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(An article from Equity Sep 2013, by Paul Rankin)

Many shareholders become investors by default. Some inherit their holdings from deceased relatives or friends. Occasionally shares come through the demutualisation of mutual benefit societies such as the creation of AMP, National Mutual or IOOF. Regardless of how shareholdings have come about, a number – referred to as an SRN or a HIN, identifies all shareholders.

SRNs (Securityholder Registration Number) identify shareholders who do not use a stockbroker to buy and sell their shares. HINs (Holder Identification Number) identify shareholders who use a broker for their transactions, whether online or full service. In both cases a ten digit number is allocated - preceded by I (for SRNs) or X (for HINs).

If a broker is not used, different SRNs are issued for each separate shareholding, whereas when a broker is used the HIN is used for all holdings registered through that broker. Generally only by using the relevant SRN or HIN can the share registry be accessed in order to change any of the shareholders details. It is not uncommon for inherited, gifted or demutualised shares to be issuer sponsored as the recipient is not asked if they already have a sponsored broker, so they will be allocated a ten digit number preceded by an I.

Should they have a sponsored broker, it is a simple matter to have that broker assume responsibility for these shares.

Knowing your SRN or HIN allows you to identify details of your holding on the Registry provider. Registering yourself with the Registry allows you to interact with the Registry to update your particulars and allows you to consolidate all your holdings in one summary, which helps you keep track of your share investments. It also allows you to view the recent history of holdings and other information that might be useful for taxation purposes.

Holder Statements

Each time a transaction occurs, the relevant share registry updates the holder’s account. At the end of the month in which a transaction occurs, a holder statement is issued to the shareholder informing them of the update (increase or decrease) to their holding. Holder statements are the only physical evidence a shareholder has of their equity in a company, and replaces what previously was known as a share certificate. For tax purposes it is important that shareholders retain ALL of their holder statements.

If a broker is engaged, transactions are registered on the CHESS system (Clearing House Electronic Sub-register System), which is maintained by the ASX Settlement and Transfer Corporation (ASTC). SRN holders on the other hand are maintained on the Issuer Sponsored sub-register system. Both sub-registries are accessible through the appropriate share registry (e.g. Computershare, Link etc).

Both sub-registry systems incorporate security measures designed to protect shareholders and their holdings from unauthorized access and manipulation. The value of Holder Statements will be discussed in a later article.

Buying & Selling on the ASX

Shareholders wishing to buy or sell shares generally must use a broker in order to access the stock exchange that manages the market. For the time being, what is known as an off-market transfer can be effected by completing the appropriate paperwork and submitting the details to the relevant share registry. This is so for SRN holdings, but if it is a broker sponsored holding the transfer must be submitted via that broker.

The advantages of appointing a broker to maintain a portfolio are:

  • All holdings are maintained under the same HIN
  • It simplifies the need for maintaining numerous different identification numbers
  • Allows for additional security to prevent unauthorized manipulation of personal details and transactions
  • Buy and sell transactions easily and conveniently arranged
  • Regular portfolio and transaction reports can be requested from the broker
  • Brokers can easily consolidate fragmented holdings in the same company, held by the same investor

Most full-service brokers now maintain facilities allowing clients online access to their account.

Paul Rankin is an ASA member and prior to retirement worked as a Chartered Accountant in Public Practice.


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