Log in

What is meant by holder of record?

Posted on Friday, May 31st, 2019 by MarketBeat Staff

What is meant by holder of record?

Summary - A holder of record is the individual or entity (such as a brokerage or investing firm) that holds the legal rights to a security. An investor can be a holder of record in one of three ways.

  1. Direct registration - this means the investor will have their name and address recorded in the company’s share registry. In return, the investor will receive a statement of ownership that confirms the number of shares they own.
  2. Take possession of physical stock certificates – this is less common with the convenience and security of electronic trading.
  3. Become a beneficial owner – this is also called being an owner “in street name”. In this case, the investor buys the security from a broker who is considered the registered owner. However, as the beneficial owner, the investor retains most of the rights and benefits of registered owners including receiving any dividend checks from dividend-paying stocks.

The route that an investor chooses for becoming a holder of record is based on factors such as cost, ease of trading, risk, and how the investor wants to receive dividends and communication from the company. Holding a security in street name is the most common and convenient, but it does mean that the investor is not the legal owner of the security. Directly registering with a company is more expensive and less convenient than holding securities in street name. However direct registration holds less risk than holding physical certificates which, if in the investor’s possession, should be kept in a secure location such as a safe or safe deposit box.

Because of a regulation known as the T + 2 Settlement Rule, owning shares of common stock is not the same thing as being the holder of record. An investor can become a holder of record the moment they purchase their stock but they will not become the owner of record until the trade is settled which will not be for two business days after the trade is made. For day traders, this sets up a situation where they may own a stock for a brief period but never become the holder of record.


In the days before electronic trading, shareholders received stock certificates that confirmed their ownership of the stock. However to facilitate the speed of trading as well as to provide convenience and security, many investors can be considered the holder of record (or shareholder of record) without taking possession of a physical stock certificate. In this article, we’ll review what is meant by the term holder of record. Continue reading to learn more about how being a holder of record is different from simply being the owner of a security. We’ll also review the difference between being a registered owner and a beneficial owner (which is called being an owner “in street name”).

What is meant by holder of record?

A holder of record is the individual or entity that is considered to be the registered owner of a security. The holder of record has the rights, benefits and responsibilities of ownership. Holders of record for shares of common stock are also called stockholders. They enjoy shareholder voting rights and will get dividend payouts. Holders of record for bonds are alternately called bondholders. Bondholders are entitled to receive the principal and interest payments for the bond. The holder of record continues to be the holder of record until they sell or transfer the security. Owners of other financial instruments such as commodities and derivatives contracts may also be known as the holder of record.

A holder of record is also known as a registered holder. A registered shareholder as the name implies, is registered with the company with whom they have purchased stock. So if Jane Doe purchases 100 shares of stock from the ABC Company, the company will have Jane’s name assigned to their corporate ledger as being a registered owner of the stock.

As a registered owner, Jane may request to receive a record of her ownership via stock certificates. However, in most cases, investors receive their shares electronically. Physical ownership of a stock certificate is not necessary for an investor to be considered the holder of record.

A less common alternative to registered ownership is to have a security issued in bearer form. This means that, instead of the issuing company keeping a record of who owns the security and mailing payments to them, the company trades the security with physical possession of the security being the only evidence of ownership.

Do investors become the owner of record the day they purchase their stock?

There is a difference between being the owner of a stock and being the owner of record. The moment an investor purchases the stock, they become the owner of the stock. However, they will not become the owner of record until two business days after their purchase date. This is because of the T +2 Settlement Rule that requires two days for trades to settle.

For example, if an investor buys a stock on a Tuesday. Because of the settlement rule, the trade will not settle until Thursday (Tuesday plus two days). On Thursday, the investor would become the holder of record. If the investor turns around and immediately sells the stock on Wednesday, they would not see that trade settle until Friday (T + 2). This means that on Thursday, they would no longer own the stock, but would still be considered the holder of record (in the eyes of the company, you’re still the owner).

Day traders will frequently buy and sell a stock the same day. In this case, the Settlement Rule means they can own the stock (briefly) but never actually be the shareholder of record. In our example above, if the trader buys and sells the stock on a Tuesday, the trade does not settle until Thursday. If the investor had not sold the stock, this would be the day they become the holder of record. However, because they sold the stock, they will not be the holder of record. This is how they can be in a situation in which they are never the shareholder of record.

What is the holder of record date?

