Nominee company

Nominee company
See also

Nominee company - is usually created by bank or different trustee organization. This kind of company hold and administer securities as a registered owner on behalf of an beneficial owner.

Nominee company is a legal entity in its own right with own share capital. In essence a nominee company is legally isolated from the custodian. This is important because if the custodian fails to keep his commitments the company company remains as a going concern. The company can’t default itself because it does not lend money, invest or take risk. The company's name is listed in the shareholders' register and it acts as legitimate owner of the securities. Securities registered on behalf of the nominated company have the same legal status as those registered by custodian but it is worth noting that the biggest difference is the separation of the custodian's risk of default. Using of nominee company is very popular because empower the custodian to keep safe and control its customers securities to its maximum efficiency. The client receives dividends in the normal way, although it is paid by his custodian rather then the issuer. However customer lose the direct relation with the issuer that he would have if his own name was reported in the shareholders' register (K. Dickinson 2015).

Registered owner vs Beneficial owner[edit]

Registered owner also known as nominee shareholder is usually individual or company who owns shares on behalf of real owners. The nominee and true owner they have entered a contract on the basis of which the nominee shareholder would hold the shares in the name of owner. The true owner would hold all rights and control of his shares (A. V. Chang, A. H. Thorson 2010).

Beneficial owner is usually an individual who enjoys benefits of ownership or customer property control on behalf of whose this tranasction is being conducted. Beneficial ownership differs from legal ownership however usually legal and beneficial owners are one and the same but sometimes there are cases legitimate and sometimes not-so legitimate, where beneficial owner want to remain anonymous (D. Cox 2014).

The differences between register owner and beneficial owner:

  • The main differences between a beneficiary owner and a nominee shareholder is that the first one is the legal owner of the shares which he bought form a limited company.
  • The beneficiary owner may stay anonymous as he designates someone to be a nominee shareholder.The nominee shareholder appears on company’s official documents and public records but the beneficiary owner receives the income from the shares.
  • The nominee shareholder does not own and has no claim form the shares. Also he has to sign a declaration of trust that protect the beneficiary owner's assets (What are the main differences 2019).


Author: Hanna Cugier