Director not producing dividend statements

[lacomaco]

A “nominee shareholder” is something that goes against the concept of trust and has no legal standing. In some (civil law) jurisdictions it is even a crime to use a nominee shareholder. In other words, the “nominee shareholder” is in all effects the real owner of the company unless he is declared to be a nominee by a court, typically for tax reasons.
It might be easier to prove a nominee to be such than a trust to exist.

You wrote: A “nominee shareholder” is something that goes against the concept of trust and has no legal standing.
I was taught every economic transaction should be decided according to its real substance and not the form. In my opinion the "nominee shareholding" with the "Declaration of Trust" is a trust. Tens of thousands of corporate service providers (excellent, very good and bad ones) cannot be completely wrong by using an instrument for 40 years - and I also indicated my own experience when we had to deal with beneficial ownership and nominee shareholders.

You wrote: In other words, the “nominee shareholder” is in all effects the real owner of the company unless he is declared to be a nominee by a court, typically for tax reasons.
In my opinion the "nominee shareholder" is the trustee who acts according to the previously stated wishes of the beneficiary of the trust. Whether this constitutes ownership or just holding the title depends on the individual country's law where it is established and/or is operated from.

As the first member from my civil law country in the world's largest professional body of trust professionals (STEP) I faced many cases between the concept of trust and equity ownership, especially in civil law countries. Also, even in common law countries treatment of trusts, its legal liabilities is different - the US, UK, Cook Islands, Nevis has different legislation for trusts.

Anyway, sorry for the long rant, without knowing where the company is incorporated, where it is managed from, which country's law is used for trust matters it is impossible to make any sound suggestions for the OP.

And also, I might be wrong...

Yes

Now I really would like to hear your opinion about the concept of nominee ownership And of course any possible idea how to help the OP

 

[JohnnyDoe]

I was taught every economic transaction should be decided according to its real substance and not the form.

there are various instances where form prevails over substance, for example in contracts law.

In my opinion the "nominee shareholding" with the "Declaration of Trust" is a trust.

It is not, but it can become a constructive trust.

Tens of thousands of corporate service providers (excellent, very good and bad ones) cannot be completely wrong by using an instrument for 40 years - and I also indicated my own experience when we had to deal with beneficial ownership and nominee shareholders.

Repeatedly doing the wrong thing doesn’t make it right.
If you want to setup a trust, then set it up according to the law, not with some shortcuts hoping that the “trustee” will be good or that a court will rule in your favor.

In my opinion the "nominee shareholder" is the trustee who acts according to the previously stated wishes of the beneficiary of the trust.

The shareholder is either a trustee or a (bare) nominee, he can’t be both at the same time, by definition of the two terms.
Now if the “declaration of trust” is a document so titled but signed by the settlor and the trustee and containing not just a mere declaration but the detailed wishes of the settlor (not of the beneficiary), then it might be more probably considered as a trust deed by a court.

Whether this constitutes ownership or just holding the title depends on the individual country's law where it is established and/or is operated from.

Agreed

As the first member from my civil law country in the world's largest professional body of trust professionals (STEP) I faced many cases between the concept of trust and equity ownership, especially in civil law countries. Also, even in common law countries treatment of trusts, its legal liabilities is different - the US, UK, Cook Islands, Nevis has different legislation for trusts.

Most of the legal cases are about taxes and spouses, aimed at dismantling a properly constructed trust. Here it’s the other way around, where a settlor needs a court to create a constructive trust, which I find more difficult in the OP’s situation.

Anyway, sorry for the long rant, without knowing where the company is incorporated, where it is managed from, which country's law is used for trust matters it is impossible to make any sound suggestions for the OP.

Definitely. The best suggestion is: next time create a proper trust, don’t trust a nominee signing a one pager.

The only nominees that work well are those employed by serious criminal organizations, they rarely fail to comply with their duties and if they do they bear the consequences

 

[JohnnyDoe]

In Panama, for example, according to the law of trusts, specifically Law No. 1 of January 5, 1984, amended by Law No. 21 of May 10, 2017, certain requirements must be met for trust agreements to be valid. Trust agreements must be documented in writing, and verbal, implied, or constructive trusts are not recognized. Additionally, the signatures of the settlor and trustee must be authenticated by a notary public in order for the trust to have legal effects on third parties.

Furthermore, only Public Law entities have the authority to create a trust through a declaration of trust. On the other hand, private individuals and non-Public Law entities can establish a trust through an agreement or a will. In all cases, regardless of the type of trust, Panamanian law mandates that every trust agreement must be in writing and include specific minimum clauses. Also in this case the signatures of the settlor and trustee must be authenticated by a notary public as per the requirements of the law.

 

[lacomaco]

In Panama, for example, according to the law of trusts, specifically Law No. 1 of January 5, 1984, amended by Law No. 21 of May 10, 2017, certain requirements must be met for trust agreements to be valid. Trust agreements must be documented in writing, and verbal, implied, or constructive trusts are not recognized. Additionally, the signatures of the settlor and trustee must be authenticated by a notary public in order for the trust to have legal effects on third parties.

Furthermore, only Public Law entities have the authority to create a trust through a declaration of trust. On the other hand, private individuals and non-Public Law entities can establish a trust through an agreement or a will. In all cases, regardless of the type of trust, Panamanian law mandates that every trust agreement must be in writing and include specific minimum clauses. Also in this case the signatures of the settlor and trustee must be authenticated by a notary public as per the requirements of the law.

