Why everyone — including your business — needs a share register
Share registers. Not the most exciting topic in the world — something your business has paid little attention to perhaps — but are you missing a valuable growth opportunity?
While there are certain requirements your share register needs to meet legally, however this is just the minimum. When managed correctly, it can also become a value-add tool for improving shareholder communications. Let’s take a closer look at why every company needs a share register, and how to maximise its benefit to your business….
It’s a legal requirement
Generally speaking, most countries require publicly listed and privately owned companies to keep an accurate record of their shareholders and the shares they own by law, and companies tend to manage this data in the form of a list or register.
Share registers are a legal requirement because, to put it simply, you need to know who owns your company. There are occasions when shareholders need to be contacted — to invite them to AGMs, pay out dividends, or consult them on a company vote — and you must have an up-to-date list of their details in order to communicate with them.
There are a certain number of basic shareholders details that your company must accurately store on file. In the UK, for example, businesses must record shareholders’ names and addresses, the number and class of shares they hold, the amount paid on the shares, the date on which they became registered as a shareholder, and — if they are no longer a shareholder — the date on which their membership ended.
There are similar record keeping requirements in other European countries, but with added significance. For instance, companies in France, Italy and Spain reward loyal shareholders with additional rights: legislation passed in France two years ago automatically gives anybody who has been registered as a company shareholder for more than two years double voting rights. Therefore, it’s vitally important that organisations in these territories keep an accurate record of when each shareholder became a registered member.
It’s also important to note that the legal requirements around shareholder registration change according to whether your business is public or privately-owned. For example, publicly owned companies must keep a list of anyone with voting rights in a company who acquires an interest in your shares.
It creates a community
While many companies — both public and private — view keeping a register as a legal ‘tick the box’ exercise, it can actually become a valuable asset for nurturing your shareholder relationships. However, the way most businesses currently manage their share registers makes it difficult to start building investor communities.
Most publicly owned companies tend to outsource management of their register to a third party, such as a registrar and/or Central Securities Depository (CDS). This puts a high level of trust in that partner, and involving a middleman often means that data updates can be slow, but the associated fees are high.
Additionally, when shares change hands, the transaction process is complex, as it can involve issuers and stock exchange communications, as well as coordinating the registrar and CSD, and many of these stakeholders are using legacy technology.
In contrast, many private companies manage their share register in-house, through Word or Excel documents. While this is a cheap way to meet legal requirements and most staff are proficient in these programmes, there are some fundamental problems with this approach.
For example, it is difficult to keep an accurate register history without saving multiple versions, which can easily be confused during the update process. Additionally, these documents are often not password protected, so anybody can change the data (accidentally or otherwise).
If your business moves away from managing data on word documents, spreadsheets, or hidden away on a third-party system, and starts managing it through an online platform, the power is placed back in your hands. There will be one central location that your employees can access securely to update information — and, as importantly, shareholders can log on at any time and check their details are accurate, so they feel like an official part of your investor network.
It provides you with an opportunity to increase shareholder value
In addition to being an accurate and transparent way to manage important details, keeping a central record of shareholder data is a powerful way for your team to learn more about them, and use that knowledge to communicate with them more convincingly.
Although the law requires companies to keep basic information about their shareholders, there is nothing to stop your business from gathering further details, such as their age or gender. There is also an opportunity to delve into their engagement patterns, such as how they vote on company issues (if they even vote in the first place).
With a deeper profile on each investor, you can start tailoring marketing communications to target certain segments of your shareholder network, depending on your growth objectives. For instance, by identifying shareholders that aren’t exercising their right to vote, you can create campaigns to encourage greater engagement, offering exclusive incentives in return for their opinions.
By reaching out more frequently with better targeted messaging, shareholders will really get a sense that your company cares about who they are, and values their input. And building a stronger relationship will not only encourage them to retain their investment, it may persuade them to increase their stake in your company.
It’s easy to achieve — with the right technology
Share registers offer huge marketing and relationship-building potential, but to do this successfully, it’s important that businesses use the right technology to manage your list.
As we’ve already mentioned, it’s time to move away from outsourcing registration to a third party, or managing it with rudimentary programmes like Word or Excel, and find a platform that can store your list centrally online. However, there are other things that you need to consider when signing up to new share registration technology.
Firstly, it’s vital to know that all your shareholder data is being stored securely. Look for a decentralised share register, which operates on the blockchain. This makes it incredibly secure, as there is no single authority controlling the data, and all information is encrypted, making it tamper-proof. Equally, it offers automatic version control, meaning that if somebody accidentally changes a record, the previous version is still available.
Secondly, it’s important to choose a platform that is user-friendly, for both shareholders and employees with limited technical knowledge. The ideal platform will not only make it simple to upload and update your shareholder information, it will include easy-to-use analytics and reporting functions, so that company executives can get a stronger understanding of who your shareholders are, and how they are engaging.
Finally, to make sure better resources don’t mean bigger budgets, you need to look carefully at the payment model for your chosen technology. Many software companies make money by charging businesses per shareholder record, which means a longer shareholder list costs you more.
However, there are products on the market running a ‘freemium’ model, where it is free to sign up and start registering shareholders. These platforms are focussed around helping businesses to increase your shareholder value, and will not penalise you for becoming an investment success.
Own has just launched a market-leading decentralised share register platform to help businesses spend less time managing shareholder data, and more time growing shareholder value. Take a tour of our technology to find out more.
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