A beneficial owner is any individual who either:
- Exercises substantial control over a reporting company, or
- Owns or controls at least 25 percent of a reporting company’s ownership interests.
Exercising substantial control or owning or controlling ownership interests may be direct or indirect, including through any contract, arrangement, understanding, relationship, or otherwise.
Trust arrangements vary. The specific facts and circumstances determine whether particular trustees, beneficiaries, grantors, settlors, and other individuals with roles in a trust are beneficial owners of a reporting company whose ownership interests are held through that trust.
For instance:
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Trustees of a trust may be beneficial owners by:
- Exercising substantial control over the reporting company, or
- Owning or controlling at least 25 percent of the ownership interests in the company through a trust or similar arrangement.
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Beneficiaries and grantors or settlors may also own or control ownership interests in a reporting company through a trust. The following conditions indicate such ownership or control:
- A trustee (or any other individual) has the authority to dispose of trust assets;
- A beneficiary is the sole permissible recipient of income and principal from the trust, or has the right to demand a distribution of or withdraw substantially all of the assets from the trust;
- A grantor or settlor has the right to revoke the trust or otherwise withdraw the assets of the trust.
This list may not be exhaustive. Due to varying facts and circumstances, other arrangements may exist where individuals associated with a trust are beneficial owners of any reporting company in which that trust holds interests.