A registered share or registered stock is a certificate of ownership in a publicly traded company which is registered in its holder’s name. Owners of registered shares are listed in the share registers of corresponding companies.
Registered shares differ from bearer shares in that their ownership is recorded, meaning they are owned by the person or entity listed as their owner in a share register. Companies know exactly who owns registered shares and communicate directly with registered shareholders.
Bearer shares, on the other hand, are simply owned by the person or entity who holds them at any given time. While the brokers which sell bearer shares and the custodian banks which hold them know who the shares belong to, the companies owned through the shares do not know who owns their bearer shares. Correspondence with bearer share holders and distribution of dividends is carried out through the custodian bank or broker.
Companies typically prefer registered shares to bearer shares because tracking transactions in their stock can help them avoid hostile takeovers. However, bearer shares are popular with investors who prefer to avoid the responsibilities attached to registering their shares (such as AGM attendance). Issuing bearer shares also helps companies to avoid the administrative burden of tracking every transaction in their stock.
More on this topic:
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