Which category you fall in was likely determined when you set up your brokerage account, and it affects how companies are allowed to communicate with you. Here’s a primer on what it means to be a non-objecting beneficial owner. The securities and exchange commission (SEC) outlines the definition of both types of beneficial owners and lays out specific rules on how companies can interact with each type of beneficial owner. The SEC requires that a broker be the intermediary between a company and a NOBO for any proxy information. Another reason most corporations are against having this distinction is due to SEC rules. Under SEC rules, communication between corporations and investors is done through a bank or broker that holds shares for investors.
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- Let’s say for simplicity that a corporation has two retail investors – Investor A and Investor B. Both of them have a brokerage account with the same financial institution.
- Financial intermediaries such as brokerage firms generally charge the company and its investors a small fee for receiving and forwarding investor communications.
Under Securities and Exchange Commission (SEC) rules, companies mainly communicate with beneficial owners through broker or bank intermediaries. Intermediaries are prohibited from disclosing to a company the identity of beneficial owners who object to that disclosure (objecting beneficial owners or OBOs), and the company cannot contact OBOs directly. The company may contact directly shareowners who do not object (non-objecting beneficial owners or NOBOs), but SEC rules nonetheless require that proxy materials be forwarded to them by the intermediaries.
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There are some advantages to being a NOBO, especially when it comes to receiving important communication promptly. The term non-objecting beneficial owner (NOBO) refers to beneficial owners of companies who have permitted their financial institutions to release their personal information to the companies they have invested in. The information given out includes the name and address of the beneficial owner, along with information regarding their investment in the security. If you own stock in a company but don’t actually hold the paper shares, meaning a brokerage holds the shares for you, you are a beneficial owner of those shares. As a beneficial owner, you can either object to your brokerage sharing your name, mailing address, and share amount with the company itself; or you can not object to sharing that information. If you don’t object, you’re a non-objecting beneficial owner.
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- Under SEC laws, intermediaries are strictly prohibited from disclosing the name and personal information of OBOs.
- However, the SEC still maintains that beneficial owners should be contacted via an intermediary, such as a broker, for proxy materials.
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- We advocate for effective and resilient capital markets.
Objecting beneficial owners (OBOs), of course, wish to maintain the distinction as well. OBOs would like to keep their holdings and financial strategies private and to avoid undesired solicitations and other spam. The only thing worse than no bookkeeping is bad bookkeeping. Every business needs accurate, timely, financial data in order to make educated decisions.
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They’ll then tailor our bookkeeping approach to fit your business. We surveyed a few other vendors before picking a bookkeeping service, but none were as responsive, professional, and cost-effective as Notanobo. There is one tough thing about handing off your bookkeeping, figuring out what to do with all your extra time. Less time bookkeeping means more time to pursue your passions — like growing and running your business.
Advantages of Being a Non-Objecting Beneficial Owner (NOBO)
The OBO/NOBO distinction impedes company communications with beneficial owners and communications among shareowners. SIFMA believes that investors have the right to be informed of the implications of proxy voting and the NOBO-OBO designation. Moreover, SIFMA believes that investors should understand it is their choice to share private personally identifiable and financial information with issuers. An OBO instructs the financial intermediary to not provide their personal information to the issuer. Conversely, a NOBO directs the intermediary to release their private personal information such as their name, address and number of shares owned to the issuer.
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Under SEC laws, intermediaries are strictly prohibited from disclosing the name and personal information of OBOs. As a result, the company cannot contact OBOs directly. Even though companies can directly contact NOBOs, the SEC still requires that proxy materials be forwarded https://accounting-services.net/bookkeeping-vancouver/ to investors only via an intermediary. Since Investor A is a NOBO, he will most likely get this news in his email directly from the company. On the other hand, Investor B will get this news in his email from the broker or financial institution that holds the shares.
This structure means that there’s an intermediary between you and a company, reducing potential solicitation (or just annoying communication) from companies. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
SIFMA is the voice of the U.S. securities industry. We advocate for effective and resilient capital markets. Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
