NOBO Shareholders: Why Tracking Non-Objecting Beneficial Owners Matters

Table of Contents

Understanding the dynamics of the share market is essential for companies aiming to optimize their investor relations strategies. Among the many facets of shareholder engagement, tracking Non-Objecting Beneficial Owners (NOBOs) plays a pivotal role. NOBOs are shareholders who permit their identities to be disclosed to companies, offering valuable insights into ownership patterns and investor behavior.

For companies looking to invest in share market strategies, understanding NOBOs is not just beneficial, it’s a necessity for fostering stronger investor relationships and driving long-term growth.

This blog delves into the significance of NOBOs, their role in shareholder communication, and the regulatory framework that governs their interactions with companies.

Let's dive in!

What Are NOBO Shareholders and Why Do They Matter?

NOBO shareholders are those who permit their identities to be disclosed to companies, enabling direct communication and better engagement. In simple words, NOBO shareholders are beneficial owners who permit companies to access their contact information for direct communication.

Unlike OBOs, who opt to keep their details private, NOBOs are key to transparent communication. This facilitates efficient and direct shareholder interactions.

By identifying NOBOs, businesses can refine their communication strategies, ensuring their messaging resonates with the right audience. A detailed examination of tailored messaging emerges in personalizing communication with investors, reinforcing the approach to managing NOBO shareholder interactions.

The Role of Financial Intermediaries

Financial intermediaries, such as brokers (firms that manage share transactions on behalf of investors), act as custodians (entities holding assets for clients) and serve as a bridge between companies and NOBO shareholders.

• Request NOBO list from broker/intermediary
• Verify data accuracy
• Segment by engagement priority
• Integrate into CRM
• Follow compliance guidelines

SEC Regulations and Proxy Materials

The Securities and Exchange Commission (SEC) mandates that intermediaries distribute proxy materials to NOBO shareholders. This ensures that NOBOs receive essential information about shareholder meetings, voting rights, and other corporate actions. Learn more about the SEC’s role in regulating these processes by visiting SEC.

How to Request NOBO Lists from Transfer Agents

• Verify eligibility to request NOBO lists by confirming issuer status and compliance with SEC regulations.
• Contact your designated transfer agent, such as Broadridge, to initiate a formal NOBO list request.
• Provide required documentation, including proof of company authorization and intended use of shareholder data.
• Review the NOBO list for accuracy and update your investor relations database with current shareholder information.
• Repeat this process regularly to maintain up-to-date records and optimize communication strategies.

In the UDF IV proxy battle, NexPoint argued that the company’s refusal to obtain and share a NOBO list “impeded fair and equitable elections” because the record holder list only identified about 13% of accounts and 20% of outstanding shares, while roughly 80% of shares and 87% of accounts were held in street name.

NexPoint asked the Maryland court to order UDF IV to procure a NOBO list and put dissidents on equal footing with management when communicating with retail investors. The filing also cites earlier cases such as Sadler v. NCR Corporation, where courts have compelled issuers to obtain NOBO lists in proxy contests to avoid information imbalances between boards and shareholders.

NOBOs vs. OBOs: Key Differences

The distinction between NOBO shareholders and OBOs can significantly impact a company’s approach to investor communication.

Actionable Data and Statistics

• 75% of street name retail shareholders are NOBOs: This statistic highlights the prevalence of NOBO status among everyday investors. Most retail investors are classified as NOBOs by default unless they explicitly object.
• 85% of exchange-traded shares held in street name: Given that the majority of shares are held in street name, identifying beneficial owners becomes increasingly relevant for companies aiming to enhance shareholder communication.

Educating Investors on NOBO/OBO Choices During Onboarding

• Clearly explain the differences between NOBO and OBO status during the account setup process.
• Highlight the benefits of direct communication and participation associated with NOBO designation.
• Respect privacy concerns by outlining how OBO status protects personal information from issuer disclosure.
• Provide resources and support for investors to change their status if their preferences evolve over time.
• Encourage informed decision-making to foster trust and transparency in shareholder relationships.

Technology Trends: AI and NOBO Data Integration

The integration of NOBO (Non-Objecting Beneficial Owner) data with AI-driven CRMs is reshaping how companies manage and deepen investor relationships. Instead of relying only on high-level shareholder data, teams can now see who actually owns their stock, how these holders behave over time, and how to prioritize outreach based on real signals, not guesswork.

In reality, this is still an underused advantage. Irwin notes that NOBOs can represent a significant percentage of a company’s shares, yet only a small share of investor relations teams regularly track NOBO data in their monitoring and CRM systems. Historically, working with NOBO lists was slow and manual, which meant many teams simply ignored them. Platforms like Irwin now pull and integrate this data directly into the IR workflow, removing a major operational barrier and making it far easier to act on these insights.

