What Is a NOBO List and Why Do Companies Use It?

Understanding a NOBO List

A Non-Objecting Beneficial Owner (NOBO) list is a compilation of information about shareholders who own company stock indirectly through a brokerage firm but have consented to their identity being disclosed to the issuing company. This list provides companies with direct insight into a segment of their ownership base, enabling more direct communication channels. The concept of a NOBO list is particularly relevant for publicly traded companies, where a significant portion of shares are held by beneficial owners rather than direct record holders.

The term “beneficial owner” refers to an individual or entity that enjoys the economic benefits of share ownership, such as dividends and voting rights, even if the shares are legally held in the name of a brokerage firm or other intermediary. This contrasts with “record ownership,” where the shares are registered directly in the owner’s name on the company’s books. Shareholders become NOBOs by explicitly not objecting to their information being shared with the company when they open or maintain their brokerage accounts. The NOBO list typically contains the shareholder’s name, mailing address, and the number of shares they own.

This list does not, however, include sensitive personal data beyond contact information, nor does it detail other aspects of a shareholder’s investment portfolio or financial transactions. Companies receive this information to facilitate direct engagement, allowing them to communicate important corporate matters without relying solely on intermediaries.

How a NOBO List is Compiled

The compilation of a NOBO list begins with brokerage firms and other financial intermediaries, often referred to as “nominees” or “record holders,” who hold shares on behalf of their clients. When an individual opens a brokerage account or purchases shares, they are typically asked to indicate whether they object to their name and shareholding information being released to the issuing company. This choice determines whether they become a Non-Objecting Beneficial Owner or an Objecting Beneficial Owner (OBO).

Brokerage firms aggregate the responses from their clients regarding their disclosure preference. For clients who do not object, the brokerage firm includes their information in data provided to a central securities depository, such as the Depository Trust Company (DTC) in the United States. The DTC acts as a central clearinghouse, holding securities in fungible bulk and facilitating the transfer of ownership electronically.

Companies seeking a NOBO list will typically request it through their transfer agent, who then obtains the compiled data from the central depository and its participant brokerage firms. The transfer agent plays an important role in maintaining the company’s shareholder records and facilitating communications. This process ensures that companies receive a standardized list of their non-objecting beneficial owners, enabling them to reach these shareholders directly.

The Purpose of a NOBO List for Companies

Companies utilize a NOBO list primarily to establish direct communication with a significant portion of their beneficial owners. This direct channel is useful for various corporate functions, reducing reliance on intermediaries. One of the most common uses is for proxy solicitations, which involve sending annual reports, proxy statements, and other materials related to shareholder meetings and corporate governance matters. Direct communication ensures that important voting information reaches shareholders promptly.

Beyond mandatory disclosures, the NOBO list facilitates broader corporate communications, allowing companies to share news, announcements, and updates directly with their investors. This can include information about financial performance, strategic initiatives, or changes in leadership. Establishing this direct link fosters greater transparency and can improve shareholder engagement by providing investors with timely and relevant information.

The NOBO list is also an important tool for investor relations activities. Companies can use the list to understand their shareholder base better, identify trends in ownership, and tailor their investor outreach efforts. Direct access to beneficial owner information supports more targeted communications and can help companies build stronger relationships with their investors. This proactive engagement can contribute to better corporate governance and a more informed shareholder base.

NOBO vs. OBO: Key Differences

The distinction between a Non-Objecting Beneficial Owner (NOBO) and an Objecting Beneficial Owner (OBO) lies in a shareholder’s choice regarding the disclosure of their identity to the issuing company. A NOBO explicitly allows their name, address, and shareholdings to be provided to the company. This consent enables the company to communicate directly with them. The shareholder makes this election, typically when opening a brokerage account, through their financial intermediary.

In contrast, an Objecting Beneficial Owner (OBO) makes an explicit choice not to have their identity disclosed to the issuing company. For OBOs, all communications from the company, including proxy materials and annual reports, must be routed through their brokerage firm or other intermediary. The company cannot directly contact an OBO, as their identity remains confidential from the issuer’s perspective.

The implications of this choice affect both the shareholder and the company. For OBOs, the primary implication is that their communication with the company is intermediated, potentially leading to slight delays in receiving materials or a less direct line of communication. For companies, the inability to directly contact OBOs means they have an incomplete picture of their entire beneficial ownership base. While companies can still fulfill their regulatory obligations by sending materials to the intermediaries for OBOs, they lose the opportunity for direct engagement and relationship building with these shareholders. Shareholders may choose to be OBOs for various reasons, including privacy concerns or a preference to manage all investment-related communications solely through their broker.