South Florida Arbitration & Litigation Lawyer Blog
Direct Registration – Securities Ownership:
This post is designed to provide the reader with a general description of securities ownership through direct registration. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. Thus, this post should not be relied upon as providing legal or investment advice. If you have any questions concerning this post, you should consult a qualified professional.
If a company offers direct registration for its securities, you can choose to be registered directly on the books of the company regardless of whether you bought your securities through your broker or directly from the company or its transfer agent through a direct investment plan. Direct registration allows you to have your security registered in your name on the books of the issuer without the need for a physical certificate to serve as evidence of your ownership. While you will not receive a certificate, you will receive a statement of ownership and periodic account statements, dividends, annual reports, proxies, and other mailings directly from the issuer.
The advantages of direct registration include:
- Since you are “registered” on the books of the company as the shareholder, you will receive annual and other reports, dividends, proxies, and other communications directly from the company.
- If you want to sell your securities through your broker, you can instruct your broker to electronically move your securities via DRS from the books of the company and then to sell your securities. Your broker should be able to do this quickly without the need for you filling out complicated and time-consuming forms.
- You do not have to worry about safekeeping or losing certificates, or having them stolen.
The disadvantages include:
- If you choose to buy or sell registered securities through a company’s direct investment plan, you usually will not be able to buy or sell at a specific market price or at a specific time. Instead, the company will purchase or sell shares for the plan at established times – for example, on a daily, weekly, or monthly basis – and at an average market price.