Shareholder in the United States
Shareholder as defined by Nolo’s Encyclopedia of Everyday Law (p. 437-455): An owner of a corporation whose ownership interest is represented by shares of stock in the corporation. Also called a stockholder.
This section covers:
In relation to Researching Shareholders:
- SEC Filings
- Secretary of State Filings
- Information provided by the company or shareholders.
In relation to Special Topics:
- Activist Shareholders;
- Annual Meetings;
- Foreign Companies;
- Insider Trading;
- Research Services;
- Shareholder Proxy Proposals.
A. Researching Shareholders
Basic shareholder research involves either identifying the shareholders of a company or finding out the companies in which a person owns stock. There are generally three sources for this kind information for shareholders in U.S. companies: (1) SEC filings (2) Secretary of State filings and (3) the company’s officers, shareholders and directors themselves. (For shareholders in foreign companies, see the “Foreign Companies” section, below. To identify insider trading or for other complex shareholder research questions, see the “Insider Trading” and “Research Services” sections, also below.)
1. SEC Filings: The SEC requires “Insider,” “Institutional” and “Beneficial” shareholders to file forms disclosing their share ownership in public companies. “Insiders” are officers or directors of the company, or people who own 10% of the company’s, stock (per Section 16(a) of the Securities and Exchange Act). They file Forms 3, 4, 5 and sometimes 144. “Beneficial” (5%) shareholders file Forms 13-D or 13-G. “Institutional” shareholders with discretion over securities worth $100+ million file Form 13F.
Shareholder Databases: Starting in 2003 all shareholder forms are filed electronically, so they are available in all the free and fee-based databases described in the Filings section of the “Securities and Exchange Commission” entry. To get forms filed before then, call Thompson Financial at 800-638-8241.
In addition, the following databases provide data on shareholder ownership and insider trading taken from the electronically-filed forms. Note: None of the databases are comprehensive prior to 2003.
LIVEDGAR offers nicely formatted Insider Trading Reports based on Forms 3, 4, 5.
The Vickers Stock Research database allows you to create reports using data from all the forms (www.vickers-stock.com).
The Vickers Institutional Holdings database on Lexis (COMPNY;VICINS) covers Institutional shareholders with information from Forms 13-D, 13-F, 4-S and 144-S.
If you have a Bloomberg terminal, you can get a reasonably comprehensive report of the Institutional shareholders of a company.
SEC Filings Databases: You can get the same or similar information by searching a database of the relevant SEC filings. For information on the various databases available, see the Filings section of the “Securities and Exchange Commission” entry in this Guide. Note: Since there are several good free filings databases, this may be your best bet for low-cost information.
2. Secretary of State Filings: The Owners and Officers database on KnowX.com provides basic company ownership information — including shareholdings — based filings with the various Secretary of State Offices throughout the United States. Alternatively, you may be able to find the relevant filings posted on the relevant Secretary of State’s Web site, or you could get copies from the relevant Secretary of State’s office. To pursue these options, see the separate entry for “Secretary of State Records.”
3. Company Information: Some companies and shareholders will give out ownership information even if they aren’t required to tell. This information can pop up in a number of places. In some cases the information is posted on the company Web site. Especially for smaller and private companies, try Dow Jones’ Corporate Ownership Watch and/or look near the end of a D&B report, which is generally the best source of ownership information for private companies. Also, search a database of business news articles to see if someone provided information to the press. If all else fails, call the company or someone who knows about the company (e.g., a stock analyst) to see if they’ll tell you anything.
1. Activist Shareholders: “Activist” shareholders try to affect the way the company is run.
For current awareness, sign up for The Deal Pipeline’s Activist & Regulatory Reportand 13D Monitor’s The Activist Report.
For international statistics, see the free reports by Activist Insight, which publishes annual and mid-year reports, as well as a periodical called Activism Monthly.
In addition to Activist Profiles, you can get “Takeover Defense Profiles” for public companies from SharkRepellent. The profiles list all the company’s provisions in place to resist activism. You can also use the detailed search template to research defense provisions.
For activism league tables, Factset compiles lists called “Company Defense – Top Law Firms,” “Company Defense – Top Banks” and “Top Legal Advisors to Activists.”
Activist Insight provides statistics on common types of actions, campaigns, proxies, holding periods, stocks, ROI for different types of investments and campaigns; lists of “intermediaries” (law firms, proxy firms and investment banks). SharkRepellent has its own statistics, including Proxy Fight Trend Analysis (generally and one just for fights for board seats).
