Stage 1 · Understand the investor’s decision · Lesson 3 of 4
Who owns the company, all the way up to real people
Before reading your numbers, a bank or a fund wants to know who owns your company, up to the last real person. This lesson has you trace your own chain of shareholders, with the document that proves each link.
The register and the reality
The register says 88%. The manager thought she owned the whole company.
A transport company in Antananarivo applies for a loan to buy two trucks. On the bank’s document list, the second line asks for an up-to-date register of shareholders. The case followed in this lesson is a composite drawn from several files.
The manager, Fanja, takes out the binder and opens the register.
Click a line to open it.
Fanja R. · 880 shares88% · shareholder since incorporation, 2019
The only line Fanja expected to see. For the bank it is easy to check: articles, incorporation minutes, ID.
Tiana R. · 120 shares12% · joined in 2019, money for the first truck
Fanja’s cousin. He left in 2021, she repaid him in cash, they shook hands. No deed followed.
For the bank, Tiana still owns 12% of the company. It will want to know who he is before going any further.
Last updated: 2019
Seven years without a single change, in a company that has hired twenty-six people.
A register that never moves raises questions about everything that may have happened since.
Recorded transfers: none
Tiana’s exit exists only in the two cousins’ memories.
To an outsider, an unwritten transfer never happened. It needs a deed signed by both parties.
Simplified extract. The names and numbers follow the case from start to finish.
Nobody cheated. A shareholder left, the money was paid back, and the paperwork did not follow. It is common in family businesses in the region. It is still enough to put a loan application on hold.
What the bank does
What do you think the bank does when it sees those 12%?
- AIgnores them, 12% is not much
- BAsks for Tiana’s ID and a written explanation, and waits until it has them
- CTurns the application down
- DInsists Fanja buys the shares back before it looks at anything
See the answer
Answer B. Asks for Tiana’s ID and a written explanation, and waits until it has them
- The chain up to people
- Tracing one line
- Your chain, link by link
- From what percentage
- The lines that block
- Related parties
- In your file
- Your chain page
The rest of the lesson
Keep reading with your free account
8 more parts, with the calculations on your own numbers and what to write in your file. The account is free, no commitment.
The words of this lesson
Each word links to its full definition in the glossary.
- Beneficial owner
- The natural person who, at the end of the chain, really owns or controls the company.
- Cap table
- The list of who owns what in your company, in shares and in percentage.
- Nominee
- A person listed as the owner in place of someone else, who stays hidden.
- Politically exposed person
- Someone holding or having held a prominent public position, plus their family and close associates.
- Related parties
- Any transaction between the company and you, your family, your other companies or your shareholders.
- Dilution
- Your share of the company gets smaller when a partner comes in. The cake grows: your slice can be worth more.
- Articles of association
- The company's founding contract: who decides what, by what majority.
- Formal governance
- A body that meets, decides and leaves a written record. Not an org chart.
- Shareholders' agreement
- The agreement between shareholders, alongside the articles, on what they promise each other.
- Holding company
- A company that does nothing itself: it owns shares in other companies.
From the lesson to your file
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