3 Facts You should Know about Nominee Service
February 5, 2016
If you decide to incorporate an offshore company you will face a question whether to resort to nominees. In this article we suggest you to get more information about what nominee service is and to decide on the necessity to use it for your business.
Who Are the Nominees?
Businessmen primarily use nominees to legally avoid the official disclosure of their ownership. Most of jurisdictions guarantee high level of confidentiality and avoid making information sharing agreements with other countries.
Nominee directors and nominee shareholders are the people who appear in all public registries as formal owners of companies. At the same time real owners maintain full control over the company but avoid public disclosure of their identities. There are various reasons why real owners want to stay anonymous but with the help of nominee service they get a chance to do it legally.
Nominee service means the appointment of nominee directors and/or nominee shareholders.
Functions of Nominee Directors
Nominee director presents a company as a President, Treasurer and Secretary. The number of directors which your company should have as well as the requirement for their names to appear in public records depends on jurisdiction’s legislation. So, nominee director is a formal company’s owner while the real owner is not publicly listed.
Legally, nominee director acquires rights according to a Power of Attorney which is issued on his name to real company’s owner (called Attorney) and acts on behalf of the real owner. Attorney has power to manage bank accounts offshore and capital flows, to sign documents and to enter into contracts.
Functions of Nominee Shareholders
Nominee shareholders are the people who formally hold company’s shares while real owner gets a chance not to be publicly associated with off shore organization. Real owner gets all the gains from the shares while nominee shareholders are paid according to the agreement between them and the owner. Information about dividends is safely protected and does not appear in any public record.
Nominee shareholders acquire rights according to a Declaration of Trust. The document signed by nominees designates owner’s requirements concerning operations with shares and dividends’ management.
Power of Attorney and Declaration of Trust are valid for the period of one year. The service may be annually renewed for a certain fee or stopped upon owner’s request.
3 Facts about Nominee Service to Consider
Now you know who are nominee directors and shareholders but it is also important to know some
particular features of the service.
- You will not hide your business from authorities
Nominees are used to avoid information disclosure to non-governmental organizations thus protecting company’s strategy or details of its funds’ allocation. Note that authorities will still have access to information about your assets.
The fight against money laundering and tax avoidance requires participants of economic relations to be careful with purposes of using the nominee service. Don’t forget that the service will provide you with a confidentiality protection against commercial companies, creditors, financial investigators, individuals and so on but not against authorities.
It can be your choice to stay undisclosed even to authorities but it is illegal and you would be held liable for such action.
- Ownership may be revealed according to your will
Nominees protect your commercial information from non-governmental organizations’ and individuals’access but it can be your choice to disclose the data and to reveal your ownership.
This may be needed in case your business gets under governmental legal action. Public identity revealing may help to advocate your business.
- Nominees don’t carry out any business activities
Nominees are involved in your company’s activity only on papers. Really they don’t carry out any day-to-day or strategically important activities. The business completely belongs to you and is managed by your trusted team.
Does Your Company Need Nominees?
You are not obliged to appoint nominee director and shareholder when incorporating a company offshore. But the service may come in hand depending on circumstances of your business development. It costs a certain fee and we recommend estimating whether the step would be reasonable against your expected income.
The decision to use nominee service or not seems to be simple but together with some pitfalls of offshore company formation it may have serious impact on your business. So do not neglect the advice of Offshore Express Company’s expert on the issue. In addition to detailed explanations you will get professional assistance on company setup and maintenance.