Beneficial Owner
An investor who enjoys the economic benefits of share ownership but whose shares are held in street name through a broker, bank, or other intermediary rather than directly on the transfer agent's records.
Full Definition
A beneficial owner is the individual or entity that is the true economic owner of a security, receiving dividends, bearing investment risk, and retaining voting rights, even though the shares are registered in the name of a nominee (typically Cede & Co., as nominee for DTC). Most retail investors are beneficial owners because their brokerage firms hold shares in street name on their behalf. Beneficial owners receive shareholder communications via the broker or through a separate mailing from a proxy distribution agent. Editors must not use 'beneficial owner' and 'registered holder' interchangeably; the terms describe legally distinct categories of ownership.
Usage
Usage note: Never hyphenate 'beneficial owner'. In SEC filings, may appear alongside 'holder of record' or 'registered holder'; editors should ensure the document uses only one term consistently for each category.
In Context
- "Beneficial owners who hold their shares through a bank or broker will receive proxy materials from their intermediary rather than directly from the company." — Proxy statement / notice of annual meeting
- "The tender offer is open to both registered holders and beneficial owners, though tendering procedures differ for each group." — Tender offer prospectus