Indirect beneficial interest

The issue of indirect beneficial interests most often occurs in reporting contexts when declarations of interest must be made. The term itself is not often used in the UK. It is standard terminology in other countries including the US and South Africa. However, disclosure requirements in the do usually include indirect beneficial interests, although the wording used is usually different.

An indirect beneficial interest occurs when a person connected to the person reporting an interest has a beneficial interest. For example, if A is a director of company X. A's spouse, B, is the beneficiary of a trust. If the trust buys shares in X, then A acquires an interest that needs to be declared, and:

  • the interest is beneficial because the shares will be held by a trustee, and
  • A's interest is indirect because B, not A, is the beneficiary

The other three types of possible interest are:

  • direct,
  • indirect, and
  • direct beneficial

Whatever the wording disclosures of indirect beneficial interests would be required in any reasonably well regulated market.

Copyright Graeme Pietersz © 2005-2020