Nominee services are popular among offshore businesses for one major reason: They guarantee the offshore businesses’ privacy legally.
There are various reasons why a business owner wants to keep their business records private, but here, we are going to talk about the basics of nominee services, and what you should know about the services so that you can make a well-informed decision.
Nominees are directors and/or shareholders who are appointed as the official representatives of the the company, on behalf of the real owners.
Nominee services are basically related to appointing nominee directors and/or shareholders to keep the real owners’ personal details off of the public records for various privacy reasons.
There are generally three types of nominee: Nominee directors, Nominee Manager & nominee shareholders.
Nominee Directors/ Managers
A nominee director is officially function as a company director, and appointed as the company’s President, Secretary and Treasurer whenever allowed. Depending on the jurisdiction of your company, it is a requirement for the company directors to have their name listed on the public record; so, instead of the real owners’ names, the nominee directors’ name will be listed publicly.
It can be said that nominee directors act as layers of protection for the real owners.
Legally speaking, a nominee director is formally appointed by the issuing of a Power of Attorney document. The document is issued in the name of the nominee director to the real owner of the company (called Attorney.) Attorney can sign documents and contracts, as well as open bank accounts.
Another type of nominee is nominee shareholders. A nominee shareholder is appointed to protect the identity of the real owner from being publicly associated with the offshore company. The nominee will hold the owner’s shares, and the company owner can access all the benefits of the shares (e.g. Dividends) and they are protected in such a way that ownership information will not be exposed publicly.
Legally speaking, a nominee shareholder’s appointment is backed by Declaration of Trust, signed by the nominee. The document requires the shareholder to act on the instruction of the real owner in term of dividends allocation, shares transfer, and so on.
Both legal documents are issued for a period of one year. The real owner may renew the service (there is an annual renewal fee involved), or stop the service any time upon request.
Nominees can protect your identity to non-governmental entities – not the governmental ones.
You can use nominee services to protect your investment strategy and details on your asset allocations – not hiding your assets from the authorities.
Tax evasion and money laundering laws require careful consideration when using nominee services. As mentioned above, nominees offer some layers of protection against non-governmental entities – such as your competitors, relatives, creditors or even private investigators – but not against governmental authorities.