Understanding Regulatory Requirements for Knowing Your Shareholders

New York | February 19, 2015

AST Ownership Intelligence provides personal and consultative services that allow companies to have comprehensive knowledge about who owns their shares on the beneficial owner level.

Access to this information gives companies the ability to provide the detail that most regulatory bodies examine when testing ownership restrictions.

Institutional and Retail Ownership

Companies are often faced with regulations which restrict ownership to specific geographic locations, or require companies to monitor investor ownership changes. These regulations could be tax and/or government related. Examples include, but are not limited to, The Canadian Telecommunications Act, Foreign Private Issuer status, and U.S. Tax Code Section 382.

The following are some key points related to the various regulations:

  • The Canadian Telecommunication Act restricts ownership of shares by foreign investors.  
  • The U.S. Securities and Exchange Commission will make regulatory accommodations for companies who qualify as a Foreign Private Issuer. One aspect of earning FPI status is met when more than 50% of the outstanding voting securities of the issuer are directly or indirectly held of record by residents of the United States.
  • The rules of U.S. Internal Revenue Service Code section 382 apply to limit a corporation’s ability to utilize existing net operating loss carryovers once the corporation experiences an “ownership change.”

Although some ownership data is publicly available through SEC filings, the required disclosure rarely identifies the beneficial owner. Rather, the SEC filings focus on institutional investors.

Institutional investors only manage the shares owned by beneficial owners. In order to identify the true owners of a company’s shares, one must go deeper than the public filings and provide granular data on the individuals who own and receive the benefits of dividend distribution and proxy voting rights.

Beneficial Ownership Identification

As part of its comprehensive analysis, AST Ownership Intelligence identifies beneficial owners on two primary levels:

  1. Who
    1. Details the names of the beneficial owners
    2. Identifies relationships of beneficial owners (e.g. parent companies, underlying holdings)
    3. Identifies the types of beneficial owners (e.g. trusts, charities, endowments, mutual funds, pensions, qualified retirement plans, companies, etc.)
  2. Where
    1. Geographic location of investors, or investors’ residency
    2. Geographic jurisdiction of investors

We hope this update has been helpful. As always, our team of experts welcome the opportunity to speak with you further about your specific requirements. Please contact us if we can provide any additional information.

AST Ownership Intelligence

Brad Starkweather

Senior Vice President

Tel.: 212.269.5580


Lou Cordone

Senior Vice President

Tel.: 212.269.5579