Nominee shareholder vs. beneficial owner: What’s the difference and how does it affect your business in Singapore?

Published by Beaufort.SG

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If you are planning to set up a company in Singapore, you may have come across the terms nominee shareholder and beneficial owner. But what do they mean and how do they affect your business?

A nominee shareholder is a person or entity that holds shares in a company on behalf of the actual owner, who is known as the beneficial owner. The nominee shareholder acts as a proxy or agent for the beneficial owner and does not have any rights or obligations in relation to the company, except to follow the instructions of the beneficial owner.

A beneficial owner is the person or entity that ultimately owns and controls the shares in a company, regardless of who is registered as the shareholder. The beneficial owner has the right to receive dividends, vote at general meetings, and sell or transfer the shares.

Why use a nominee shareholder?

There are various reasons why a beneficial owner may choose to use a nominee shareholder, such as:

– To protect their privacy and anonymity. The identity of the shareholders of a Singapore company is publicly available, so using a nominee shareholder can help to keep the beneficial owner’s name and details confidential.
– To comply with local regulations. Some jurisdictions may require a certain percentage of local shareholding in a company, so using a nominee shareholder can help to meet this requirement.
– To facilitate transactions. Using a nominee shareholder can make it easier to buy or sell shares in a company, as the nominee shareholder can act on behalf of the beneficial owner without involving them directly.

What are the implications of using a nominee shareholder?

While using a nominee shareholder can have some benefits, it also comes with some risks and responsibilities, such as:

– The need for a nominee shareholder agreement. This is a legal document that outlines the relationship and obligations between the nominee shareholder and the beneficial owner. It should specify the terms and conditions of the shareholding, such as the amount and type of shares, the rights and duties of both parties and how to terminate the agreement.
– The need for disclosure of beneficial ownership. Singapore has strict anti-money laundering and counter-terrorism financing laws that require companies to maintain accurate and up-to-date information on their beneficial owners. Companies must also disclose their beneficial owners to relevant authorities upon request.
– The potential for disputes or fraud. There is always a possibility that the nominee shareholder may act against the interests of the beneficial owner, such as by misusing or transferring the shares without authorization. Therefore, it is important to choose a reputable and trustworthy nominee shareholder and to monitor their actions regularly.

How can we help?

If you are looking for a reliable and professional nominee shareholder service in Singapore, we can help. We have years of experience in providing corporate services to local and foreign clients, including company incorporation, accounting, tax, payroll, and compliance. We can act as your nominee shareholder and ensure that your interests are protected at all times. Contact us today to find out more.

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