Is it Legal to Appoint a Nominee Shareholder?

 

Is it legal to appoint a nominee shareholder upon a new company registration? The short answer to this question is yes, when registering a limited company you have the right to appoint a nominee to take on the roles of shareholder, director or company secretary. When a private company is registered there are a number legal requirements which have to be met and certain documentation filed that becomes available for public viewing, for example, on the Companies House website in the UK.

A nominee shareholder doesn't fulfil any role within the organisation and is not the actual owner of any shares. A nominee shareholder can be an individual or a company; they will have to sign a declaration of trust before being added to the share certificate or any company documentation. This means that they agree not to benefit from any shares held and the interests of the beneficiary owner are protected.

Nominee shareholders have no access to the company's bank account, cannot sign cheques or make payments and have no legal right to handle any of the company's assets. The actual owner of the shares still benefits from their ownership and receives their dividends as normal.

Why appoint a nominee shareholder? People appoint nominee shareholders for two main reasons. The first is to satisfy personal and commercial requirements to remain anonymous, for whatever reason they would like to keep their name and personal details off any public documentation or records.

It may be that the shareholder or owner of the company limited by shares likes to keep records of his investments private, alternatively they simply don't want their name and address to appear on records that are viewable by the public. The reasons are varied but appointing a nominee shareholder will ensure that the beneficiary owner's name is not recorded.