There may be instances whereby some shareholders may want to get someone to hold their shares of the company on their behalf. The person nominated is said to be holding the shares in trust and is called a nominee shareholder. The person who nominated the nominee is called the beneficial owner.
For example, John asks Mary to hold his shares in ABC Pte Ltd for him. John is the beneficial owner and Mary is the nominee shareholder.
The nominee shareholder’s name will appear on the register of shareholders and is entitled to any dividend and income generated by the company and payable to the shareholders. In the registrar, there is no record that a shareholder is a nominee. Thus you will need to take steps to secure your rights as the beneficial owner if you are using a nominee shareholder structure.
Have a trust deed done up for the nominee shareholding agreement
A trust deed (or otherwise called a deed of trust or declaration of trust) is a document signed by the nominee shareholder to protect the interests of the beneficial shareholder with regards to any dividend and income that will be due. This deed should state that the nominee shareholder has no legal claim over these monies.
A trust deed should also state that the voting rights would reside with the beneficial owner and not the nominee shareholder. The arrangement of how the voting is to be done at general meetings should also be spelt out in the document.
Inform all officers of the company about this nominee shareholding arrangement
Directors and secretaries of the company should have knowledge that there is a nominee shareholding agreement. For us, as the corporate secretary of the company that has a shareholding agreement, we will request a copy of the trust deed. We will also update the registers accordingly. (Namely the register of nominee shareholders, register of beneficial owners and register of controllers) Do note that these registers are not public. They are kept in the company file and can only be inspected by the shareholders or directors of the company.
Get legal advice on protecting your rights
Speak to your corporate secretary on how you can ringfence your interests as a beneficial owner. You should also engage a lawyer to draft a proper trust deed for you as a beneficial owner.
If you need advice, you can contact us. We work with experienced lawyers on such matters. We have experience in handling such arrangements.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at Singapore Secretary Services
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