Beneficial ownership

The beneficial owner of an asset is the person for whose benefit it is being held. Beneficial ownership arises when an asset is owned by one person (the "legal owner") who has a duty to use it on behalf of another; one person holds assets as trustee for another.

Securities, especially those held by private investors, are often held by brokers' nominee companies. Like other property, securities may also be held by trustees, and it is sometimes necessary to trace ownership through a long line of holding companies and trustees to find the ultimate beneficial owner.

The difficulties involved in tracing ultimate beneficial owners can make it more difficult to enforce regulations, such as those regarding takeovers. Mechanisms exist in the UK to help uncover them. For example, the Companies Act gives companies the power to demand that legal owners (whose names are shown in the register of shareholders) disclose information about beneficial owners.

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