Nominee shareholder refers to the holder of shares on behalf of another person or beneficial owner or original holder of shares. The nomination is a mandate given by a shareholder to give the legal title of shares to a described person with whom shares shall vest on the death of a shareholder or original holder. A nominee is a person who is described in that mandate.

New evidence presented in report shows that the misuse of nominees is an underappreciated point of vulnerability in the global agenda to increase transparency of ultimate beneficial owners of companies. Despite significant advances in beneficial ownership in many countries over the past few years, the need to close loopholes such as misuse of nominees is fully apparent.

To address these loopholes, strengthening the regulation of nominee arrangements and stepping up the enforcement of regulation of the providers offering such services can enhance the transparency of shell companies and help reduce financial crime.

These recommendations are timely: in early March, the Financial Action Task Force (“FATF”) adopted changes to its rule on beneficial ownership of legal persons, Recommendation 24. Requiring more robust transparency rules for nominees is just one of a number of important changes to the FATF’s international standard on beneficial ownership.

Corporate nominee will enter into a declaration of trust in favour of the beneficial owner. The declaration of trust is known as a ‘bare trust’ which means that all of the economic and valuable interest in the shares is transferred to you, the beneficiary. Unlike some trust arrangements, the nominee retains no discretion or power as to how to act with respect to the shares.

The declaration of trust makes clear that the beneficiary shall direct how the nominee will vote in respect of the shares and that the nominee will hold all dividends on trust for the beneficiary. There is also a power of attorney included to allow the beneficiary to sign any resolutions and receive any dividends.

Any company or individual can become a nominee shareholder who acts as trustee to the shares in order not to disclose the identity of the actual shareholder. A nominee shareholder can be an individual or a corporation.

Having a nominee shareholder on behalf of you will bring you these primary benefits:

Anonymity: Your identity will be protected and masked.

Privacy: Not only your identity but other personal information will also be protected including personal addresses, owned assets, etc.