What are Non-Beneficially Held Shares? (2024 Update)

A critical step in setting up your company is allocating and managing shares. Shares allocate ownership in your company to different shareholders (also called members) and in different amounts. Moreover, they can also give members certain rights within your company, such as voting and making important company decisions. This is why it’s important to understand the different share types that are available.

Depending on the company structure of your business, you can offer a variety of shares types. Two of these include beneficially held and non-beneficially held. In this article, we’ll discuss non-beneficially shares and how they can help you structure your business

Table of Contents

Article Summary

As outlined above, beneficially held and non-beneficially held shares are just two types of a myriad of shares issued in a company setting. The main point of differentiation comes from whether or not the entity holding the shares directly benefits from them.

  • Non-Beneficially Held Shares: shares are held with no direct benefit to the entity bestowed with them. Commonly issued to a trustee for a person or company to legally own a person’s shares.
  • Beneficially Held Shares: shares are held with direct benefit to the entity bestowed with them.

Get a free legal document when you sign up to Lawpath

Sign up for one of our legal plans or get started for free today.

Beneficial status

A shareholder’s beneficial status denotes whether a shareholder receives a direct benefit from the shares. If they do, then the shares are beneficially held and if not, then the shares are non-beneficially held. You can change the beneficial status of these shares online through ASIC. On the contrary, you must ensure that you notify ASIC within 28 days to avoid any penalties.

Non-Beneficially Held Shares

‘Non-beneficially held shares’ are a type of share. A trustee holds these for another entity, such as a person or company. This means that they do not hold the shares or benefit from it themselves. This means they won’t receive any direct benefits from the shares. For example, a trust cannot own company shares. A trustee may be listed as the legal owner and hold shares on behalf of the trust to combat this.

Beneficially-held shares

Alternatively, beneficially held shares directly benefit the person who holds them. For example, if you’re a sole shareholder, you will receive all dividends. You benefit directly from your ownership of those shares. Therefore, ‘beneficially held shares benefit you’ whereas ‘non-beneficially held shares benefit someone else’.

Example

The Y Trust has acquired a 27% stake in Company X. This equates to roughly 27,000 shares. When it comes to share allocation, the trustee of the Y Trust becomes the shareholder, holding them non-beneficially.

ASIC and Non-Beneficially Held Shares

Once you have registered your company, you can allocate shares online. At this point, you may also want to create a shareholders agreement. If the shares aren’t held beneficially, they will be listed as ‘No’ on ASIC Connect. ASIC will not inquire into the trust. Therefore, this is a useful way to hold shares in a company anonymously. However, if they are held beneficially, they will be listed as ‘Beneficially Held – Yes’.

Conclusion

If you wish to make an application for additional shares you can use the customisable and ready to use application for shares. ASIC requires companies to record the shares they issue on a register and, thus, you must also update ASIC on the status of these shares. Non-beneficially held shares can be a great way to structure ownership of your company, but it’s important to know if it’s the right share structure for you. If you’re unsure as to what share structure is right for you, it may be worth contacting a business lawyer.

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

Most Popular Articles
You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions

Share:

Register for our free live webinar today!

Price of Justice: Paying the Right Price for Legal Expertise

12:00pm AEDT
Tuesday 30th April 2024

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

Default interest clauses can help protect lenders' interests, but sometimes they will not be enforceable. Find out more here.
Lying on your resume to get a job is never a good idea. In fact obtaining employment through fraud can actually land you in jail.
Reference checks are integral to hiring the right people for your business. Make sure you get it right by following these simple steps.

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.