an entity, whether as an individual or a group, who owns an asset and receives its benefit.
Actual Owner Details
Determining an actual owner of an asset can be easy. For instance, if you buy a motorcycle using your own money, naturally, you get full ownership of it, and any revenue you gain from it will be your own. Other times, however, it can get increasingly tough, especially if multiple entities are owning that one asset. For example, public companies are owned by all parties who hold any amount of the company's shares, which could be a lot.
Finding the actual owner of private companies is comparatively easy. Your main option should be to look at the state or corporate office in the area where your target company is registered. One company may be registered in one state but can run its operation in other states or countries. Most states usually keep a database record of which companies are registered in their state, available online for free.
For real estate, it can be hard or easy, depending on the situation. Finding residential property ownership is the easiest kind, which you can do by either visiting the city or county's official website or going to the property records office of that city or county. The hard part comes if the ownership is in the name of an organization or company, not an individual, which is the norm for commercial properties. In these cases, you may need to look deeper.
Example of Actual Owner
An actual owner of an asset doesn't have to be the one who manages it. An example of this is a limited partnership (LP) made up of two or more partners. In this type of relationship, one party acts as the general partner who runs and oversees the business, while the other acts as the limited partner who don't actively participate. In other words, one entity does most of the work and generates earnings, while the other passively receive the portion of income. In LPs, a limited partner doesn't need to put in the effort to utilize its asset to produce profits.
Significance of Actual Owner
As mentioned before, finding the actual property owners gets progressively difficult in certain situations, like trusts and shell corporations. A trust is a mutual relationship where one party (trustor) gives a mandate to another party (trustee) to hold and run a property or asset to benefit the trustor. In the case of trusts, identifying which party is acting as the actual owner is not as clear-cut. Although, this is not as bad as shell corporations.
Shell corporations are business operations that are either inactive or don't have significant assets. Shell corporations are mostly illegal and are used as a disguise to avoid law enforcement and the public eye. Finding the actual owner often requires legal effort. With that said, a small percentage of shell corporations are legitimate firms. They are usually startups—companies in their early stages of growth that generate limited income.
Other times, things are not as tricky. Public companies' actual owners can be individuals, groups, another company, or even groups of companies. Even though this can amount to many owners, the board of directors— acting as a representation of shareholders—is the one who has the power to affect the company's business decisions. To earn a seat on the board of directors, an entity needs to acquire a sufficient number of shares, making identifying all of the significant owners shouldn't prove to be too challenging for normal public corporations.