Investing with Sharesies - share ownership

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Forums › Finance and wealth management › Investing with Sharesies - share ownership

OldGeek

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#277334 8-Oct-2020 12:04

I have been a very small time investor on Sharesies for nearly a year now, and there is just one issue with this platform that bugs me: share ownership is through Sharesies Nominee Ltd. So with everything purchased through Sharesies, the registered owner is the nominee company - not you. If you buy shares in a company it is the nominee company that is on their share register. As a consequence you do not receive shareholder communications (such as reports, AGM invitations etc) and you cannot exercise shareholder rights (such as meeting attendance and voting).

For the most part this does not bother me as I am a very small investor ($700 in total invested through my Sharesies wallet) but I transferred in an existing shareholding (Vector) worth over $3000 without realising this. I am no longer on the Vector share register because of this.

So Sharesies is not for investors that wish to actively participate as a shareholder in the companies they buy into. It is, in all other respects, a good platform for entry-level participation on the stock exchanges they offer (principally the NZX).

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antonknee

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#2581291 8-Oct-2020 12:51

The shares are effectively held in trust for you as the beneficial owner by Sharesies Nominee Ltd. A good callout for those not aware of this (although Sharesies don't hide this fact, a lot of people probably would not understand what it means).

I believe Sharesies have previously stated they are working to bring voting to the platform.

You also cannot participate in dividend reinvestment plans. For announcements and results, I follow these on the NZX website - and Sharesies have a great newsletter (Lunch Money) that publishes these too and offers commentary.

surfisup1000

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#2581324 8-Oct-2020 13:41

Yes, there is some risk that you are giving ownership away to a 3rd party. Even trust arrangements are not a guarantee against fraud by well placed insiders.

Risks are very low, but the fact is they are there.

If you are investing large sums then you probably shouldn't be using Sharesies.

BlinkyBill

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#2581418 8-Oct-2020 15:23

You are not giving away ownership- you are giving away common identification across all registry’s as an owner. Oldgeek is correct and Surfisup1000 should not make incorrect statements about financial matters that might cause concern for some people.

On the point, what do you expect for a low/no cost service? The point of Sharesies is to make it easier for “naive” investors to get into the stock market, and having your own personal CSN isn’t likely to be of immediate benefit to those types of investors.

sxz

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#2581467 8-Oct-2020 15:42

I would worry about this a little - if Sharesies goes under, it's them (not you) on the ownership record. Trust or no trust, if they own $100m of shares, but owe their customers $150m of share value - those customers are not going to be happy.

surfisup1000

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#2581468 8-Oct-2020 15:44

BlinkyBill:

You are not giving away ownership- you are giving away common identification across all registry’s as an owner. Oldgeek is correct and Surfisup1000 should not make incorrect statements about financial matters that might cause concern for some people.

On the point, what do you expect for a low/no cost service? The point of Sharesies is to make it easier for “naive” investors to get into the stock market, and having your own personal CSN isn’t likely to be of immediate benefit to those types of investors.

Perhaps I should have said control. Yes, you still legally own the shares/funds, but don't have the usual rights.

surfisup1000

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#2581470 8-Oct-2020 15:49

sxz:

I would worry about this a little - if Sharesies goes under, it's them (not you) on the ownership record. Trust or no trust, if they own $100m of shares, but owe their customers $150m of share value - those customers are not going to be happy.

If Sharesies did go under, there is almost no risk of losing your investment. This is due to the trust arrangement which ring fences investor funds away from the company.

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BlinkyBill

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#2581537 8-Oct-2020 17:41

surfisup1000:

BlinkyBill:

You are not giving away ownership- you are giving away common identification across all registry’s as an owner. Oldgeek is correct and Surfisup1000 should not make incorrect statements about financial matters that might cause concern for some people.

On the point, what do you expect for a low/no cost service? The point of Sharesies is to make it easier for “naive” investors to get into the stock market, and having your own personal CSN isn’t likely to be of immediate benefit to those types of investors.

Perhaps I should have said control. Yes, you still legally own the shares/funds, but don't have the usual rights.

Well, you are still able to collect dividends, participate in restricted offers such as share buybacks, placements and rights offers, and so forth.

What you don’t get is mailed-out information (from the company in which you are a shareholder) and voting. But that’s because the CSN is Sharesies CSN and not your personal CSN. The reality is that a) people who use Sharesies are unlikely to be interested in the Annual Report, nor in voting and b) small shareholders have an inconsequential impact on shareholder votes compared with larger interest groups.

Honestly, this single issue with Sharesies is not a reason to not use Sharesies. And from an ownership perspective it’s much less of a risk than the CFO of Fletcher Building, for example, committing a fraud (I’m in no way suggesting anything untoward by the Fletcher CFO, just using that as an example).

If you ARE interested in voting and receiving corporate information, use a proper sharebroker.

mattwnz

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#2581551 8-Oct-2020 18:30

BlinkyBill:

The reality is that a) people who use Sharesies are unlikely to be interested in the Annual Report, nor in voting

I used to use ASB securities, and have been buying shares for decades since I was a kid. But you had to buy quite a big parcel of shares to get you monies worth out of the minimum trading fee with conventional brokers. ASB have however reduced their minimum fee recently.

Whereas I have recently used Sharesies to buy a few shares gradually, and I only pay a percentage. eg Allows me to dollar cost average the purchase. I think voting is an important part of being a shareholder, especially when the company isn't doing well, so I hope Sharesies do bring in some way of voting, because the trust over time could potentially become quite a big shareholder in some companies.. However some of the shares I purchased via Sharesies, I previously purchased via ASB, so already have a CSN for, so I already have some voting on.

My issue with Sharesies is that they don't currently have trading in Australian shares.

OldGeek

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#2581576 8-Oct-2020 20:20

BlinkyBill:

You are not giving away ownership- you are giving away common identification across all registry’s as an owner. Oldgeek is correct and Surfisup1000 should not make incorrect statements about financial matters that might cause concern for some people.

On the point, what do you expect for a low/no cost service? The point of Sharesies is to make it easier for “naive” investors to get into the stock market, and having your own personal CSN isn’t likely to be of immediate benefit to those types of investors.

I went into Sharesies as a novice. Because it was an experiment using a trivial amount of money (for me) I did a little research that pointed to Sharesies being what I thought was a sharebroker to novices. I had a CSN for the Vector shares but did not know it, nor was I aware of its significance. I was and still am the novice low-value investor that saw Sharesies as a way of 'playing the share market'.

The Vectra shares came from the privatisation of the Hutt Valley Energy Board in the late 1990s (being connected to their network at the time). This shareholding morphed into TransAlta and several other iterations of takeover that ended up in Vectra. I never paid for these shares and I still recall the brokers that set up temporary stalls in Malls to buy those original shares from those wishing to cash up their windfall. I took a passing interest in the various reports to shareholders. I did not attend AGMs but did assign my (trivial) voting rights to the board Chairperson as my proxy. Bringing those shares into my Sharesies portfolio meant that this involvement ended, although my investment did not.

So this is just another path of learning for me. While it is true that I receive dividends and some shareholder communications, this is always at the whim of whatever Sharesies decide. I now know that if I wish to be treated as a bona-fide shareholder by the company I have invested in, Sharesies is not the right vehicle. There is no deception here. I was not deceived, I simply have realised the proxy nature of buying through Sharesies.

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antonknee

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#2581586 8-Oct-2020 20:56

mattwnz:
My issue with Sharesies is that they don't currently have trading in Australian shares.

Likewise. They’d talked about doing this but chose to launch US markets first (despite Hatch and Stake already being great options for that). Hopefully one day soon.

BlinkyBill

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#2581650 8-Oct-2020 21:44

I don’t get the complaints. Sharesies is a low cost provider, but some people want full fat service. You get what you pay for - advice and services, or no advice and few services. McDonalds, or Logan Brown.

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OldGeek

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#2581802 9-Oct-2020 10:18

So what is a good alternative to Sharesies where your share ownership is reflected in the company share register?

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antonknee

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#2581812 9-Oct-2020 10:51

The reality is alternatives are limited - ASB online share trading or Direct Broking (ex-ANZ, now Jarden) are probably the two most accessible options for consumers. However both have high fees of circa $30 per trade, which is the beauty of Sharesies. Someone investing relatively low amounts is going to see a lot of their potential returns eaten away by that fee.

Eg on your $700 invested (assuming it's all one security, although it sounds like it's not) this is potentially $60 worth of fees to buy and sell that security - or nearly 10%.

Given such a small shareholder (Sharesies target market) would have incredibly little influence by voting or attending meetings, and can stay abreast of reports and announcements via other means, I would suggest the lower fees are well worth that tradeoff. Ie I do not think the ability to vote on things like director appointments is worth paying $30 a trade.

BlinkyBill

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#2581824 9-Oct-2020 11:12

OldGeek:

So what is a good alternative to Sharesies where your share ownership is reflected in the company share register?

you will need to get a broker, who will transact your trades under your own personal CSN. Obviously, this will be a paid-for service. I use Craig’s, but you should look on the net and pick one you like. Only use a reputable stockbroker with published trade costs.

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#2581847 9-Oct-2020 11:16

Moved to correct sub-forum.

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