What is a trust company?
Trusts enable the issue of shares with simultaneous retention of voting rights. With the help of trust companies, companies can continue to decide themselves on the course to be taken by the company and still increase the capital by issuing shares to investors. One could also say that it is a kind of protective construction. This form is the most comprehensive, which ensures that the voting right remains at least partially with the company.
When a company engages a trust company, shareholders can only buy certificates of the shares owned by the trust itself. Keep in mind that these certificates can only generate returns.
Shares and certificates
The difference between shares and certificates is not very big financially, but it has important consequences. If you own shares, you are also a partner of the entrepreneur. This means that you can earn a share price, have the right to receive a dividend and have the right to vote. If you have many shares in a company, that means theoretically that you have a say in the future course of the company.
A trust company owns all the shares of a company and issues certificates – these form the basis for your investment. Consider the fact that you do not qualify for the certificate to receive the price or dividend paid. You have no voting rights because the company does not want to give it away.
No voting rights
When using shares, you have no voting rights and, for example, you can not attend general meetings of shareholders. Only the trust company is present at these meetings, as this is theoretically the sole shareholder. The fact that you own a certificate ensures that you can achieve an attractive return, but it does not change the identity of the shareholders. Set yourself a goal that you want to achieve with the share purchase. When it comes to the financial investment, choosing the certificate does not have to be a problem. You would like to actively use the voting right? Then you should make sure that you actually buy shares and not the certificates of a trust company.
Trust companies can be used to protect against hostile takeovers. This variant is especially popular with family businesses. In this way, you can prevent that you as a shareholder get a vote because you are actually not a shareholder. They hold a certificate in their hands and invest in a company without voting in return.