Bearer shares or registered shares :
The shares or securities in a stock market portfolio may be registered or bearer shares. In the case of bearer shares, the issuing company does not know the name of the holder. In the case of registered shares, the shareholder is known to the company. But the impact of this difference is not limited to this, as it will also influence the succession of these shares.
Indeed, most stock market investors buy bearer shares as part of short- or medium-term investment strategies. Investors wishing to make a long-term investment in the capital of a company will prefer registered shares.
However, it is still possible, by making a request to a financial intermediary, for bearer shares to be converted into registered shares. Of course, as we will see in the rest of this article, there are other major differences between bearer shares and registered shares, whether in terms of management, profitability or information.
Bearer investment and its specificities :
First of all, it should be remembered that a share is in fact a title of ownership that can be traded. It represents part of the share capital of a company. Thus, a share gives rights to the shareholder who buys it in order to realize capital gains by selling it later at a higher value. To own company shares, also known as "securities", it is compulsory to register them in a securities account or a PEA or Share Savings Plan in the name of the holder. In this type of account, the shareholder has the choice of holding the shares in bearer or registered form.
As we have seen above, in the case of bearer shares, the identity of the holder is not transmitted to the company but is only known to the financial intermediaries who are responsible for the administrative management of the shares. It should be noted that the majority of stock market securities held in France are in this form, i.e. bearer shares. This system is ideal for shareholders who only wish to keep their shares for the short or medium term.
In contrast, registered shares allow the shareholder to be registered in the share register of the issuing company.
One of the main differences between bearer and registered securities is that it is easier to transfer bearer securities, which do not require a notarial deed and are eligible for manual donation.
Why opt for bearer shares?
The choice of one or the other of these two solutions for holding securities requires the comparison of several criteria and elements.
- Firstly, and as far as information is concerned, registered shares are more interesting because the shareholder who is known to the company has easier access to general meetings. It is nevertheless possible to request a notice of general meetings from the management intermediary for holders of bearer shares.
- As far as management is concerned, this is one of the strong points of bearer shares, as it is possible to combine all the shares in a single securities account or PEA. Holding registered shares requires opening an account with each company whose shares are held, except in the case of administered registered shares.
- The taxation of bearer shares is also simpler with a single tax form for all shares.
- However, it should be noted that the profitability of the shares remains higher with registered shares because they can sometimes benefit from loyalty advantages such as a double voting right or an increased dividend. In addition, registered shares are exempt from custody fees, which can represent a substantial advantage.