Key Takeaways
- NOBOs allow direct issuer communication with shareholders.
- Default status for retail street-name beneficial owners.
- NOBOs disclose identity, address, and share holdings.
- Enables issuers to track investor behavior and sentiment.
What is Non-Objecting Beneficial Owner (NOBO)?
A Non-Objecting Beneficial Owner (NOBO) is a shareholder who holds securities indirectly through a broker or financial intermediary and consents to having their identity and contact information disclosed to the issuing company. This disclosure enables direct communication from the issuer, unlike an Objecting Beneficial Owner (OBO) who opts to keep such details private.
NOBO status is common among retail investors holding shares in "street name," where the broker is the registered owner but the beneficial owner is the true shareholder. Understanding NOBOs is essential for effective shareholder engagement and proxy solicitation.
Key Characteristics
NOBOs have distinct features that affect shareholder communications and privacy:
- Consent to Disclosure: NOBOs allow issuers to access their name, address, and shareholdings, facilitating direct mailings such as annual reports and proxy materials.
- Street Name Holdings: Shares are held through intermediaries, but NOBOs permit their details to be shared with the issuer.
- Default Status: Most retail shareholders are NOBOs by default unless they explicitly object via their broker.
- Proxy Voting: Despite disclosure, proxy votes from NOBOs are still routed through intermediaries.
- Investor Relations Insight: Issuers gain valuable data through NOBO lists, aiding data analytics and targeted communication strategies.
How It Works
When a company requests a NOBO list, brokers provide shareholder information for those who have not objected to disclosure. This enables the issuer to send materials directly, improving engagement and reducing mailing costs compared to routing through intermediaries.
Shareholders can change their NOBO status anytime by instructing their broker to object or permit disclosure. This flexibility balances shareholder privacy preferences with issuer needs for transparency and communication.
Examples and Use Cases
NOBO status plays a critical role in shareholder communications and corporate governance:
- Airlines: Delta and American Airlines rely on NOBO lists to send proxy materials directly to retail shareholders, streamlining outreach efforts during annual meetings.
- Investor Access: Retail investors holding A shares often appear as NOBOs, facilitating direct receipt of company updates and financial disclosures.
- Broker Selection: Choosing brokers from lists like best online brokers can affect your NOBO status and the ease of receiving shareholder communications.
Important Considerations
While NOBO status improves transparency and direct communication, it also means less privacy for shareholders. If you prioritize confidentiality, you may wish to opt out and become an Objecting Beneficial Owner.
Issuers benefit from NOBO data but must comply with regulatory obligations, ensuring shareholder rights and privacy are respected. Understanding your status and how it affects communications and voting can help you manage your investments more effectively.
Final Words
Non-Objecting Beneficial Owners (NOBOs) enable issuers to communicate directly with shareholders, enhancing transparency and engagement. If you hold shares through an intermediary, consider whether maintaining your NOBO status aligns with your privacy preferences and communication needs.
Frequently Asked Questions
A Non-Objecting Beneficial Owner (NOBO) is a shareholder who holds securities through a broker or intermediary and allows their identity, address, and share holdings to be disclosed to the issuing company, enabling direct communication from the issuer.
NOBOs receive direct communications such as annual reports and proxy statements from the issuing company, unlike Objecting Beneficial Owners (OBOs), whose information remains private and receive communications via intermediaries.
NOBOs permit disclosure of their identity and holdings to issuers for direct contact, while OBOs object to this disclosure, keeping their information private and requiring issuers to communicate through brokers or intermediaries.
Yes, shareholders can change their status anytime by contacting their broker or financial intermediary to either opt in as a NOBO or opt out to become an OBO.
Approximately 75% of retail shareholders hold shares in street name and default to NOBO status because it allows issuers to communicate directly, improving engagement and access to shareholder materials.
In the U.S., NOBO status is governed by SEC rules established in the mid-1980s related to proxy distributions, while in Canada, similar regulations exist under National Instrument 54-101 to facilitate direct issuer communication.
No, proxy voting for NOBOs is still routed through intermediaries, even though issuers can communicate directly with NOBOs for other shareholder materials.
Identifying NOBOs allows companies to engage directly with shareholders, send materials efficiently, and gain better insights into ownership patterns and investor behavior, enhancing shareholder relations.
