The nominal holder of securities is the depositary, on the personal account (custody account) of which the rights to securities belonging to other persons are accounted. The concept of a nominal holder was introduced by the federal law “On the Securities Market” (article 8.3). He is a person who holds securities in his own name and on the instructions of another person, but is not the owner [1] .
In a broad sense, a nominal holder means not only an organization defined by Russian law, but also foreign nominal holders and foreign organizations that are entitled, in accordance with their personal law, to record and transfer rights to securities [2] .
Content
Business Case
The meaning of nominal holding is to represent the interests of owners of securities, that is, investors . The reason for the emergence of nominal holding is to protect the interests of investors from errors or other problems that may arise when direct account is taken by registrars or issuers of rights to securities [1] .
The nominal holder provides professional service to investors. Some second-level nominal holders are provided with some operational and cheaper services [3] . In particular, registration of transfer of ownership within one day and a low fixed fee, which in the case of the registrar, as a rule, depends on the amount of the transaction.
Privacy Preservation
Thanks to the nominal holding scheme, the nominal holder of securities will be indicated not in the register of shareholders. In some cases, the nominal holder in the register of shareholders may be only the central depository , which in Russia is the National Settlement Depository CJSC , belonging to the Moscow Exchange group. NCO CJSC "NSD" works as a depository with organizations that carry out professional activities on the securities market and have licenses. In particular, NSD opens depository accounts for the nominal holder. The owner of the securities can open an account at depository "X". Securities will be under double nominal holding. As a result, neither the registrar nor the primary nominal holder, whose accounts will take into account securities in the registry, will know the actual owner.
Relationship between the holder of the securities and the nominal holder
Nominal holding is formalized through a contract between the owner of the security and his attorney. The form of the contract may vary, but by legal nature it is closest to the agency contract. The agreement on nominal holding is based on the principles of the commission, since the agent (nominee holder) can act in the interests and at the expense of the client. The agreement on nominal holding contains provisions on the representation of the interests of the owner of the securities with the issuer through delegation to the nominal holder of the rights and powers of the owner. The nominal holder may perform actions related to the exercise of the rights of his clients, without a power of attorney, in accordance with their instructions or instructions. The transfer of rights to securities between depositors of the same nominal holder is not reflected in his personal account or the depot account of the nominal holder [4] .
Central Securities Depository as Nominal Holder
In cases provided by law, only the central depository can be a nominal holder in the register. He may open nominee custody accounts with other depositories [5] . In particular, in Russia, the central depository opens foreign nominal holder custody accounts to organizations included in the list approved by the Bank of Russia . They can be international centralized systems for recording rights to securities and (or) settlement of securities, as well as foreign central depositories or clearing houses [6] . For example, Depository Trust and Clearing Corporation, Euroclear Bank or Clearstream Banking.
Nominal Holders in Russia
In 2017, there are 363 depositories in Russia, each of which can act as a nominal holder [7] .
See also
- Depository bank
- Custody activities
- Depositary bank
- Specialized depository
- Central Securities Depository
Notes
- ↑ 1 2 Lyashkov A. Nominal holder in the corporate securities market // Securities Market. - 1997. - № 5 . - p . 19-23 .
- ↑ Kirichenko D. Corporate actions and the exercise of the rights of shareholders // Depositarium. - 2016. - № 1 . - p . 24-32 .
- ↑ Mikhailova E. Virtual safe for shares // D`. - 2008. - № 4 .
- ↑ Collection of questions and answers on depository activity and depository accounting // Depositarium. - 2000. - № 3 .
- ↑ Dementieva Yu., Stuart D. Changes in legislation and their influence on issuers with depositary receipt programs . Latham & Watkins (2012).
- ↑ Kamasheva S. The concept of a foreign nominee holder in Russia: at what stage we are // Depositary. - 2014. - № 3 . - p . 26-29 .
- ↑ Professional participants in the securities market: List of depositories . Bank of Russia (August 25, 2017).
Literature
- Federal Law of April 22, 1996 No. 39-ФЗ (as amended on July 18, 2017) “On the Securities Market”.
- Federal Law of 07.12.2011 No. 414-ФЗ (as amended on 13.07.2015) “On the central depositary”.