A nominee can be someone who is nominated and entrusted, whether it be a person, partnership or company, to hold assets on behalf of another entity. A nominee company is required to hold shares in their name on behalf of investors within the business. The reason why this type of structure is put in place is to not only save time but to make things more simple. It helps to establish and maintain ongoing relationships and the whole process is seen as easier for both the issuer and investors.

The safekeeping of investors’ securities or property is seen as a declaration of trust. The securities are held by the nominee who is legally the owner in name, however, the beneficial holds onto the real ownership of shares in the company. The nominee shareholder or company has to sign a custodial agreement, which states they have no legal claim over the shares, which in turn protects the beneficiaries' assets.

A nominee shareholder structure is put in place to help and protect both parties. The individual or company, otherwise known as a nominee, holds property or shares of the beneficial owners. The company or nominee shareholder is named on public record as holding the shares but is accountable to the owner of the shares or property, the beneficial owner, who remains anonymous.

For more information on nominee shareholders, our blog post explains what they are, their rights and the benefits of having one.

Why use a nominee company?

The appointment of a nominee company or shareholder will help keep the beneficiaries' identity safe and anonymous. There are many reasons why a beneficial owner will use a nominee company, whether it be for personal or business reasons. Disclosing financial information and remaining anonymous is perfectly legal and legitimate. Politicians, lawyers or journalists are examples of beneficial owners who, for obvious reasons, want to keep their finances confidential.

Using a nominee company can also be an attractive proposition for foreign investors. Difficulty in managing shares is one problem that an investor may face, so they will therefore appoint a nominee company or shareholder to help save time and money. Stockbrokers will often use a nominee company, holding shares that belong to their clients, making the buying and selling of those shares much easier.

Investors and businesses can both benefit from a nominee share structure. Investors often face difficulties in contacting start-up businesses to invest in, likewise with businesses who communicate with hundreds of investors, taking up an enormous amount of time and effort. Having a structure in place helps to deal with this problem. In a nominee share structure, the investor's shares are managed by a nominee company.

Need help?

Our nominee services are structured to help keep your personal information off the record. With over 40 years of experience and an excellent track record with our customers, you can rely on us.

You can find out more information on our Nominee Shareholder page.