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Home Limited Companies Provision of a Nominee Shareholder Service Why Do People Use a Nominee Shareholder Service to Form a Company?

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Why do people use a nominee shareholder service to register a company?

Company Start-Up With a Nominee Shareholder

Why do people use a nominee shareholder service to register a company? There are two main reasons people use a nominee shareholder service when registering a limited company. The first reason is to fulfil legal requirements. The second reason is to enable the beneficiary owner to remain anonymous as a shareholder if that is one of their requirements when purchasing the shares.

When registering a private company there are lots of things to think about, one of the things on the list is who are going to fulfil the roles of director, shareholder and company secretary? These roles are legal requirements when founding a company, but sometimes the company founder struggles to fill the roles or doesn't want to publicly fulfil the roles themselves. If this is the case then the founder may turn towards nominee services, more specifically in this case, a nominee shareholder service.

A nominee shareholder is a company or individual that takes on the role of shareholder on behalf of the actual shareholder. This means that their name appears on the share certificate and their personal details are logged on all public documentation in place of the actual shareholder. The shareholder, or beneficiary owner, remains totally anonymous.

The shareholder or company founder, in using a nominee shareholder service, does not give up any of their legal rights to the shares as a beneficiary owner. The nominee shareholder's name is simply used in place of the actual shareholder's. The nominee shareholder will be required to sign the relevant documentation stating that they agree to this in order to protect the beneficiary owner's investment. The beneficiary owner still legally owns the shares and therefore, still receives the income and dividends from those shares.

A nominee shareholder holds no formal role within the company they have been appointed as nominee for. They have no access to the business' assets or bank account, they are not part of the decision making of the business nor can they sign anything on behalf of the business. These rights still belong to the shareholders, directors or company secretary behind the nominees.