4 Ways To Track Your Shareholders More Efficiently
The thing with shareholder structure and ownership is that you don’t just have to register your certificates of stock with the registry of the corporate secretary. You also have to record each and every transaction involving the sale, assignment, or transfer of certificates of shares of stock. This is important because transfers may change the majority ownership in corporations. Numerous tracking software solutions have been introduced in the market. If you want to know the latest management solutions for tracking equity ownership, try going over CakeEquity and other similar sites and software applications. Here are a few suggested ways to track your shareholder structure more efficiently:
1. That Old Registry Book
Back in the day, of course, keeping track of a company’s shareholders was all done by writing them all down in the old registry book, which was just really a logbook kept by the corporate secretary. But, it’s since been relegated to secondary records for being too cumbersome, and hard to maintain and update. This doesn’t mean, however, that it can’t be used anymore to track stocks.
Every company has to keep track of who owns it. This is one of the essential functions of any company. Aside from regulatory reasons, since the Securities and Exchange Commission (SEC) requires all companies to record its ownership and all transfers of shares made, there are other equally important reasons. Shareholder structure is factored into your company’s market valuation. Your shareholders and potential investors have the right to know your shareholder structure and inspect your corporate books during reasonable hours.
In the early days of your company, one way of doing it more efficiently would be to hire an IT company to create a document converter software system and application for you. This system would be used to save shareholder documents into PDF files, And, from PDF, such files can be inputted into MS Excel or other spreadsheet applications. This would give you the processing power of a spreadsheet, while keeping the visual identity of your certificates of shares.
Before the use of spreadsheet applications became commonplace, companies tried to become more efficient in tracking their shareholder structure by volleying emails about transactions and transfers. An email addressed was designated as the electronic counterpart of the old registry book. Requests for registration of certificates of stock were sent to the email. The secretaries would receive such requests, and make updates and changes in their records.
Every time a share of stock was sold, assigned, or transferred, they would send an email to the designated registry email, with scanned copies of the certificates and deeds evidencing the transaction or transfer. Secretaries would, then, note the transfer and the details of the transaction. Once the transfer is done, they’d send a reply email to the sender, saying that their transaction has been noted and recorded in the company’s corporate books and records.
3. Spreadsheet Sharing
Another way of tracking your shareholder ownership more efficiently is by using spreadsheet software applications. This is a common way for companies to keep track of their shareholder ownership and capitalization structure. Their spreadsheet files often involve critical details about each shareholder file and the transactions involved. Attributes often include many details and specific information about a share of stock, especially those involving large blocks of shares owned by corporations, or wealthy investors and individuals.
When your company was just starting up, it probably didn’t need complex documentation or sophisticated software applications to keep track of your shareholder ownership. You may have just written down these things on napkins or scratch papers. But, as your company continues to grow, you’ll have to maintain proper documentation of your shareholder structure, which can be easily accessed by investors and creditors. Pieces of information such as class of shares, purchase price, par value of shares, and dates of transactions and transfers, are critical information.
These spreadsheet files will prove very useful when you have to apply for financing or when you offer shareholder ownership to potential investors. Inefficiency can cause damage to companies. Most investors will require due diligence review and evaluation of your corporate documents, including your financial statements and shareholder ownership documents.
4. Shareholder Tracking Software
Currently, the most efficient way of tracking your shareholders would be to use a shareholder tracking software. There’s already a growing number of software applications, which are used to track shareholder ownership. Most of these software applications provide template solutions that enable any management team to maintain accurate records and update them more efficiently and quickly. In more recent years, IT companies have been offering software-as-a-service (SaaS) solutions for tracking shareholder structure and ownership.
The next generation of software applications for tracking shareholder ownership will most likely involve mobile applications, encrypted file transfers, and real-time document sharing. Also, there might come a time when artificial intelligence (AI) might be used for shareholder structure, as well as ownership tracking and management. Non-fungible tokens (NFTs), with their innate capacity to track transfers and movements of documents, might also be used one day to track transfers of shares and supporting documents, such as deeds of sale or assignment.
Shareholder structure and ownership are an essential aspect of corporate governance. Corporations have to record their registration, ownership, and transfers to comply with federal and state laws. More than that, however, they’re also needed for due diligence. Potential investors and venture capitalists would usually ask for information about shareholder structure and ownership.
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