Beneficial Owner
The person who enjoys the economic benefits of shares, even if held in someone else's name.
Definition
A beneficial owner is the person who enjoys the economic benefits of ownership (receiving dividends, capital gains, exit proceeds) even if the shares are held in another name (a trust, brokerage, or nominee). This distinction matters for tax purposes, SEC reporting requirements, and determining who actually controls shares. In startup contexts, shares held in trusts, SPVs, or by nominees still have beneficial owners who receive the economic value.
Why it matters
If you hold shares through a trust or SPV (common in secondary transactions), you are the beneficial owner. Understanding this distinction matters for tax reporting and ensuring you receive your share of any exit proceeds.
Example
An employee sells shares to a secondary buyer's SPV. The SPV is the registered holder on the cap table, but the secondary fund is the beneficial owner receiving economic value. The employee's tax obligations ended at the sale.