Types of Investors
   

Types of Investors

There are different ways you can “hold” or “own” shares in a company. These types of ownership include:

Registered Owner: You may choose to hold your shares directly with the company. This is known as “direct registration.” With this option, your name and address are recorded on the company’s, or issuer’s, books. Though shareholders don’t receive a physical certificate, they do receive a statement of ownership, as well as all shareholder communications directly from the company. Shareholders may select direct registration even if their securities are purchased through an intermediary, such as a broker-dealer.

Beneficial Owner: You may choose to hold your shares in a financial intermediary’s name, or “street name.” This means your shares are registered in the name of your broker or bank. However, you’re the beneficial, or true, owner of the shares and benefit from all of the privileges associated with owning the stock.

Beneficial owners are either Non-Objecting Beneficial Owners or Objecting Beneficial Owners.

Non-Objecting Beneficial Owners of Securities (or “NOBOs”) purchase shares through a broker or bank and do not object to releasing their name to requesting companies. NOBOs hold their securities in street name and may receive shareholder communications directly from the issuer.

Objecting Beneficial Owners of Securities (or “OBOs”) purchase shares through a broker or bank and object to releasing their name to issuing companies. OBOs hold their securities in street name and receive all shareholder communications through their broker or bank.

Investing in Mutual Funds

When you invest in a mutual fund, the fund manager pools your money with other investors’ assets to make investments in a variety of securities issued by various companies.

Mutual fund managers vote on behalf of all of their customers, and, as an individual investor with a limited number of shares, you can’t influence how the fund votes. However, investment companies have a fiduciary responsibility to act in the best interest of their customers, and an obligation to vote accordingly.

Historically, mutual fund companies weren’t required to disclose why and how their proxies were voted. However, in 2003, the Securities and Exchange Commission (SEC) amended the rules governing disclosure requirements by mutual funds to address investment companies’ fiduciary responsibility to their investors. The amended rules now require mutual funds to:

  • Disclose their proxy voting policies and procedures
  • File Form N-PX—a form that documents the fund’s proxy voting records for the previous 12 months—annually with the SEC
  • Disclose their proxy voting records to their sharehol

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