Bona Trust Corporation Privide Custody Service.
What is Custody?
Custody means “storage” and refers to the business of storing and managing securities, etc.
Custody work refers to standing proxy business act as an investor’s agent, storage and management of securities, proxy receipt of principal and interest and dividends, delivery of deposited assets Settlement, management of investment performance, provide a wide range of business such as exercise of voting rights.
There are 2 kinds of agents for this agent. One is limited agent who has been given the authority to represent only certain matters, the other is Standing proxy agent who has been granted comprehensive delegation authority.
Investors can separately set custodian and standing proxy to deposit securities, but in most cases the same person doubles as custodian and standing proxy.
Generally, these are collectively called “custodians”, but in addition to managing and storing securities for investors, must take into consideration the receipt of dividends, collection of principal and interest, exercise of stock acquisition rights and bonds with stock acquisition rights, etc., exercise of voting rights at shareholders meeting, etc., and exercise of rights as securities holders.
However, this standing proxy system is not mandated to be appointed. In practice, an agent is necessary for complicated procedure and application concerning the cost of transportation of stock certificates, the problem of insurance, furthermore regarding the transfer of name or dividend payment method etc. (In particular, when investors lives abroad, etc., if he / she needs various regulations on the Foreign Exchange and Trading Act, application in regulation such as withholding tax based on the tax treaty, notification report, etc., he / she needs an agent familiar with those processes).
In our custody service, we mainly undertake separate storage as regards ABS (Asset Back Security) as a main task.
|Main types of custody work|
|1. Acquisition, disposition, transfer of securities based on an order, settlement of funds involved in those transactions|
|2. Management of deposits, change name of securities and management of securities|
|3. Collection of principal and interest concerning custody certificates, acceptance of dividends and notification (tax treaties etc.) on these interests / dividends|
|4. Exercise of stock acquisition rights and bonds with stock acquisition rights|
|5. Exercise voting rights on behalf of shareholders (foreign country) in accordance with the order|
|6. Other receipt of various notices and sending securities holding reports etc.|
The essence of custody
The essence of custody has 2 points, “management” and “responsibility”.
The type of “management” can be categorised into “direct ownership” and “indirect ownership” depending on the possessive structure of stored assets (who stores and stores in what form).
Regarding the contents of “responsibility”, there are 2 perspectives of whether to regard it as a mandated person’s responsibility under the doctrine of “delegation” and whether it is considered as a fiduciary responsibility in the scope of the trust law.
And if Custodian keeps the property of a third party, the possession form of the managed property will be kept as it is in the name of the principal in the case of substitution or deposit, but in the case of trust, it will involve relocation to the name of the trustee (Ref: “Nominee service“).
Should you have any queries, please do not hesitate to contact us.