A nominee shareholder (or subscriber) is a person or company who holds shares in another business on behalf of a someone else.
Nominee Shareholders and Subscribers are Less Commonly Used
The shareholder service is the least commonly used nominee service compared to the director and secretary roles. Whilst the reasons for this might vary depending on the individual circumstances, two common causes are:
1. People understand that owning and being in possession of the company’s shares is fundamental to receiving the full benefits of any profits and other gains which may earned.
Armed with knowledge of the power which shares bestow, they are reluctant to relinquish this to a third party nominee.
The use of a reputable company formation agent who can provide a well written power of attorney can to a large degree, provide the necessary assurances that their investment is safe.
2. Although details of the original subscribers are contained in the memorandum and articles of association, information on who currently owns shares is not as transparent as say details of who is currently a company director or secretary.
Details of share transfers are usually updated at Companies House once a year when the annual return is submitted. This appears to provide the shareholders will a greater degree of anonymity whereby they can keep their ownership of a company’s shares private for longer and thereby not have to engage nominee shareholder services.
The belief is not a factual one however. Any member of the general public has a right to inspect a company’s statutory records at its registered office provided reasonable notice is given.
Also, in order for the shareholders name not to appear on the memorandum and articles of association, they would have to engage a nominee shareholder when setting up the company.
Nominee Shareholder, Director and Secretary
A nominee shareholder is normally used in conjunction with a director and secretary, but rarely on it own. Ready made companies will often use nominees particularly if they were formed for the purpose of reselling at a later date.
Even when this is not the case, the formation agent who purchasers the company to resell would more than likely appoint their nominees as the company officers.
Like other arrangements, the purchase of the nominee shareholder service can expect to be presented with a deed of indemnity for their agreement and signature.