, you typically get shareholder voting rights and any dividend payouts that are issued. If it's a bond, you own it and receive the principal and interest payments. Once you sell the security, you stop being the holder of record. This term can also apply to the legitimate owner of other securities, like commodities or derivative contracts.
Securities come in either 'registered' or 'bearer' form. In registered form, the issuing firm keeps records of the owner and mails out payments directly to you. In bearer form, the security trades without any ownership record; just having the physical security proves ownership. Bearer forms have mostly been eliminated because of their potential for misuse, so now securities are mainly issued in registered form.
You should know that a registered holder differs from a beneficial owner or holder, where holdings are in a brokerage account or held by a bank or nominee in street name. But as shareholders, both registered holders and beneficial owners have the same rights for voting, dividends, and communications—the difference is just in how you exercise voting rights or receive dividends and communications. Holding physical certificates in your own name is still an option for some investors, even though it's the norm to hold in street name. Transferring ownership this way costs more, so brokers charge higher rates for it.
Important Note
The shareholder register is essential for examining a company's ownership.
Register of Shareholders
Holders of record often appear in a shareholder register, which is a list of a company's active share owners, updated continuously. This register records each person's name, address, and number of shares held, and it might even include the holder's occupation and the price paid for the shares.
The shareholder register is not the same as a shareholder list; the list gets updated only once a year, while the register tracks the current partial owners of the company on an ongoing basis.
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