MINORS AS SECURITY HOLDERS
Recommended
Registration Procedures | Chess
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There appears to be no legal restriction preventing
the registration of a minor (a person under18 years of
age) as a securityholder, except as may be included in a company’s
constitution.
However, it is understood that in most jurisdictions
a minor cannot legally enter into a contract and would experience difficulties
if registered.
Problems would occur with the following situations:
- The contract to purchase
the securities in the first place may not be valid.
- They may not be bound
by the company's constitution.
- They may not be legally
entitled to sign any transfer out of their name
- Appointment of proxies
or voting at meetings
- Instructions for the following
items :
- Change of address.
- Dividend reinvestment elections.
- Banking instructions.
Recommended
Registration Procedures
It is recommended that any securities to be held
for a minor are registered in the name of the parent or trustee with
an account designation including the minor’s name. This would distinguish
the holding from any other holding in the name of the parent or trustee.
This could be subject to the parent or guardian seeking legal advice
regarding the possible need for the parent to be appointed as trustee
for the child.
For Example
- MR JOHN WILLIAM
SMITH
- <MARY SMITH ACCOUNT>,
- 100 SMITH STREET
- MELBOURNE VIC 3000
Refer to: FORM
28 "MINOR(S) STATEMENT AND INDEMNITY
CHESS
Under the CHESS
procedures, it is possible for participants to process a transfer complying
with SCH procedures which a company cannot refuse to register. This
carries the backing of the Corporations Law, the SCH Business Rules
and the ASX Listing Rules. Therefore
it is possible that minors may be registered as shareholders under the
SCH Business Rules and be bound by a company’s constitution even
though CHESS procedures recommend
against it.
Where a transaction to dispose of shares is processed
by a CHESS participant who is
not aware of the securityholder’s capacity, the company is obliged
to register that transfer. It should be noted that there is a general
broker warranty and indemnity to indemnify the company against any action
brought against it as a result of it processing a CHESS
transfer.
In respect of proxies and other instructions however,
where the company is aware of the shareholder’s capacity, it should
notify the securityholder (parent or guardian) that there are legal
impediments to these actions and suggest that the securities be transferred
so as to accord with the recommended registration procedures above.
