Beneficial ownership.

In plain English

Beneficial ownership identifies the person or entity with voting power or investment power over a security, or who receives its economic benefit, regardless of the legal name on the certificate. Most shares are held in street name through a broker, so the broker's nominee is the record holder while the customer is the beneficial owner. SEC rules use the concept to decide who must file ownership reports, and holdings can be attributed across family members and affiliated entities. Anti-money-laundering rules apply a related idea to companies, requiring firms to identify the humans behind an account. The point is to look through legal structures to the person actually in control.

01Why it matters

Your shares are almost certainly held in your broker's nominee name, which is why proxy materials reach you through the broker and why account title and actual ownership are not the same thing.

02The math, step by step

Say a person holds 3 percent of a company personally and a family trust they control holds another 2 percent. Those holdings can be combined into a 5 percent beneficial stake, so a reporting obligation can arise even though no single account is large enough on its own. The threshold itself comes from SEC rules.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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