2. Annual Meetings: The following list of list of resources on how to run an annual meeting for stockholders was compiled in December 2014 by Jocelyn Stilwell-Tong, Research & Training Librarian at Paul Hastings LLP:
- The Handbook for the Conduct of Shareholders’ Meetings (American Bar Association);
- BNA Corporate Practice Portfolio no. 12-5th, The Annual Meeting of Shareholders, by Darren C. Baker, Richard T. Miller, Alexander B. Young (available in print, through Bloomberg Law and through the Corporate Law Resource Center on BNA.com);
- PLC / Practical Law Company has a section on “Conducting the Annual Meeting” and a “Script for the Annual Stockholders’ Meeting”;
- “Meetings of Stockholders” (Bloomberg Law) – by Balotti, Finkelstein and Williams (available through Intelliconnect and in print);
- TheCorporateCounsel.net has a good selection of materials on stockholder meetings, including the RR Donnelley “Annual Meeting Handbook”. If you subscribe, just click on the “Practice Area” link on the home page, and then on “Annual Shareholders’ Meetings”.
3. Foreign Companies: To identify shareholders in companies outside the U.S., try the foreign equivalents to each U.S. category discussed above. For example, to find Canadian shareholders, search SEDAR filings instead of the SEC’s EDGAR filings. For German companies, the BaFin posts a database of Major Holdings of Voting Rights in Officially Listed Companies.
In the UK, “Every company subject to the Companies Act having share capital must keep a register of members on which the name, address and shareholding of each member (i.e., the legal owner of shares) is recorded. That register is required to be open for inspection in the United Kingdom, either at the company’s registered office or another place as may be specified by notice to the Registrar of Companies (and such notice is open to public inspection).”
4. Insider Trading: The SEC explains its insider trading rules, forms and procedures in its Guide to Insider Trading: Online Publications at the SEC. LIVEDGAR offers nicely formatted Insider Trading Reports, which are particularly useful starting 2003, when electronic filing of insider forms became mandatory. For more online resources see the databases discussed above. If you need to unravel or examine a particularly complex insider situation see “Research Service,” below.
5. Research Services: If you need a complex analysis of a situation — for example, if you need to identify insider trading or pick out patterns of sales and acquisitions in a particular industry — hiring a research firm may be the way to go. Some firms that do this kind of work for U.S. shareholders include CSC Networks (800-631-2155) and the Thomson Reuters (888-989-8373).
6. Shareholder Proxy Proposals: The most comprehensive work on the topic, to my knowledge, is Shareholder Proposals by Gumbs and Maitra, currently portfolio Number 83 in the BNA Corporate Practice Series. If you subscribe to the Corporate and M&A Module, Practical Law has a Practice Note on “How to Handle Shareholder Proposals,” a sample Shareholder Proposal Log, a chart of Deadlines for Rule 14a-8 Shareholder Proposals and a Rule 14a-8 Shareholder Proposal Process Flowchart.
Institutional Shareholder Services
Institutional Shareholder Services (ISS), studies and provides information on corporate proxy votes, principally for the benefit of institutional investors (pension funds, college endowments, etc.). They also make recommendations as to whether it is in a shareholder’s best interest to vote for or against particular proxies, and they advise businesses on how to handle corporate governance issues.
ISS is a unit of the MSCI, and the MSCI web site provides information about ISS under the “Environmental, Social & .Governance” tab. The ISS phone number is 301-556-0500.
Corporate ISS Corporate Governance Quotient Profiles analyze “the quality of corporate boards and the impact of their governance practices.” They are available on Westlaw (CORPGOV) and, by subscription, through the Government Analytics website.
Reports: ISS Proxy Reports analyze proxy issues and make voting recommendations for annual shareholder meeting. The reports are available, by subscription, through the Government Analytics website. There is an archive on Westlaw covering on Westlaw (ISS) from 1997 to February 2011.
Policies and Guidelines: RiskMetrics posts substantial summaries of the Policies and Guidelines the company uses to analyze proxies and other matters. Clients can access the complete reports.
Competition: The other major independant shareholder advisory service is Glass Lewis & Company. See also “Anaylyst Reports” in this legal Encyclopedia.
Institutional Shareholder Services
Secretary of State Records
Securities and Exchange Commission