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What is a Holder of Record?

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  • Written By: Tim Zurick
  • Edited By: A. Joseph
  • Last Modified Date: 20 November 2016
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    Conjecture Corporation
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A holder of record is the registered owner of a stock or a debt instrument, such as a bond. Corporations must keep track of the owners of their securities for various administrative purposes. Some securities are callable, meaning that the issuing company can require their return. Others might have restrictions attached to their transferability. In such cases, the issuer must be able to communicate with the holder.

The securities owner might be entitled to certain rights related to his or her investment. These rights can include voting on corporate matters, distributions of dividends and interest as well as routine corporate communications. Depending on the specific type of security involved, the registration of owners might be maintained by the issuing corporation itself or by an independent registrar company. Again, the ability to find the holder of record is critically important.

Common stocks are regularly traded from one owner to another, which can create a problem if a dividend should come due during the transfer period. When stocks are traded, final transfer of ownership can take several days. The question is then whether the buyer or the seller is entitled to receive a dividend or the proceeds from a stock split during this settlement period. United States Securities and Exchange Commission rules resolve the question by mandating that corporate directors specify a record date as they declare a dividend. Holders of record on that date are entitled to the dividend.

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To qualify as a holder of record, the stock must be purchased at least two business days prior to the record date. This last day to earn the dividend is called the ex-dividend date. The record date is not normally the date of purchase; it is merely the moment in time when ownership is established for distribution purposes.

A holder of record might be an individual or a business entity, and the holder's name is normally listed on the stock or bond certificate. He or she might be merely a custodial holder, such as when the actual beneficiary is a minor or when a security is held by a broker on behalf of a client. Securities also can be completely unregistered, in which case there is no holder of record to be noted by the registrar or to be named on the certificate. Such unregistered securities are called bearer certificates, and whoever is in possession of them can trade them or receive any beneficial distributions due. Holders of record also might be referred to as owners of record or shareholders/stockholders of record.

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