The definition of 'Nominee'
A nominee is a person or company who holds an asset on behalf of another.
The nominee acts on behalf of the other individual, or group of individuals, on many administrative related tasks. A nominee structure is said to be in place when investment opportunities are set up to act as the nominee for the investor.
How does it work?
The shares are legally owned by the nominee company and the investor is the stock's beneficial owner, with all rights over the shares.
Through this type of agreement, a non-trading company owns the shares, which ensures that an investor's assets are legally separate from the assets and liabilities of the nominee company. If the company becomes insolvent or ceases to trade for whatever reason, the investor's investments are treated completely separately and are transferred to them as the beneficial owner.
Why choose a nominee?
There are advantages to a nominee structure. It focuses the flow of communication between investors and the companies they have invested in, resulting in a faster and more efficient process. A nominee structure will often be advantageous to both investors and companies.