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An easy explainer of non beneficially held shares

19/09/2022 by
The Marketing Team
In this Business Kitz post, we'll talk about non beneficially held shares and how they may help you organise your firm. When starting up a business, it is essential that you understand crucial elements to running a successful enterprise. Allocating and managing shares is a vital stage in establishing your company. Shares assign various amounts […]
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In this Business Kitz post, we'll talk about non beneficially held shares and how they may help you organise your firm. When starting up a business, it is essential that you understand crucial elements to running a successful enterprise. Allocating and managing shares is a vital stage in establishing your company. Shares assign various amounts of ownership in your firm to different members. You can offer a variety of share types depending on your company's structure, with the two being beneficially held shares and non beneficially held shares. 

What is a non beneficially held share?

As previously stated, non beneficially held shares are one of the many forms of shares when setting up a company. A trustee manages things on behalf of another entity, such as a person or a firm. This implies that they do not own the shares or benefit from them. This implies they will not gain directly from the shares.

Moreover, non beneficially held shares can be an excellent method to organise ownership of your firm, but you must first determine whether this is the best share structure for you.

What is the difference between non beneficially and beneficially held shares?

The major distinction is whether or not the entity owning the shares directly profits from them.

  • Non beneficially held shares: These are shares that are held with no direct advantage to the entity that owns them. 
  • Beneficially held shares: shares are held with direct benefit to the entity that owns them.
HELD

What is a shareholder's beneficial status?

Beneficially held denotes that the owner of the shares benefits directly from them. If they do, the shares are beneficially owned; otherwise, they are non beneficially held. If you want to change your beneficial status, the Australian Securities and Investment Commission (ASIC) allows you to modify it online. On the contrary, to avoid fines, you must inform ASIC within 28 days.

ASIC is an independent government agency in Australia, their purpose is to administer the Australian Securities and Investments Commission Act 2001 (ASIC Act).

Non beneficially held shares allocation

Once your business has been registered you can allocate shares online, and at this stage, you may also want to create a shareholders agreement. Furthermore, when allocating shares you can grant members particular privileges within your organisation, such as voting and making critical corporate decisions.

If the shares are not owned beneficially, they will be published on ASIC Connect as 'No.' ASIC will not investigate the trust. As a result, this is a convenient way to hold stock in a firm while remaining anonymous.

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Legal advice 

If you are confused about the difference between beneficially and non beneficially held shares, our sister company, Legal Kitz can assist. To arrange a FREE consultation with one of their highly experienced team members, click here today, or contact us at info@legalkitz.com.au or 1300 988 954.

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The Marketing Team
Business Kitz Marketing team are experts in their field. You can expect the best business guides and updates on employment law here.
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