Our valued sponsor
Nominee director and shareholder.
- Thread starter nastathin
- Start date
Do you actually know what a nominee director or shareholder is and how they work?
Nominee Sherholder:
Nominee shareholders are utilised in most jurisdictions. With respect to publicly traded shares, nominees (registeing shares in the names of stockbrokers) are commonly, and legitimately, used to facilitate the clearance and settlement of trades. The rationale for using nominee shareholders in other contexts, however, is less persuasive and may lead to abuse. For example, many jurisdictions require corporations to maintain shareholder registers and file annual returns containing a shareholders list and directors information, i.e. UK, Germany, Spain, Greece, Denmark, Sweden, Norway etc. The use of nominees, however, reduces the usefulness of the shareholder register or the shareholder list because the shareholder of record may not be the ultimaye beneficial owner.
Where nominee shareholders are used, most jurisdictions employ investigatory means (questioning the record holder) to discover the identity of the beneficial owners. In the United Kingdom, Section 212 of the Companies Act 1985 provides companies with a procedure to identify the beneficial owners of their shares. Under this Section, a company can ask the nominee to disclose the identity of the beneficial owner. If the nominee refuses, the company can apply sanctions such as suspending voting rights, withholding dividends, or refusing to register any subsequent transfer of shares. All this dosen't apply for offshore jurisdiction like Belize, Cyprus and Seychelles.
Nominee director and corporate directors
Nominee directors and corporations serving as directors (corporate directors) can also be misused to conceal the identity of the beneficial owner, and their use renders director information reported to the companies registry less useful. Nominee directors appear as a director on all company documents and in official registries (if any) (for instant Seychelles and Belize don't have such) but pass on all duties required to be performed by a director to the beneficial owner of the company. In many jurisdictions, the nominee or corporate director is not required to own shares in the company in which it serves as a director.
Certain jurisdictions including most OECD Member countries and OFC such as Cyprus, Isle of Man Jersey, Malta and the Netherlands Antilles do not recognise nominee directors. Consequently, a person who accepts a directorship is subject to all of the requirements and obligations of a director, including fiduciary obligations, notwithstanding the fact that he is acting as a nominee. In certain jurisdictions, directors cannot be indemified by the beneficial owner. Non-recognitiion of the concept of nominee director has one indirect benefit- those furnishing or acting as professional directors are likely to take greater preceutions to ensure that their client, the beneficial owner, does not misuse the corporate vehicle for illicit purposes. In the Netherlands Antilles, which does not recognise the concept of nominee directors, reputable trust companies that are asked to serve as directors will conduct a rigorous background check on their clients and, in the case of bearer share companies will insist on the immobilisation of those shares as an condition to accept a directorship. To curb the avilability and use of nominee directorschips, certain jurisdictions such as Ireland, impose a limit on the number of directorships a person may hold. In Ireland, a person may hold a maximum of 25 directorships. In the United Kingdom, the Companies Act requires disclosure of the identity of "shadow" directors, who are defined as persons on whose instructions the directors of the company are accustomed to act.
Corporate directors are used in many jurisdictions. Some jurisdictions, including Australia, Denmark, Hungary, Ireland, Jersey, Panama, and Switzerland, do not permit corporations to act as directors while other jurisdictions, such as the Netherlands, United Kingdom, and many OFCs, recognise corporate directors. Corporate directors may be a device that facilitates the abuse of corporate vehicles if the legal system cannot timely and effectively assign director responsibility to physical persons for illicit corporate behaviour.
Nominee Sherholder:
Nominee shareholders are utilised in most jurisdictions. With respect to publicly traded shares, nominees (registeing shares in the names of stockbrokers) are commonly, and legitimately, used to facilitate the clearance and settlement of trades. The rationale for using nominee shareholders in other contexts, however, is less persuasive and may lead to abuse. For example, many jurisdictions require corporations to maintain shareholder registers and file annual returns containing a shareholders list and directors information, i.e. UK, Germany, Spain, Greece, Denmark, Sweden, Norway etc. The use of nominees, however, reduces the usefulness of the shareholder register or the shareholder list because the shareholder of record may not be the ultimaye beneficial owner.
Where nominee shareholders are used, most jurisdictions employ investigatory means (questioning the record holder) to discover the identity of the beneficial owners. In the United Kingdom, Section 212 of the Companies Act 1985 provides companies with a procedure to identify the beneficial owners of their shares. Under this Section, a company can ask the nominee to disclose the identity of the beneficial owner. If the nominee refuses, the company can apply sanctions such as suspending voting rights, withholding dividends, or refusing to register any subsequent transfer of shares. All this dosen't apply for offshore jurisdiction like Belize, Cyprus and Seychelles.
Nominee director and corporate directors
Nominee directors and corporations serving as directors (corporate directors) can also be misused to conceal the identity of the beneficial owner, and their use renders director information reported to the companies registry less useful. Nominee directors appear as a director on all company documents and in official registries (if any) (for instant Seychelles and Belize don't have such) but pass on all duties required to be performed by a director to the beneficial owner of the company. In many jurisdictions, the nominee or corporate director is not required to own shares in the company in which it serves as a director.
Certain jurisdictions including most OECD Member countries and OFC such as Cyprus, Isle of Man Jersey, Malta and the Netherlands Antilles do not recognise nominee directors. Consequently, a person who accepts a directorship is subject to all of the requirements and obligations of a director, including fiduciary obligations, notwithstanding the fact that he is acting as a nominee. In certain jurisdictions, directors cannot be indemified by the beneficial owner. Non-recognitiion of the concept of nominee director has one indirect benefit- those furnishing or acting as professional directors are likely to take greater preceutions to ensure that their client, the beneficial owner, does not misuse the corporate vehicle for illicit purposes. In the Netherlands Antilles, which does not recognise the concept of nominee directors, reputable trust companies that are asked to serve as directors will conduct a rigorous background check on their clients and, in the case of bearer share companies will insist on the immobilisation of those shares as an condition to accept a directorship. To curb the avilability and use of nominee directorschips, certain jurisdictions such as Ireland, impose a limit on the number of directorships a person may hold. In Ireland, a person may hold a maximum of 25 directorships. In the United Kingdom, the Companies Act requires disclosure of the identity of "shadow" directors, who are defined as persons on whose instructions the directors of the company are accustomed to act.
Corporate directors are used in many jurisdictions. Some jurisdictions, including Australia, Denmark, Hungary, Ireland, Jersey, Panama, and Switzerland, do not permit corporations to act as directors while other jurisdictions, such as the Netherlands, United Kingdom, and many OFCs, recognise corporate directors. Corporate directors may be a device that facilitates the abuse of corporate vehicles if the legal system cannot timely and effectively assign director responsibility to physical persons for illicit corporate behaviour.
Similar threads
Latest Threads
-
US -> UAE Transfer Safely- Started by lagloriacubana
- Replies: 2
-
-
-
Biz Dev/Traffic Advice for an OTC Desk. Alpha from whales & sharks is highly welcomed & appreciated
- Started by misterman
- Replies: 4
-
