The nominative share is a type of share whose main characteristic is the requirement to register the name of its owner, by the company issuing the quota. That is, the identification of the holder of each share is totally mandatory.
This registration is done directly in the Register of Registered Shares of the organization and only after its conclusion is the ownership of the shareholder official.
It is the only option currently available on the Brazilian market, replacing (already extinct) bearer shares and endorsable shares.
How does the nominative action work?
When an investor submits a share purchase order, he doesn’t just initiate a transaction. In fact, it is signaling that it has overcome several of the most common obstacles to the financial market.
In other words, you have already defined your strategy, chosen the roles that are most aligned with your positioning, carried out all the analyzes and are ready to carry out your “bet”. Well, at least that’s what the most successful investors do.
However, after all this saga, the investor faces yet another pending issue until he officially holds possession of the selected asset.
This pending is the registration of ownership.
Through it, publicly traded Brazilian companies maintain an updated inventory of who their active shareholders are, as well as the number of shares each holds and other similar information.
This practice emerged in Brazil in 1976, after the creation of the Corporations Law (n ° 6404, art. 20), and ensures that no shareholder acts anonymously in the market.
Why is nominative action the only accepted modality today?
Initially, it should be noted that the nominative share is the only modality accepted only with regard to ownership records , that is, the registration of the owners of the shares.
In the market, there are still other types of actions related to documentation records. They are called book entry shares and differentiate the papers that need physical documentation from those that don’t.
They are different criteria and, therefore, do not interfere in the “monopoly” of registered shares in their category.
In this case, exclusivity was instituted only in 1990, when Law No. 8,021 prohibited the issuance of shares that registered holders otherwise.
Until that moment, it was possible to choose bearer shares and endorsable shares.
Bearer shares were those whose registration of the holder was not mandatory. Therefore, the owner of the shares was the individual who had their certificates in hand, regardless of whether they were the real buyer of them.
The endorsable action , in turn, was in the way. While it was mandatory to register the first shareholder (that is, the first to buy the stock, directly from the company), the following negotiations depended only on the endorsement of the security to confirm ownership.
What are the types of registered shares?
As all shares issued today are nominative, they have the ability to combine with all other types of existing shares.
It is like the human being, who can be black, white, yellow, brown, etc., but remains a human being.
The share can be preferred , ordinary , book-entry or non-book-entry depending on its characteristics, but it is always nominative.
Ordinary nominative share
Here, the registered shareholder has the right to vote.
Preferred nominative share
Those who own this type of share, on the other hand, prefer to receive remuneration (dividends and interest on equity).
Registered book-entry share
It is not concrete (ie physical), as it does not depend on the issuance of any certificate. In this case, the shares are held only in deposit accounts.
Non-book entry nominative action
As the name implies, it is the exact opposite of the previous modality: all movement of the action is material, with the handling of physical documents.
What is the Nominative Shares Registration Book for?
According to the Corporations Law, the following are registered in the Register of Registered Shares, among other items:
- The amortization of shares;
- Stock conversion;
- The name of the shareholder;
- The number of shares;
- Redemptions and refunds.