Registered share - What is a registered share?
A registered share is a share issued in the owner’s name. If the owner later sells the share, the new owner must register it in their name.
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If someone owns a registered share, they’re referred to as a registered shareholder. They’ll have their name and address recorded on the company’s share registry. Registered shares may also be referred to as registered stock.
What is a share?
A share is a certain percentage of ownership of a company. When someone purchases a share, they receive shareholder voting rights, and the company profits are shared between the shareholders based on their percentage of ownership. It’s a popular way for companies to raise funds for their business.
Registered shares vs. bearer shares
A bearer share is the opposite of a registered share. A bearer share doesn’t have to be registered and doesn’t have a name on the share certificate. Whoever holds the share certificate is the current shareholder. If the share certificate is given to another person, they are then the shareholder.
Registered shares allow the issuing business to always know who its shareholders are. With bearer shares, however, the issuing business can’t track the ownership of the share.
Companies generally prefer registered shares as they’ll be able to track stock transactions to avoid a hostile takeover.
In recent times, bearer shares have become less common, as it’s easier for them to be related to illegal activity. Many international companies have switched to registered shares. Panama is one of the few countries that still allow the issue of bearer shares.
What does it mean to own a registered share?
If you own a registered share of a company, this usually means that you’ll have voting rights, and receive dividends payments (if there are any).
The shareholder will receive investor information, their dividends and any other information directly from the company, rather than through a middleman. Even if you purchase your shares through a broker, it’s possible to register them.