Within the economic world, there are certain terms that should be known. One of them is registered shares. Although it is not a product that is within the reach of many, yes you can run into him at some point and for that you have to know what it refers to.
In this case, today we are going to focus on knowing what nominative actions are, types, examples and how they are transmitted. Do you want to learn it?
What are registered shares
Registered shares are those actions that are registered to a specific name. In other words, these shares are linked to a specific owner or shareholder in such a way that only he or she can make use of them.
In other words, we could conceptualize nominative actions as an action that is in the name of a person.
This makes us see the difference with bearer shares, which anyone could manage, but in the case of registered only the person with the name written in this action can exercise the power to assert your rights (and also to fulfill the obligations given to you).
When a nominative action is carried out, this must always be registered in the book of registered shares, otherwise it might not be valid.
Not all shares are registered
As you know, bearer shares coexist with registered shares. However, there are a number of them that must necessarily be considered in the second case. Which? Specific:
- The actions established by law that must be nominative. In this case, you can only abide by what the law establishes.
- Those that require an accessory benefit. For example, those that accompany a main obligation.
- Shares that are not fully paid up. When there is still something pending in these actions, as the person responsible for them, the holder must take charge of settling the accounts and, to avoid problems, they identify with that shareholder to keep control.
Types of registered shares
It is not easy to classify registered shares to divide them by types because in reality It all depends on the criteria with which they are going to be classified..
One of the most common is based on the type of right that the shareholders will have. Thus, we have:
- common. Also known as ordinary. In this case, the holder of that share has a voice and a vote in the shareholders' meetings (in a way, he has control over the decisions that are made).
- Preferential. They are those that give the shareholder rights to receive a minimum dividend. In other words, when accounts have to be settled, the holders of these shares have priority to recover their investment if there are problems paying all shareholders.
Now, another of the classifications that is widely used is the transmission medium, and in this case we find two large groups that are:
- Endorsable. We can define them as those actions that can be transferred to another person. For this, a mechanism must be followed, that of endorsement, in addition to notifying the issuing company of this movement so that it is registered in the Registry book.
- Not endorsable. Unlike the others, in this case they cannot be transmitted. However, this is not so in reality; yes, they can be transferred, but using the figure of the “assignment of non-endorsable credits”.
How registered shares are transferred
Imagine that you have a nominative share (of whatever type) and that you prefer not to have it, but to transmit it to another person. As we have told you before, this can be in case of being endorsable or non-endorsable.
What if it is endorsable? Then an endorsement procedure is carried out. What is done is make a contract where the shareholder is willing to sell his registered shares to the person who is going to buy them. And, therefore, they pass on your name to the new buyer.
Now, for this to be legal, that contract must be registered in the registry book of nominative shares. Otherwise, it would not have legality to do so.
What happens if they are not endorsable? In the event that the shares are not endorsable, it does not mean that they cannot be transferred, they can. But to carry out the process, it must be done through what is called a contract for the assignment of non-endorsable credits.. It is really similar to the above, since the last step after the signing of that contract is going to be registered in the registered shares book. But, and here is the difference, this book will have two parts, the endorsable ones (where the previous one would go) and the non-endorsable ones, where these go.
Examples of registered shares
To finish, we want to give you some examples of nominative shares so that the type of shares and the reason why they are called as such are much clearer to you.
One of the clearest examples are the actions of soccer teams. Many have shareholders and those shares can be nominative.
To be more clear, imagine that you have a soccer team that you love and 2000 shares go up for sale. You have enough money to buy them and at that moment they tell you that they are nominative. What does it mean? That those 2000 actions will be linked to your person. No one else will be responsible for them and at the same time you will be able to exercise your rights while fulfilling your obligations.
Another example can be operations carried out on the stock market by companies. Instead of being bearer shares, without knowing who is behind them, they would come with "name and surname". In fact, in many corporations, or in high standing (or very famous) companies, registered shares are used to carry out financial operations.
Like any share, registered shares have their advantages and disadvantages. But when it comes to getting them, you have to weigh those pros and cons before getting something that might not be right for you (or will bring you more trouble). Has their concept and everything related to them been clear to you?