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The Importance of Maintaining Accurate Shareholder and Demographic Data

Maintaining shareholder records is an important yet sometimes overlooked part of equity plan management. Having a complete list of shareholders, with demographic and contact information for each of them, can be critical for companies starting to plan their liquidity needs. They may need that information readily available when it comes time to conduct a liquidity event or IPO. Furthermore, missing shareholder contact information may quickly delay a company’s transaction timeline

3 Reasons Why Companies May Perform Regular Data Audits

Maintaining shareholder records isn’t a one-time exercise but an ongoing part of equity plan management. There are three reasons a company may want to perform regular data audits:

  1. Employees inevitably move around. As more companies begin to embrace remote or hybrid workforces, it may increase the likelihood that employees will be dispersed across multiple regions and countries. Plan administrators may want to ensure they have accurate contact information for every shareholder on the cap table. This is not only to ensure they can contact shareholders if action is required on their part, but also because incorrect data about where a shareholder is located can trigger the wrong tax obligation or reporting, which can create challenges for both the company and the shareholder.
  2. Employees may be constantly joining and leaving the company. When an employee leaves the company and forfeits their unvested equity, the company may need to ensure that the termination is reflected in the cap table. If they happened to hold shares or had vested awards then the company may need to have the employee’s contact number and address to ensure communications get to the right place during a liquidity event.
  3. It may help support compensation and equity planning. Some equity plan managers frequently measure how effective their total compensation offering is. Accurate demographic data may make it easier for managers to analyze how compensation and equity look for different employee groups. 

Information  Companies May Require from Every Shareholder

Whether a company is considering a liquidity event or looking to transition into an IPO, it may need to have specific shareholder data readily available to launch. Specifically, a company may need to have every shareholders':

  1. Company or personal email address
  2. Date of Birth
  3. Hire Date (if a current or former employee)
  4. Term date if applicable
  5. Live/Work Location
  6. Tax ID number
  7. Mailing Address for Their Primary Live/Work Location
  8. Primary Phone Number

Updating Contact and Demographic Data

One way to ensure shareholder records remain accurate is to communicate directly with shareholders or via the HR department. Companies may establish a regular cadence (e.g., semi-annually) of auditing shareholder records and reaching out to shareholders to confirm that their demographic and contact data is accurate, ensuring any updates are reflected in the equity plan.

Companies can also integrate their equity plan with their existing payroll or HR system so that information gets fed automatically, rather than manually. If a company does integrate with another system, it can be essential to ensure that someone on the HR or payroll side is regularly auditing that data and checking it for accuracy.

Simplifying Equity Plan Management with Shareworks

Companies that manage their equity plan with Shareworks may have the peace of mind of knowing that the platform can flag missing shareholder information within the cap table before any liquidity event or IPO launch. Companies can also work with their dedicated relationship manager to run a report on shareholder records at any time.

Contact us if you would like to learn how to streamline your cap table management or experience the benefits of providing shareholder liquidity on the Shareworks platform.

About the Author

Angie Matturro is an Applications Marketing Lead at Shareworks by Morgan Stanley with years of dedicated experience taking complicated topics and breaking them down into easy to understand parts. She recently received her JD from Arizona State University, Sandra Day O’Connor School of Law, and is excited to help share the organization’s industry knowledge and expertise.

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