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Nominee services are typically provided by an intermediary to conceal the beneficial owner's business. Nominee services relate to nominee shareholders and nominee directors. As a rule, the nominee service should also include a PO box service (office address for correspondence purposes). Nominee services are suitable for large corporate structures for tax planning purposes and often involve international elements. For example, the beneficial owner is located in a different country than the company itself.
Nominee shareholder services are normally performed on the basis of a declaration of trust whereby the nominee declares that they hold shares on behalf of someone else and have no authority to make decisions in the company, vote at a shareholders meeting or receive dividends, unless: the customer has expressly instructed it. The nominee has no rights to sell shares unless requested by the client. However, the Client and the Agent may agree on specific tasks for the Agent to perform. Such duties are often delegated to lawyers and attorneys who are professionals in the field and can protect the interests of the client.
Nominated director, also called 'shadow director', who normally only appears for official records, while the company is in effect ruled by the client by power of attorney. Based on the authorization, the customer can open a bank account and assume full management and control of the company.
Benefits of nominee services
The benefits of using nominee services are evident in cases where a business owner wishes to maintain their privacy and reduce access to official records or does not want their name to be associated with the business in question. In addition, there may be situations where an individual has restrictions on performing the proposed activity or where the law requires local management, such as a local secretary in Hong Kong.
When quick action is required to register a company abroad in the event the client is unable to travel, it is often more convenient to temporarily appoint a local company director. When intending to open a business in a foreign jurisdiction such as the British Virgin Islands, Belize or Hong Kong, it can be physically difficult to appear in person.
Nominee services usually guarantee confidentiality and anonymity. However, disclosure is sometimes made to banks or investigative authorities during court proceedings.
The nominee services are often used for tax planning and wealth protection purposes. If the ultimate beneficiary of the full corporate structure resides in low-tax jurisdictions, it should enjoy the benefits of the low-tax regime for the dividends received from the profits generated.
Other benefits derive from the country of registration and are often related to financial statements and reports. In some tax haven jurisdictions there is no requirement to file the annual form, hence low auditing and accounting requirements which offer certain advantages if the individual is willing to increase privacy and confidentiality and hide their assets.