Ask Colin

What is the best way to handle the administration of shareholdings?

All share registries are now electronic. They run off the CHESS system.

There are two ways you can hold your shares:

  • As a broker sponsored shareholder or
  • As an issuer sponsored shareholder (an issuer is each company whose shares you own)

It makes no difference whether your broker is internet or phone or both.

I use ONE broker only to keep things simple. That broker also sponsors all of my CHESS holdings. This also keeps it simple.

Your broker can put your tax file number(s) into CHESS and share registries should therefore not need to ask for them. However, in practice, some still ask you to fill out a form and return it.

Your broker can also put your address into CHESS and that is how the registry will send you the paperwork. However, if you have owned a share before at a different address, the system does not work – they send the paperwork to your old address. See the Tricks of the Trade article in Newsletter 65.

Your broker can not put your banking details into CHESS for direct credit of dividends (some companies make this compulsory). That is why the registry will send you a form to fill out. However, this also does not work properly. If you owned a share before and supplied different banking details, they will use the old details and not ask you or give you a chance to update them.

I found the only way out of these last two issues after I changed address and bank details was to move all my holdings to a new HIN number and start again. It is a pain, but at least the problems stop.

So long as you avoid the address and bank details changes problem, it works quite smoothly. It is just a matter of filling out the forms when they arrive and sending them back. Each one only takes a few minutes.

Some share registries also have facilities to put details into their web site. However, it is a pain because you have to do it for each and every company and the web sites are none too user friendly in my experience. Some things cannot be done on the web sites and have to be done by mail anyway. I avoid the web sites to keep sane in the process.

One day we will actually become a clever country and be able to put everything into CHESS and it all flow through to the share registries. Don’t hold your breath waiting, though.