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What is a nominee shareholder in the UK?
Nominee shareholder is the registered owner of shares held on behalf of the actual beneficial owner. If the beneficial owner does not wish to publicize their information and wishes to stay anonymous, he or she may choose to nominate a nominee.
A nominee shareholder can be an individual or a corporation. In short, a nominee shareholder is just the shareholder of a company in name as the nominee shareholder does not really own shares or anything.
On behalf of the actual shareholder, a nominee shareholder only acts as a legal, unrelated, third party who is officially registered as the holder of shares. This shields the actual share owner from being associated with a particular company publicly.
Is the nominee shareholder safe?
In terms of legal safety, in case of any disagreement in the future, the appointment of a nominee shareholder won’t cause any issues to the beneficial owner as the nominee shareholder had legally allowed their name to be used as the registered owner of the shares.
With the question of safety, below are several points that you might want to have a look at to relieve your concerns:
- Nominee shareholder will be only a shareholder in the name of it. You don’t have to worry that the nominee shareholder will own the shares since they are registered publicly.
- You will always remain as the owner of your share capital and have full rights over them regardless of the nominee shareholder’s name appears on the public list.
- Although in some cases, the nominee shareholder will have access to the property and the bank account of your company, there will be no power given to the nominee shareholder to do anything with it.
So, as long as you have an agreement of trust, in written form, there is nothing for you to worry about. However, if the agreement is only communicated verbally, the level of safety is really low.
The benefits of appointing a nominee shareholder
Having a nominee shareholder on behalf of you will bring you these primary benefits:
- Anonymity: Your identity will be protected and masked from recorded publicly at Companies House.
- Privacy: Not only your identity but other personal information will also be protected including personal addresses, owned assets, etc.
Furthermore, there is no way that someone can tell that a shareholder appearing on the list is a nominee shareholder since the agreement of the appointment is only between the beneficial owner and the nominee themselves.
How to appoint a nominee shareholder
To appoint a nominee shareholder, fill out a nomination form for the Company Secretary before the next AGM.
UK companies focus on registered shareholders per the Companies Act 2006 and Model Articles of Association. These articles stipulate that, except where legally mandated, the company doesn’t recognize shares held in trust and disregards non-registered share interests.
This means nominees can exercise voting rights, receive dividends, and transfer shares, while also being liable for payments and membership duties. The company’s interaction regarding share issues is solely with the nominee.
To formalize roles, the nominee and beneficiary owner should have an agreement or Declaration of Trust.
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Frequently Asked Questions
Who can represent as a nominee shareholder?
A nominee shareholder can be either an individual or a business entity.
What is the functionality of a nominee shareholder?
A nominee shareholder has no specific functionality. The only function that he or she or that entity would perform is that its name will appear on the public list of shareholders.
Can a nominee shareholder receive benefits from company shares?
No. The nominee shareholder does not hold any shares or benefit from the shares in any way. They will need to sign a declaration of trust indicating that they have no legal right or claim over the shares. They will also not be able to make decisions or sign any documentation of shares on behalf of the company.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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