Nominee Shareholders Agreements: Things You Need To Know
What is a Nominee Shareholder?
Nominee shareholders are common in incorporated companies. In a corporate form, shares are easily divisible, making it easier to manage a number of investors. Usually there is a single public face to an incorporated company; the corporation itself, while sources of capital may come from many individuals and entities.
A nominee shareholder is an individual or an entity who holds a legal title to, but not the beneficial interest in, shares owned by another individual. The nominee is typically listed on the public records of the company as owning shares , but they do not exercise the rights associated with the shares on their own behalf (such as voting at shareholder meetings). For all intents and purposes, a nominee shareholder can be a completely invisible party in the corporate structure, and this is the intent.
The most obvious benefit of using a nominee shareholder is to create a degree of anonymity. No matter how small the shareholding position, if someone holds shares in a corporation, then their full name will be on the corporate register. While it is possible to use a corporation or trust as a shareholder, the nominee shareholder is meant to be listed on the public records.