The holder of record date is the date when the board of directors or other entity of a corporation designates the holders of record that are on their stock ledger to receive dividend payments and/or stock rights. The holder of record date is different from the ex-dividend date. The holder of record date is also known as the record date or date of record.

If I purchase shares through a brokerage account, am I the holder of record?

When investors purchase shares through a brokerage account, they are considered to be the beneficial owner. If Jane Doe had purchased 100 shares of the ABC Company through her broker, the broker would be considered the holder of record. However, Jane would be the beneficial owner.

Being a beneficial owner means that the individual investor will not have their name on the stock certificate, but they will still be listed as the “real and beneficial owner”. This method of ownership is known as holding the securities “in street name”. 

Holding securities “in street name” is far more convenient for brokers because it means they are not tracking securities, for example individual stock certificates, to each individual. A broker holds their securities in electronic form. When an investor buys or sells securities, the broker allocates that portion of their inventory to the investor.

A beneficial owner has many of the same benefits as a registered owner. This means, if they own dividend stocks, they will receive dividend payments. Since they are not the legal owners of the shares they can exercise their right to vote at shareholder meetings by submitting their proxy vote.

Why is holding securities “in street name” a more efficient way to trade securities?

Holding securities in street name reduces both the time and the expense of transactions. For example if, instead of holding securities electronically, a broker holds paper stock certificates, they would have to match the exact stock certificate to the individual investor and send them to the company who would then have to change the name on the securities to the new owners. Since the holder of record is not officially the holder of record until the holder of record date, this would delay the ownership of that security.

Considering that there are thousands of transactions that take place every day, having the securities trading in street name is also a tremendous cost savings which can boost the total return on an investment.

It is possible for an investor to request a transfer of ownership from in street name to holding physical certificates, but because of the inconvenience it provides for the broker it will cost an investor more to own those shares.

Am I the holder of record for the stocks in my IRA?

An investor is only the holder of record for stocks in their retirement account if they purchased the stocks directly from the company. If they purchased the shares of stock in their retirement account through a broker (as the vast majority of retirement fund holders do), the broker is considered the holder of record. In this case, the investor is still considered the beneficial owner.

This is not the same thing as a self-directed IRA which simply means the investor, rather than the broker or fund company, is choosing the individual stocks and other securities that make up their retirement account.

The final word on holder of record

Holder of record is the term used to describe owners of a security who are eligible to receive dividends and other stock rights. A holder of record is known alternately as a shareholder of record as it pertains to stocks, or bondholder of record in the case of bonds. A holder of record can be a registered owner which means their name and address is recorded on the ledger of the company from which they purchased the security. This can, but in most cases today does not, involve taking possession of the physical stock certificates. Due to electronic trading and the proliferation of investors trading through brokerage houses, many holders of records are considered to be beneficial owners. In this case, the brokerage is the legal owner of the stock, but the investor is considered the holder of record when the time comes for the company to issue dividends. Beneficial owners have voting rights through the proxy system.

An investor becomes the owner of a security on the day of the trade. However, because of rules that govern when a trade actually settles, they will not become the holder of record for two days after the trade.  Although in many cases this is just a matter of time, the title “holder of record” is a critical designation for determining an investor’s ability to receive dividend payments and have other rights afforded to owners of a stock.


20 High-Yield Dividend Stocks that Could Ruin Your Retirement Portfolio

Almost everyone loves a company that pays strong dividends. Who doesn't like receiving a check every quarter for simply owning a stock--especially if that stock is paying you back 4%, 5% or even 10% of its share price in annual income each year?. In a world where 10-year treasuries are yielding just above 2%, it seems hard to go wrong when buying a stock that's yielding significantly above the going rates on fixed-income assets. Unfortunately, the market rarely offers a free lunch.

While high-yield stocks may have a lot of near-term attractiveness, those same high-yields can often signal significant danger ahead. In some cases, it might mean that the company's dividend will stop growing or won't grow as fast as it used to. Worse yet, the company could cut its dividend, reduce the income you receive from owning the stock and drive down the value of the shares that you own.

4%-plus yields might seem like an easy opportunity to boost the investment income you receive, but high-yield stocks can just as often be a track reading to snare unsuspecting investors. It's not always easy to tell the difference though.

This slideshow highlights 10 high-yield dividend stocks that are paying an unsustainably large percentage of their earnings in the form of a dividend. These companies are all paying out more than 100% of their earnings per share in the form of a dividend, a sign that the advertised high-yield probably won't last.

View the "20 High-Yield Dividend Stocks that Could Ruin Your Retirement Portfolio".

Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:

Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.