https://www.sec.gov/comments/4-537/4537-25.pdf
Pulled from the above comment letter which is an uploaded paper which goes into detail on street name registration.
Ownership of a given companies bulk of issued stock can be difficult to envision and this diagram puts it in plain and simple terms - so I wanted to share it here and give some other context.
At the top - XYZ corporation has 11mil issued shares, and you can see that some shareholders are listed in their own name on the ledger. John Smith and Robert Jones are registered shareholders who hold legal title to the securities. The most common method to become a registered shareholder is to use the Direct Registration system, which is the Depository Trust Company (DTC) service which moves shares out of Cede and into the names of individuals.
Of those 11mil, in this example, 10mil are under the name of Cede and Co. Cede and Co is the nominee name of the DTC, and these shares are maintained in an aggregated bulk which breaks down cleanly into several categories.
DTC is aware of the breakdowns of that 10 million - but the issuer, XYZ corp, does not have visibility. However, there is a method to provide some limited visibility to the issuing company.
What are OBO and NOBO?
The OBO/NOBO distinction that splits ownership boxes has to do with whether or not the shareholder (beneficial owner) prefers the issuer to have visibility into their account (position, tenure, name, etc) for purposes of business contact. This business contact can include proxy voting information or proxy solicitation.
OBO = you are anonymized and the issuer has no idea who you are
NOBO = your details are released in a report to the issuer should the issuer choose to request it from the CSD you are a client of
OBO is default and AFAIK issuers don’t usually bother requesting those reports as it can be costly and there isn’t usually much information in them, since rarely do people select to be NOBO anyway.
There isn’t any difference in how you are listed as a beneficial owner on the internal ledger of your broker, it’s just about appearance on a report should the issuer choose to request that report.
In an SEC comment from the Council of Individual Investors, the preference for removing this distinction was clearly preferred.
“Companies tend to favor the elimination of the OBO/NOBO distinction. They argue that, if shareowners can participate more directly in board elections through proxy access or other means, companies should be able to contact them directly. They also argue that a direct communication framework would increase shareowner participation and reduce costs.”
Further info: