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James Chen, CMT is an expert trader, investment adviser, and global market strategist.
Updated July 12, 2022 Fact checked by Fact checked by Suzanne KvilhaugSuzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.
A registered holder is a shareholder who holds their shares directly with a company. Registered holders have their names and addresses recorded in the company's share registry, which is usually maintained by its transfer agent. Investors who use this direct registration system (DRS), a service offered by the Depository Trust Company, to become registered holders receive a statement of ownership attesting to the number of shares they hold, rather than a physical stock certificate.
Registered holders receive all investor information, corporate communications, and dividends directly from the company or its transfer agent. A shareholder can elect to become a registered holder even if the shares are purchased through a broker. A registered holder is also known as a registered owner.
The direct registration route through which a shareholder can become a registered holder is one of three ways a security can be held. The other two ways of holding a security are in street name or through physical certificates.
An investor's preference for using one of these three ways of holding securities would be based on factors such as convenience when trading, cost, risk, their preferred method of receiving dividends, and communications.
Becoming a registered holder is not as convenient or cheap as holding securities in street name. Still, it is preferable to holding physical certificates, which can be lost, damaged, or stolen.
While a registered holder can sell a security directly from their direct registration system account, to obtain current pricing, the security generally has to be transferred electronically to a broker/dealer before it can be traded.
Registered holders usually have more access to a company's records and the ability to dissent during a merger than beneficial owners, even though both types of holders share the right to vote, collect dividends, and receive quarterly reports.
A registered holder is distinct from a beneficial owner or holder, whose holdings are held in a brokerage account or by a bank or nominee in street name. But as shareholders of a company, registered holders and beneficial owners have the same rights with regard to voting, receiving dividends, and communications. The main difference is how voting rights are exercised, and how dividends or communications are received.
That said, there are many jurisdictions where only registered holders, also known as legal owners, can exercise the rights. So a registered holder can inspect a company's records and books, vote, and dissent in a merger.
Beneficial owners must work through the proxy system to exercise these same rights as they are not the legal owners of the shares. In fact, requests by beneficial owners to review the books are often rejected by companies on the grounds that they do not come from a registered holder.
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Description Related TermsThe target payout ratio is a goal companies set for the amount of earnings they intend to pay out as dividends. The ratio is important to the company and shareholders.
The conversion price is the price per share at which a convertible security, like corporate bonds or preferred shares, can be converted into common stock.
A sophisticated investor is a type of investor with significant net worth and experience, permitting advanced investment opportunities.
An unrealized gain is a potential profit that exists on paper resulting from an investment that has yet to be sold for cash.
A direct stock purchase plan (DSPP) enables individual investors to purchase stock directly from the issuing company without a broker.
A holding period is the amount of time an investment is held by an investor or the period between the purchase and sale of a security.
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