Non-Objecting Beneficial Owner (NOBO)

Definition

A Non-Objecting Beneficial Owner (NOBO) is a shareholder who gives their broker or bank permission to release their name and address to the companies or issuers in which they own securities. This allows the companies or issuers to communicate directly with the shareholder. It’s the opposite of an Objecting Beneficial Owner (OBO), a shareholder who doesn’t allow their contact information to be shared.

Phonetic

Non-Objecting Beneficial Owner (NOBO)Phonetics:Non-Objecting: /nɒn əbˈdʒɛktɪŋ/Beneficial: /ˌbɛnəˈfɪʃ(ə)l/Owner: /ˈoʊnər/NOBO: /ˈnoʊboʊ/

Key Takeaways

1. Ownership Structure: A Non-Objecting Beneficial Owner, or NOBO, refers to an investor who holds shares of a public company through a broker and allows their name and other information to be shared with the companies in which they hold an investment. This type of ownership structure contrasts with an Objecting Beneficial Owner (OBO) who prefers to keep their information anonymous.
2. Communication Preferences: The decision to become a NOBO offers companies the opportunity to communicate directly with their shareholders. As a result, these shareholders are typically more involved in shareholder meetings and have a greater understanding of the company’s operations and financial health.
3. Investor Relations: Being a NOBO can potentially influence a company’s investor relations strategy. Companies may decide to use the information provided by these investors to enhance their relations and communication. This direct line of communication can lead to the development of investor relations materials that better meet the needs and expectations of this key stakeholder group.

Importance

The term Non-Objecting Beneficial Owner (NOBO) is essential in business/finance as it refers to a beneficial owner of a company’s securities who does not object to the company knowing their identity. This term is particularly important in the context of shareholder communications and rights. When these individuals permit their brokers to release their names to the companies in which they own stock, the company can directly communicate with them about annual reports, proxy statements, or other relevant matters. This access facilitates a more direct relationship between a company and its shareholders, potentially improving corporate governance and transparency. It can also have an impact on shareholder voting, thus influencing the company’s strategic decisions.

Explanation

The term Non-Objecting Beneficial Owner (NOBO) plays a vital role in the direct communication between companies issuing securities and their shareholders. Often, shares of a public company are not held directly by the shareholders but instead, are held by a broker or bank. When these shareholders do not object to the release of their contact information, they are referred to as non-objecting beneficial owners or NOBOs. Access to such information allows companies to communicate directly with their shareholders, this line of communication is crucial during important voting or corporate decision-making processes.Having NOBO lists can benefit companies in multiple ways. For one, it can enhance corporate governance by making it feasible for companies to approach shareholders for present vote solicitation directly, particularly on critical matters such as mergers or acquisitions. Moreover, companies can use NOBO lists to gauge shareholder sentiment or attitudes towards specific company policies or strategic decisions. Therefore, the Privacy Act calls for shareholder’s permission before their contact information is disclosed to the companies, respecting the privacy rights of shareholders while providing companies the chance to connect directly with shareholders who are willing.

Examples

1. Apple Inc.: Let’s say you own shares in Apple Inc. through a brokerage firm like Fidelity. While Apple Inc. may not have your personal contact information, if you are a non-objecting beneficial owner (NOBO), Apple Inc. can request it from Fidelity to communicate directly with you. This can be about common shareholder matters including election of Board members or other shareholder votes.2. Alphabet Inc. (Google’s parent company): If you hold Alphabet Inc’s shares, you may be registered as a NOBO. They may approach the brokerage firm or bank where you hold your shares to get your contact details and consult you directly about important corporate decisions or events like merger proposals or change in corporate leadership.3. Amazon Inc.: When you invest in Amazon Inc. through a broker like Charles Schwab, as a NOBO, Amazon can request your details from Charles Schwab. This can allow Amazon to directly send you their financial reports, giving you a detailed review of the company’s performances. It can also facilitate direct voting which otherwise would be done through a proxy (broker). Remember, a Non-Objecting Beneficial Owner is a shareholder who holds shares through a broker or other nominee and who gives permission to that broker to release their name and address to the company whose shares they hold. This allows the company to communicate directly with their shareholders. However, the specifics can vary based on the company’s policies and individual investor agreements.

Frequently Asked Questions(FAQ)

Related Finance Terms

• Proxy Voting
• Beneficial Ownership
• Registered Owner
• Broker-Dealer
• Securities and Exchange Commission (SEC)

Sources for More Information

• Investopedia
• Dividend.com
• MarketWatch
• Financial Planning