Yes, civil law countries like Panama, which adopted partly or fully trust laws are usually stricter than legal systems in common law countries.

 

[jafo]

Of course. I don’t know the law of every country, but I guess certain formalities and rules must be followed everywhere.

Neither you nor I have to know the laws of every country because, at the end of the day, it's immaterial. What we need to know REALLY WELL is the Laws of Human Nature. These are the same ones since the beginning of time and will be until the end of time. No agreement, contract, trust, etc can stop a man hellbent on breaching it. No "trusted" third party ever!

 

[anotherone]

What options does a UBO or even a shareholder have if the (nominee) director is not producing or witholding dividend statements?
How to get the money out of the company?
Is the provider/director liable or something, solely based on a signed declaration of trust ?

I am going to talk about the UK practices.
In the UK, there is no legal requitements to get the director signature on dividend statements.
If you really want one, you can appoint a company secretary, and delegate this task to the company secretary.
In case, of tax investigation HMRC does not care, HMRC cares about whether you pay yourself an amount of money (dividends) that is part of profits this is the real legal requirements.

You can only pay dividends out of a company's available profits. This includes current year profits and profits retained from previous years. There can't be dividend payments if the company is not profitable. This is to prevent companies from distributing capital as dividends, which can harm creditors.

https://www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company

 

[aage]

Replace the director asap. It should always be possible to replace a director in the company unless he owns more than 51% of the shares.

 

[anotherone]

Replace the director asap. It should always be possible to replace a director in the company unless he owns more than 51% of the shares.

I prefer a nominee director who does not want to get involved in anything rather than a nominee director who requires to see bankstatements of the company; then get greedy and wants to get paid more every year to be a nominee.

 

[jafo]

see bankstatements of the company; then get greedy and wants to get paid more every year to be a nominee.

Based on history, you just described +99.99% of humans!

 

[JackAlabama]

I prefer a nominee director who does not want to get involved in anything rather than a nominee director who requires to see bankstatements of the company; then get greedy and wants to get paid more every year to be a nominee.

its normal. Wait until you put a side chick of yours in that role

 

[jafo]

its normal. Wait until you put a side chick of yours in that role

@JohnnyDoe - What happened with the side chick? Tell us. I need to laugh

 

[JohnnyDoe]

@JohnnyDoe - What happened with the side chick? Tell us. I need to laugh

She says she’s the real owner and it cost me $3m in legal fees so far to convince banks and courts she is not. She’s not even a side chick actually, just a random ugly crazy b…h I thought fiverr was a safer place to recruit nominees than the strip bar.

 

[jafo]

She says she’s the real owner and it cost me $3m in legal fees so far to convince banks and courts she is not. She’s not even a side chick actually, just a random ugly crazy b…h I thought fiverr was a safer place to recruit nominees than the strip bar.

I'm dead!

 

[Cloudbanck]

She says she’s the real owner and it cost me $3m in legal fees so far to convince banks and courts she is not. She’s not even a side chick actually, just a random ugly crazy b…h I thought fiverr was a safer place to recruit nominees than the strip bar.

Lesson from JohnnyDoe there, find your nominee directors in a strip bar.

But something that could work is just somebody semi-illiterate from a third world country that doesnt have the knowledge/capacity to steal the company, and is super grateful for a modest but life-changing monthly stipend.

Like this story from Darknet Diaries that everybody should listen to, showing how things really work in third world countries.
https://darknetdiaries.com/episode/142/So this guy sets up an industrial scale fake diploma mill, with a whole office building in Pakistan full of people creating fake university websites, selling courses you can click through, and selling diplomas. They even extort the people they have sold diplomas to, calling them up, saying they'll tell their boss they have a fake diploma, unless they pay like 8000 USD.

At one point the fake diploma mill company gets a class action lawsuit in the US by US victims. So what does the guy do, he gets some random Pakistani person to take the entire blame. The Pakistani person is being coached to - over video call with the US court - accept full guilt that he was the brain behind it all. It works, the verdict is that the Pakistani person has to pay 22 million dollars. And the Pakistani person is a one-dollar-a-day person that of course just disappears. And how much was this Pakistani person paid? Drumroll... 250 USD. So compare accepting guilt for a multimillion dollar fraud with being a nominee director.

Later on the guy beind the fake diploma mill actually gets a criminal legal process in Pakistan against him. That was a little bit more expensive to get rid of, he had to pay a judge 18,000 USD to be acquitted.

 

[jafo]

somebody semi-illiterate that doesnt have the knowledge/capacity to steal, and is super grateful for a modest but life-changing monthly stipend

BINGOOOOOOO!

TIFIFY!
This is every politician's DREAM!
In the EU, this is the wet dream of the Ursulas and Lagardes (of course...the ONLY way these "women" get any "action" is from those "thirsty" African "doctors & engineers" refugees.

 

[JohnLocke]

I prefer a nominee director who does not want to get involved in anything rather than a nominee director who requires to see bankstatements of the company; then get greedy and wants to get paid more every year to be a nominee.

And here you actually hit upon a real problem. These CSP's nominees become more and more greedy the more the company earns. And this is across the board, from bookkeeping to financial statements. Just like lawyers and accountants always adjust their bills according to the client's wallet.