Business, Legal & Accounting Glossary
Under a trust, the person who has equitable title to some asset or property. Note that the beneficial owner is regarded in equity as being the property’s ‘true’ owner, despite the fact that he does not possess legal title to it.
The true owner of a security or property which may be registered in another name.
Many clients of stockbrokers, particularly those of online execution-only brokers, have ‘nominee’ accounts. With nominee accounts, the shares are registered in the name of the broker, but the client is the beneficial owner.
Beneficial owner is a legal term which refers to a person who has the right to live in a property and use it as he/she wishes although he/she may not actually possess full ownership, for example, a leaseholder.
The phrase, however, is becoming more and more common in stockmarket usage as a result of the growing importance of nominee accounts. In this instance, the beneficial owner of shares owns shares held in trust by a nominee, which is usually a company set up for this purpose by a stockbroker.
You may wish to hold shares through a nominee account to reduce paperwork or save on dealing costs as the stock market moves to rolling settlement.
Remember, you may lose your rights to shareholders’ perks, annual reports and your right to vote at annual and special shareholder meetings if you hold your shares in a nominee account.
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This glossary post was last updated: 26th April, 2020 | 2 Views.