Any person or a legal entity can own shares in a Pty Ltd company. If the owner of the shares is entitled to the direct benefit from the shares, the shares are beneficially held. If the shares of the company are owned for the benefit of someone else, then the shares are not beneficially held.

Beneficial owner is a person who enjoys the benefit of ownership even though the title of the asset is in name of another person/entity.

By benefit it means that it includes voting power and / or receiving dividends.

Why someone would hold shares for benefit of others?

There can be various reasons why a person would hold shares for benefit of others. One of such reason is that a trust cannot hold shares in a company. Therefore, shares of the company would be registered in name of trustees for benefit of the trust. Shares held by a person as trustee, nominee or on account of another person are non–beneficially held.

For example –

1. X is the shareholder in company ABC Pty Ltd. All dividends are going to be paid directly to him. Since X is the one deriving benefit from the shares he is beneficially holding the shares.

2. If X sets up a family trust and is a trustee of the trust and wants earnings from the company’s shares to go through the trust. In this case, X is not beneficially holding the shares but for the benefit of the trust.

X in whose name the shares are registered is the registered owner and the trust for whose benefit shares are held is the beneficial owner.

What are shareholder’s obligation regarding beneficial ownership?

The shareholders who do not beneficially hold shares must notify the company in writing within 14 days beginning on registration of a share transfer.

If there is any change in the nature of a holding i.e. from beneficially owned shares to non beneficial holding or from non beneficial holding to beneficially holding, the shareholder must notify the company in writing within 14 days of the changes.

If all shares are held beneficially by the registered owner there is no requirement to give notice to the company.

This provision applies to all companies other than listed companies as there are other provisions for listed companies for tracing beneficial ownership of shares.


What is the form of Notice to the Company?

The notice to advise the company about beneficial / non beneficial holding of shares must -

a) state name and address of the transferee (if notice is not given along with share transfer form) / person
b) specify number of shares now held non-beneficially / beneficially;
c) set out particulars of the shares and
d) be signed by or on behalf of the transferee.

When company has to inform ASIC about beneficial holding of shares?

When any person in top 20 members of the proprietary company changes their shares from beneficially to non-beneficially holding (or vice versa), the company is required to inform ASIC about the changes in Form 484 (Section C) within 28 days of the change.

Company records

When unlisted company having share capital receives notice about the shares not beneficially held, the company must record it in the Register of members reflecting any shares that a member does not hold beneficially.

Failure to comply

Failure to inform company about the non beneficial ownership and changes therein is an offence of strict liability under criminal code and penalties may apply.