A nominal holder of shares is a shock absorber between the owner of the share and the issuer. For the convenience of the reader, the abbreviation NDA is applicable in the article.
In an effort to save hard-earned and unspent money, a person places rubles on deposits, opens metal accounts or exchanges domestic currency for foreign money. Part of the free finance is invested in the Russian economy through the purchase of debt receipts. Asset owners are called by the investor. The level of financial literacy of the population is known and not in dispute. Therefore, to represent the interests of investors, the institute of nominal asset holders has been introduced.
Legislation NDA
The chain of stock rotation of stocks and bonds includes four major links:
- Issuer
- Central Securities Depository.
- Nominee holder - second level depository.
- The owner of the asset.
Manipulation of property within this scheme is regulated by Russian legislation on the securities market and on depositories. Normative acts were first introduced into the legal field in 1996. Given the ongoing political and economic events, laws are regularly updated.
A person, if he is not a professional participant in the exchange market, will easily get lost in normative wilds. What is the meaning of a nominee holder? The activity of NDA is aimed at representing the interests of investors before issuers and registries.
Who can be NDA
Nominal stock holding is a form of camouflage. In the harsh 90s, the institution of attorneys on the stock market was in demand. The fact is that buying and selling by a specific person often met resistance from issuers. In addition, some investors tried not to advertise participation in enterprises.
A nominal holder of securities is a participant in a bilateral agreement. By concluding an agreement with the owner, “face value” means himself in the register, and the real owner seemed to go into the shadows. The nominee manager did not receive ownership of the assets received, but could perform the actions with them, indicated in the contract with the real owner.
To solve the client’s problems, the financial intermediary in question must be a professional and be on the register of holders of financial assets.
Nominee holders of securities are the depositary and broker familiar to shareholders. The layman encountered a depositary during the exchange of privatization checks for a piece of the Russian flagship economy. Brokers met people who decided to play on the stock exchange. In each case, the owner enters into an agreement on the principles of the commission: the client instructs, and the manager fulfills. Whatever relations are enshrined in the contract, the transfer of ownership does not occur.
The contract necessarily stipulates the method of communication with the client. A nominee shareholder is an operational notifier of interested parties of material facts. For example, a broker sent customers letters about a sixfold increase in the depositary's commission for withdrawing securities from a securities account. A notification was received a month before the start of the tariff changes. Traders, having estimated the volume of securities stored in the depository, managed to make a withdrawal for 500 rubles of commission before the New Year holidays. Latecomers for a similar operation will pay 2800 rubles. Estimating the amount of savings, we must remember that these are hard-earned, earned, own funds. The difference of 2300 rubles is worthy of application.
The difference between NDA and remote control
In search of a legitimate and profitable placement of purchased, received as a gift or a voucher for national wealth, a person is faced with the need to immerse himself in the exchange sciences. Not every shareholder has the opportunity and desire to spend their own time and energy on the development of market wisdom. An authorized person is required who will not let you down and do not lay hands on someone else's property. In the legal field, there is the concept of trust management. Non-documentary property is given into the wrong hands, and these hands can perform any operations with assets, including sale.
A nominal holder is not entitled to sell other people's property. This is the difference between “face value” and “trust”. A nominal holder of shares is an intermediary between the investor and the issuer.
Rights and obligations of ND
Based on the type of nominee holder, the relations of the parties are fixed in the following types of contracts:
- Depository, when securities are held by the depository.
- Customer service, when the broker receives the rights to manage entrusted securities.
The client hires an employee - this is the essence of the contract. A nominal shareholder is fully aware of this. Therefore, in addition to passport data and legal addresses, the following sections are included in the obligations:
what rights does the principal confer on the nominal holder;
the order of operations and the method of reporting;
amount of remuneration;
liability and warranty.
The method of submitting instructions and reporting is important because of the territorial remoteness of counterparties.
NDA Accounts
With accounts, the situation is as follows. The nominee holder has a custody account, which takes into account the rights of others to shares. Suppose a person exchanged a voucher for receipts or bought a share of the enterprise. All client rights to a part of the issuer's property and to possible dividend compensation are registered in the shareholders register.
After concluding a client’s contract with a professional assistant and transferring securities to him, a new person appears in the register of shareholders.
A nominal holder opens an account: individual for each principal and collective account for a group of clients.
Problems with NDA
In the box “owner - issuer - registrar - nominee holder" the lucky purchaser has the support of a nominee holder in front of the company and the registrar. But in the event of a conflict of interest between the owner and ND, the postulates of the law are vague.
It is not possible to take all situations into account in normative acts.
Three aspects will help to safeguard your own interests and preserve property to the shareholder:
- Financial literacy.
- Permanent accounting of transactions with trusted property.
- Regular monitoring of the actions of the nominal holder.
A nominee shareholder is the pros and cons of trust. An honest merchant word means a lot:
- Issuers often pay dividends to shareholders. But when the documentary certificate is handed over to the nominal holder, it is ND that is listed in the register of the issuing company. The possibility of a long delay in the transfer of dividends by the holder to the owner of financial instruments is not ruled out.
- Suppose the owner wants to sell the stock. In this case, a certificate of ownership must be presented. Which is completely impossible, since the assets are registered on a nominal holder. The real owner remains out of work. No document - no rights.
- Let the person decide to get a loan secured by property. And it will not be possible to lay financial property, since the assets have been transferred to a nominal holder.
NDA in Russia
As of January 2018, the list of depositories contains 349 entities vested with the right to function as a nominal holder.
A year ago, the list consisted of 363 units.