A nominee shareholder is a person that acts as the registered owner of shares on behalf of another person who is the actual owner of the shares. As such, a nominee shareholder takes up the name of another and simply holds the share on behalf of such person in agreement.
In Singapore, it is not illegal to appoint a nominee shareholder; however, this action must be done for the right reason and purpose. In addition to this, the appointment and registration of the nominee shareholder must be submitted to the Inland Revenue Authority of Singapore (IRAS), Accounting and Corporate Regulatory Authority (ACRA), and other governmental agencies as deemed fit.
Appointment of a Nominee Shareholder
It is proper for a nominee shareholder to sign a nominee agreement (declaration of trust) in order to officially measure the capabilities of the nominee shareholder.
The declaration of trust usually involves a list of official declarations stating who the share rightly belongs to, how the nominee shareholder would only act in the owner’s best interest and, as such, would promptly transfer shares upon request of the rightful owner, and report the rights and benefits related to the shares to the rightful owner when required.
The owner should obtain an undated share transfer form in order to secure the shares in the hands of the nominee shareholders.
Benefits of Appointing a Nominee Shareholder
There are numerous individual reasons why shareowners would try to appoint a nominee shareholder; however, the major benefits of appointing a shareholder are; anonymity and ownership.
As such, for whatever reasons you are appointing a nominee shareholder, you can stay anonymous both online and on paper and still yield a significant share in a company. This is why it is advisable to appoint someone trustworthy, such as a family member, lawyer, etc.
In addition, the risk of appointing a nominee shareholder can not be overlooked. Therefore, it is important that the shareowner completely secures the ownership of his shares even when the nominee shareholder holds it.