Nominees shareholders

[Ben]

I got a question to ask. I saw many top shareholders in listed companies are under nominees, for example, DBS Nominees, HSBC Nominees etc... What actually is nominees?

[iisterry]

Under the brokerage name I believe. For Eg, if a minority shareholder were to purchase via DBS Vickers Online, it would be considered under DBS Nominees.

[d.o.g.]

if a minority shareholder were to purchase via DBS Vickers Online, it would be considered under DBS Nominees.

This is not correct. Nominees are used when the legal ownership is separate from beneficial ownership. For example, when buying on margin, the nominee is the legal owner. It holds the shares as collateral, and keeps track of the beneficial owner via its own internal register.

An investor who wishes to hide his presence may also use a nominee account to hold his shares even though he paid cash. This can be useful if the investor is famous and wants to avoid people from front-running him.

[Ben]

An investor who wishes to hide his presence may also use a nominee account to hold his shares even though he paid cash. This can be useful if the investor is famous and wants to avoid people from front-running him.

Thanks d.o.g.

Is it possible that there are more than one person in a nominee account? For example, if DBS nominees has 1 million shares in x company, can it be that there are more than one unrelated person owning that 1 million share?

[Jon-san]

A good example would be anyone buying a company's shares using his CPF monies. The shares would then come under CPF nominees. The person actually owning the shares would be the buyer, but CPF would be the one receiving any Annual Reports before forwarding them to the respective buyer.

[d.o.g.]

Is it possible that there are more than one person in a nominee account? For example, if DBS nominees has 1 million shares in x company, can it be that there are more than one unrelated person owning that 1 million share?

Of course. There can be an unlimited number of beneficial owners even though there is only 1 legal owner (the nominee). And the beneficial owners can also be nominees, ad infinitum.

[Ben]

Of course. There can be an unlimited number of beneficial owners even though there is only 1 legal owner (the nominee). And the beneficial owners can also be nominees, ad infinitum.

Thanks. One more question. Can substantial shareholder of a company buy shares using nominee account and so hide his real shareholding? I think this is not allowed but would like to confirm.

[Musicwhiz]

Thanks. One more question. Can substantial shareholder of a company buy shares using nominee account and so hide his real shareholding? I think this is not allowed but would like to confirm.

From my own understanding, yes this can be done. But the SSH still has to declare if he buys or sells above the 5% threshold, and he will have to disclose the nominee account name as well in which the shares are held through.

Maybe someone can correct me on this in case I am mistaken? Thanks.

[d.o.g.]

Can substantial shareholder of a company buy shares using nominee account and so hide his real shareholding? I think this is not allowed but would like to confirm.

Of course it can be done. The substantial shareholder is supposed to disclose, but in practice this is very hard to police, since as long as he does not cross 5% at each nominee, nobody is any the wiser.

[mikh]

This is what i find frustrating. It's just not transparent enough and makes difficult for outsiders to figure out the real owners, their motivations and corporate actions. Another instance of minority shareholders losing out.