Activist Shareholders Trading on the Blockchain: Is the Prized Secrecy Compromised?

Background: Registered Shareholders and Beneficial Shareholders

While a registered shareholder holds its shares directly with a company and can be contacted through its transfer agent, a beneficial shareholder does not have the shares registered in its name. Instead, a securities depository is the registered shareholder. There are two types of beneficial shareholders, a Non-Objecting Beneficial Owner (NOBO) and an Objecting Bene­ficial Owner (OBO). A NOBO has authorized a financial intermediary to disclose its identity and share position. An OBO has taken affirmative steps to object to such disclosure. Therefore, while a NOBO can be contacted directly, an OBO can only be contacted through the intermediary. Activist shareholders are generally OBOs until they are required to disclose their identity and share positions under securities regulations. We briefly explore the impact of blockchain technology on this secrecy, which is fundamental to the strategy of activist