What is a Nominee Shareholder?
A nominee shareholder is a person who holds shares on behalf of another person, the beneficial owner. The beneficial owner is the person who actually owns the shares, but they may choose to appoint a nominee shareholder for a number of reasons, such as:
- To keep their identity confidential
- To avoid having to deal with the administration of holding shares
- To comply with certain regulations
What are the benefits of using a nominee shareholder?
There are a number of benefits to using a nominee shareholder, including:
- Increased privacy: The beneficial owner's identity will not be publicly registered as a shareholder.
- Reduced administration: The nominee shareholder will take care of all the administrative tasks associated with holding shares, such as receiving dividends and voting at shareholder meetings.
- Compliance with regulations: Some regulations require shareholders to be resident in a particular country or to have a certain level of net worth. Using a nominee shareholder can help businesses to comply with these regulations.
What are the risks of using a nominee shareholder?
There are a few risks associated with using a nominee shareholder, including:
- Loss of control: The nominee shareholder will have control over the shares, and the beneficial owner will not be able to sell them or vote them without the nominee's permission.
- Fraud: If the nominee shareholder is dishonest, they could steal the beneficial owner's shares or sell them without their permission.
- Tax implications: The beneficial owner may be liable for tax on the dividends and capital gains from the shares, even if they do not receive them or benefit from them.
How to choose a nominee shareholder?
When choosing a nominee shareholder, it is important to consider the following factors:
- Experience: The nominee shareholder should have experience in acting as a nominee shareholder for other companies.
- Reputation: The nominee shareholder should have a good reputation.
- Cost: The nominee shareholder should be affordable.
- Location: The nominee shareholder should be located in a convenient location.
Once you have considered these factors, you can start to compare different nominee shareholder service providers.
Nominee shareholders can be a valuable asset for businesses. By using a nominee shareholder, you can increase privacy, reduce administration, and comply with regulations. However, it is important to do your research before choosing a nominee shareholder service provider.