JohnB wrote:I have one individual share holding from years back, LLoydsTSB, and get AGM invitations, short/long annual reports restructuring notifications, and dividend cheques/slips (not that they paid any for years). I guess if I'd bought that through a broker the dividend paperwork would go, but don't you still get all the other letters?
It depends on exactly how you use the broker to buy the shares. If you buy certificates through a broker, or if you buy in a broker CREST account, your holding is directly registered with the company under your name and address. Traditionally, that meant that the company send you all their shareholder communications by post; nowadays, it usually means that they send you the first set by post, and that first set includes (or even consists entirely of) a letter saying that they normally publish the shareholder communications on their website and only post you a letter saying that the new communications are available there (a simple letter is much cheaper for the company to print and post than e.g. an annual report - especially some of the monsters produced by e.g. insurance companies!). They do offer you the chance to opt for receiving hard copies by post if you want - I believe it's a legal requirement that shareholders can do that - and they often invite you to supply your email address so that they can email you to tell you that shareholder communications are available rather than posting you a letter.
If on the other hand you buy in a broker nominee account (much more common than broker CREST accounts), your shareholding is not directly registered with the company under your name and address. Instead, it is registered with the company under the broker's nominee company's name and address, usually combined with the shareholdings of many or all of the broker's other clients who hold that type of share in nominee accounts to form a single registered shareholding. So all the company knows is that the broker's nominee company holds a total of say 1,234,567 shares, and it can only send shareholder communications to the broker's nominee company (*). It's the broker's job to keep track of how those 1,234,567 shares are split up among their clients and pass on relevant communications, etc, as needed to the clients - for example, to split up the sums they receive as dividends correctly between their clients, or to pass details of corporate actions that want a response (e.g. rights issues) to their clients and collect the clients' responses, collate them and pass the result on to the company (for example, by telling the company the total number of rights their clients want to take up and keeping the individual client responses so that they can distribute the resulting shares correctly when they arrive).
One particular point worth making about the method used is that share ISAs have to be held in nominee accounts.
I should say that IMHO, both options have their disadvantages. Traditionally, the certificate (and CREST account) method produced vast amounts of paper through the post, with much of it devoted to details of little or no interest to ordinary individual shareholders. The more modern methods involving company websites get rid of the volume-of-paper problem, but if anything make the find-the-needles-of-useful-information-in-the-haystacks-of-detail problem worse (for instance, I've definitely seen a tendency for company annual reports to become longer and longer over the years...).
On the other hand, the nominee (and ISA) method means that all shareholder communications are filtered through the brokers. That produces much less paper - often virtually none - and the brokers have a strong incentive to cut out irrelevant detail, namely that they don't want to have to deal with large numbers of "what on earth does this mean?" questions from their clients! So they tend to summarise as much as possible - and that typically means a
lot. E.g. a rights issue for which the company's shareholder circular might be 50-100 pages long becomes a single-page broker corporate action saying essentially something like "ABC is doing an N-for-M rights issue at a subscription price of XXXp per right. Based on your holding of XXXX shares, you have YYYY rights. You have the following options of what to do with them: 1) Take up all of your rights; 2) Take up some of your rights; 3) Sell all of your rights; 4) Sell enough of your rights to raise the money needed to take up the rest. If you don't respond, the rights will lapse and the company may make a lapsed-rights payment to you." Along with a few more essential details such as response deadlines, when cash must be available in your account, etc.
Which generally works fine - but does have the disadvantage that brokers have a tendency to oversimplify, which tends particularly to affect their summaries of the more complex corporate actions, and occasionally they completely garble what's on offer, making it incomprehensible. Or rather worse, perfectly comprehensible but just plain wrong - for instance, there used to be "B/C share schemes", which returned cash to shareholders in a way that allowed them a choice of tax treatment, either as income (subject to Income Tax) or as capital (subject to CGT). To make the choice, shareholders elected to receive either B or C shares at an intermediate stage in the action, and I've once encountered a case of a broker sending a corporate action notice for one such scheme that described everything perfectly correctly, except that it had which of B and C shares was for the income treatment and which for the capital treatment precisely the wrong way around!
(*) That's in the absence of information the company has received by other means - for example, many companies allow people to register to receive non-individualised shareholder communications by email, almost certainly on the basis that email is so cheap that it costs less to send them to anyone who asks for them than to try to restrict them to the shareholders who are actually entitled to them.
Gengulphus