A stockholder of record, also known as a registered shareholder, refers to an individual or entity whose name is officially listed on the records of a company or its transfer agent as the owner of shares of stock. Being a stockholder of record implies that the individual or entity holds legal ownership of the shares, granting them certain rights and privileges associated with the ownership of corporate stocks. This term is especially relevant in the context of publicly traded companies where shares are bought and sold on the secondary market.
When a person or entity purchases shares in a company, either during an initial public offering (IPO) or via the stock market, their ownership needs to be recorded in the corporation’s books. This registration process is performed by the company’s transfer agent, a specialized entity responsible for maintaining accurate records of share ownership. The stockholder of record is identified as the official owner of the shares on the date the registration is completed.
The role of a stockholder of record carries several important implications. Firstly, it grants the stockholder the right to receive dividends, if and when they are declared by the company’s board of directors. Dividends are a portion of a company’s profits distributed to its shareholders, typically on a per-share basis. As a registered shareholder, the stockholder of record is entitled to receive their portion of the dividend payments, which are often distributed quarterly or annually.
Moreover, being a stockholder of record grants certain voting rights within the company. Shareholders typically have the right to vote on matters brought before the company’s annual general meeting (AGM) or special meetings. These matters may include the election of directors, changes in corporate policies, amendments to the company’s bylaws, mergers and acquisitions, and issuing new shares. The number of votes a stockholder possesses is usually determined by the number of shares they hold.
Additionally, stockholders of record have the privilege of receiving important corporate communications and financial disclosures from the company. These may include annual reports, financial statements, and proxy statements. By providing these documents, companies ensure that stockholders are kept informed about the financial performance, strategic decisions, and upcoming events that may impact their investment. This transparency facilitates the stockholders’ ability to make informed decisions regarding their holdings.
It should be noted that being a stockholder of record does not guarantee absolute ownership or control of the shares. In some cases, stockholders may entrust their shares to a broker or custodian for safekeeping, or they may hold the shares in street name. In such instances, the registered stockholder may not appear on the company’s records but retains the beneficial ownership and all associated rights.
In conclusion, a stockholder of record is an individual or entity whose name is officially listed on the records of a company or its transfer agent as the owner of shares of stock. This designation affords stockholders certain rights including the receipt of dividends, voting privileges, and access to important corporate communications. Understanding the role of the stockholder of record is essential for investors seeking to navigate the complexities of the stock market and exercise their ownership rights within a corporation.