As technology continues to reshape investor relations, the outlook for the broader WealthTech sector is strong. By 2031, the WealthTech market is expected to reach $18.6 billion, with a CAGR of 14.8%. Rapid adoption of AI-powered tools that unlock and operationalize NOBO data is a key driver behind this growth, and a clear signal that investors increasingly expect data-rich, technology-enabled engagement.

Weighing the Pros and Cons of NOBO Distinctions

The debate surrounding NOBO shareholders and OBO distinctions has sparked contrasting opinions among stakeholders.

• Pro: Streamlined communication, cost savings
• Con: Potential privacy loss, reduced intermediary revenue

One proxy fight example shows the upside of having clean access to NOBO data when the stakes are high. In a case study from Alliance Advisors, a $70 million market-cap insurance company faced a serial activist that had built a stake of around 10% and launched a proxy contest.

As part of the defence, Alliance Advisors combined institutional analysis with targeted outreach to both registered and NOBO shareholders to secure support for the board’s slate. At the annual meeting, each director received support from at least 96% of shares cast, and over 56% of shares outstanding voted in favour of the company’s proposals—enough for the issuer to reach quorum on its own card without relying on any dissident votes

1. Banks and Brokers: Protecting Privacy and Revenue Streams

Banks and brokers, however, have a different perspective. They argue that maintaining the NOBO/OBO distinction is essential for safeguarding customer privacy. Objecting shareholders often prefer anonymity to avoid unsolicited communications, which could disrupt their financial strategies.

Additionally, brokers and banks benefit financially from acting as intermediaries between companies and shareholders. The fees associated with managing shareholder data and facilitating communication represent a significant revenue stream. Removing the distinction could diminish their role, leading to potential financial losses.

Campaigners pushing for NOBO transparency also highlight the cost and concentration behind today’s system. The Shareholder Ownership Transparency Alliance (SOTA) points out that companies must pay intermediaries for a NOBO list, and that the bill can run into the tens of thousands of dollars depending on issuer size and shareholder count.

They also note that many OBO accounts are made up of high-net-worth individuals, hedge funds and foreign investors, and that in some situations OBOs can collectively hold 25% or more of a company’s stock. In that scenario, management has to compensate by over-communicating with thousands of smaller, identifiable holders just to offset one large hidden block, driving both complexity and cost.

2. Objecting Shareholders: Privacy as a Priority

For objecting shareholders, privacy is paramount. Many investors choose the OBO classification to shield their financial strategies and avoid being inundated with unsolicited messages from companies. This preference underscores the importance of balancing transparency with respect for individual privacy.

The NOBO/OBO distinction also allows shareholders to maintain control over their interactions with companies. While NOBO shareholders may welcome direct communication, OBO investors often prioritize discretion, ensuring their investment decisions remain confidential.

3. Striking a Balance

The NOBO/OBO debate highlights the need for a balanced approach that considers the interests of all parties involved. Companies seeking to abolish the distinction must address privacy concerns and explore alternative methods for engaging with shareholders. Transparency plays a crucial role in this process which aligns with the discussion surrounding accurate NOBO tracking.

By fostering open dialogue and implementing secure communication channels, businesses can bridge the gap between direct engagement and privacy protection. This approach ensures that shareholder interests remain a priority while addressing operational challenges.

4. The Role of Online Share Trading

Digital brokerage platforms have further complicated the NOBO/OBO distinction. These interfaces often handle investor classifications automatically, making it easier for shareholders to opt for privacy. As online share trading continues to evolve, companies must adapt their strategies to accommodate these changes while maintaining effective communication with investors.

The NOBO/OBO distinction is more than a technical classification—it reflects the diverse priorities of companies, intermediaries, and shareholders. Balancing these perspectives is crucial for fostering trust and ensuring long-term success in shareholder relations.

Conclusion

Effective shareholder communication begins with understanding the core strategies discussed in this blog. From defining NOBOs (Non-Objecting Beneficial Owners) to exploring regulatory frameworks and stakeholder perspectives, these insights emphasize the importance of transparency and precision in investor relations. Data-driven approaches to shareholder engagement not only streamline communication but also foster stronger relationships with investors, ensuring alignment with organizational goals.

At Qubit Capital, we specialize in empowering businesses to identify and map their investor base with advanced tools. If you're ready to transform your IR strategy, discover how our Investor Discovery and Mapping service can help. Let us guide you toward a more strategic and impactful approach to investor relations.

Key Takeaways

• NOBO shareholders allow direct outreach to beneficial owners.
• Knowing the difference between NOBOs and OBOs helps tailor communications.
• SEC rules and financial intermediaries govern proxy materials and shareholder data.
• Data-driven tactics and case studies help counter activist threats.
• Advanced IR tools and best practices boost shareholder engagement..