Some private business organisations or companies either carry out share registry tasks in-house or outsource them to professional advisors, like accountants or lawyers. Unfortunately, this approach might not always be suitable, and it is challenging to scale.
In addition, it can be costly, time-consuming, impractical, or even pose operational risks as your business grows or if it issues various instruments, like bonds. But as the number of security holders expands on your company’s register, the need for share registry services arises.
Understanding Share Registry
It is a database containing information about shareholders of a company and all the shares they have. Usually, third-party registrars are responsible for maintaining it and recording any changes, including when shares are sold out or bought.
However, for startups, the key function of a share registry service is to present accurate details about a business’s ownership structure. This information is crucial for several reasons. For instance, it enables companies to communicate with their shareholders, hold shareholder meetings, and issue dividends.
How It Works
A company’s registered shareholders should be recorded in a register. According to experts, this register is often organised into classes, where every shareholder is listed alphabetically by their last name.
The register can include all shareholders’ personal information and maintain records of every share issued to shareholders. It may also include share transfer details and the names of shareholders who received those shares.
Registers can be maintained by third-party registry service providers or the company itself. Third-party registry service providers are tasked with updating and maintaining registers at agreed fees. Because shareholder registers are public documents, third-party service providers and other parties may access updated lists of every shareholder in a company at a time.
Why Consider Share Registry Services?
Whether you own a private entity that wants unlisted funds management, a publicly listed company, or are in IPO application processes for the first time, experts like BoardRoom can care for your registry needs. With share registry services from an expert, you can benefit from the following:
- Meeting administration and scrutinising service: Businesses must provide well-managed and seamless EGMs and AGMs, regardless of how their shareholders decide to attend. With expert help, your shareholders won’t just attend hybrid meetings. They will also be able to attend virtual and physical meetings.
- Maintenance & coordination: Experts’ exceptional precision, knowledge of registry requirements, and client care support businesses thrive across APAC. They may also help with payment distribution, shareholder communication/support, maintaining members for non-equity securities/listed securities, and registering shareholders’ securities or shares.
- Corporate action: Once a company becomes public, it will need more capital and funding. Experts may help administer and plan a company’s capital-raising projects and corporate actions. They can help with general offers, rights issue exercises, and share allocation/placement.
- IPO guidance: Finalising IPO processes is an achievement for Singaporean businesses. However, many IPOs take over six months, which might be very complex. Fortunately, experts have enough experience to deliver many benefits, including balloting, application processing, and preparing balloting schemes.
Failing to Meet Share Registry Obligations: Consequences
For businesses, outdated share registers may cause serious issues when raising capital, distributing dividends, or shareholder voting and communications.
Regulatory bodies may act differently and impose penalties against companies that don’t meet register requirements. For instance, if a company doesn’t meet its legal responsibilities in the correct timeframe, the responsible body might charge a hefty late fee and deregister the company if it already has outstanding penalties and fees.
Shareholder Registry Requirements and Creating Shareholder Registers
If shareholders are entitled to direct benefits of shares, we can classify shares as beneficiaries held. Every share held in trust is classified as non-beneficiary because it’s held for third parties.
Companies need to provide shareholder registers to current stakeholders for free, whereas non-stakeholders might be required to pay a certain fee. Experts say that companies must present current stakeholders with contact details of other stakeholders when their needs arise.
Shareholder registers include more than just the contact details and names of shareholders. They also include the amount paid to get shares, the category/number of shares that respective shareholders held, and important dates, like share transfers, share cancellations, and share purchases.
Services Share Registrars Provide
Organisations providing shareholder registry services manage share registers for companies, including details, members’ addresses/names, share class/classes, whether or not stakes are beneficially held, and stake transactions, including the number of shares.
Unless you’re already an expert in working with capital markets, you won’t know the differences between the services that share registrars provide. Some of the services registrars provide include the following:
1. Support Service for IPO Listing
An important role of registrars is to always support their clients throughout and before their IPO listing process or journey. Since there are many unknowns in the IPO listing process, it is important to enlist the services of an expert.
Professionals have experience in different situations, which ensures they advise you on the necessary steps for a great experience founded on best practice governance and compliance.
2. Secure Process & Data Protection
Professional registrars often liaise with regulatory bodies to ensure that very important data, such as shareholder lists and registers of every active shareholder, are maintained actively. This is one of the standard services that share registrars provide, but what sets them apart are their procedures and policies around data protection.
The data that share register houses have sensitive personal information, such as identity numbers and residential addresses. In countries like Singapore, the law under the PDPA protects personal data.
3. Polling Solutions
Registrars must anticipate different clients’ needs and advise businesses on which polling solutions are more suitable for them depending on factors like the company’s budget or the number of stakeholders. Here are common forms of polling solutions/services that registrars provide:
- Electronic polling: This is administered through smart cards and handsets.
- Manual polling: This is done through paper and pen, and registrars count votes manually during meetings.
In conclusion, understanding the importance of share registry services is important for managing stakeholders and the different types of securities that your company may decide to provide. By choosing the best registrar, your business will not only provide data to investors without incurring unnecessary costs, but it will also be able to manage real-time information more efficiently.
