Nominee Shareholder Agreements

Nominee`s shareholder refers to the holder of shares on behalf of another person or a beneficial owner or initial holder of shares. Appointment is a mandate given by a shareholder to assign legal title to the shares to a person described by whom the shares are transferred after the death of a shareholder or an initial holder of shares. A nominee is a person described in this mandate. The person named as the owner is the nominee, while the person who actually paid for the shares is the beneficiary. The beneficiary is often of the opinion that it is necessary not to be listed as a shareholder in the register of members and, therefore, such an agreement is concluded. They act as a legitimate, unrelated third party, officially registered as a shareholder holder in the name of the shareholder. This protects the beneficiary from any public relationship with that particular company. A nominee must make a refining statement of confidence that he or she has no advantage over the shares until the original shareholder is alive. This declaration is called a custody agreement. As part of the deposit agreement, the nominated shareholder holds the shares. Any person or entity may hold legal security in shares under appointment. Even a minor can be a candidate for shares in a company.

If the nominee is a minor, the shareholders shall designate any other person who, in the event of the death of the shareholders, will be entitled to shares during the minority of the nominee. The appointment may be submitted at any time during his lifetime in writing to the company in the prescribed form. It can even be deleted or modified later by filing a mandatory form. The effect of a mandate given by the shareholder is valid from the date on which the company receives it. The nominated shareholder has no advantage, since the economic shareholder has until the life of the original economic shareholder. Nominee enjoys the same rights and commitments as the original shareholder as soon as it has shares. In Singapore, members of the public can search for companies registered in Singapore to identify the directors and shareholders of those companies. In other words, the names and other personal data of directors and shareholders are publicly available to everyone for a small fee via BizFile, which some entrepreneurs might want to avoid. A nominated shareholder is someone who “lends you their name” to act as a registered owner of shares in a company, when in reality they only own the shares to your advantage. To ensure that the shares are transferred to you, even if the nominee refuses or cannot arrange the transfer of shares, you can obtain a signed but undated share transfer form in your favour.

You may wish to keep the share certificate (if the company concerned is a limited liability company). There have been controversies among the legal heirs over the ownership of the nominee`s rights to the transferred shares. At present, the Enterprise Act does not allow for the creation of a third mode of succession, i.e. a valid will cannot annul a valid appointment established in accordance with the law. For legal heirs, the nominee is considered only as an agent. A fiduciary relationship is established between the nominee and the legal heirs in order to protect the interests of the legal heirs until the will of the original shareholder takes effect. . .