A nominee shareholder is a person that appears on the public records as the holder of the company's shares. This is to keep the identity of the company beneficiary out of the public eye, hence, for a fee, a person appears on the public records as the owner, but this nominee is not granted neither administrative nor management powers.
For these types of situations, the beneficiary and the nominee sign a "Declaration of Trust" where the Nominee states he or she is holding the shares as a trustee of the beneficiary, and agrees to transfer all the shares to the beneficiary, or to assign the shares to another person as requested by the beneficiary, upon and pursuant to the beneficiary's request. This Declaration of Trust is an internal document, not disclosed to or with third parties.
The Nominee Shareholder also states that she/he holds the dividends and interest accrued on trust for the beneficiary, which shall be transfered to the Beneficiary as requested by him/her.
If the Nominee Shareholder transfers the shares without the Beneficiary consent, or refuses to transfer the shares as per the Shareholder's instruction, the nominee can get sued, pay an indemnification to the beneficiary, and such transaction will be void!
There are laws that requires the disclosure of the final beneficiary of the shares and the funds, so from a legal point of view this nominee director is just to keep the beneficiary owner's name out of the public eye.
Legality
The legality of having a nominee shareholder will vary depending on the specific jurisdiction's law.
About the Author:
Jean Franco Fernández Clark
Corporate & Tax Lawyer.
Speaks English/Spanish/French/Italian/Russian. 我学习汉语。
