About Nominee service

Bona Trust Corporation provides Nominee Service.

nominee


What is Nominee System?

The Nominee system refers to a system that allows directors and shareholders to register using third party names, so-called “nominal lending” services. In general, it is a word that we cannot hear much, but it is a service used very well in offshore finance.

For example, one feature of nominee is a legal technical name for holding securities etc. indirectly. Once rewritten to nominee name, it is difficult for third parties to distinguish between trust property and other property (mixed storage).

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Changing custody name to nominee name is common in British Commonwealth countries such as Malaysia, Hong Kong or Singapore etc.

The reason for transferring from investor’s name to nominee’s name is that if he / she leave asset management to fund managers, if he / she put it in the name of nominee, convenience that he / she can move funds and assets without the signature of the investor himself / herself.

If securities and fund accounts of a large number of investors are nominated as the same nominee, various procedures such as name transfer and fund transfer can be carried out smoothly by custodians (Ref: “Custody Service“).

For offshore company like Labuan, it is possible to register incorporation using the nominee system, it is possible to register as “Nominee Director”, “Nominee shareholder”.

Either one of “directors” or “shareholders” is allowed for nominee service, but in the case of aiming to protect UBO (Ultimate Beneficiary Owner)’s information, it is common to utilise nominee services on both sides.


On the procedure of the Nominee system

When using the nominee service, a nominee agreement will be concluded between the nominee and the Ultimate beneficiary owner. This agreement is generally called “TRUST DEED”.

Once TRUST DEED is concluded, all the legal authority will be lost to the nominee’s directors and shareholders, and no legal liability will be charged. All profits and losses here will be attributed to the UBO.

Moreover, while it is possible to protect personal information by utilising the nominee system itself, the authority of conduct, such as fund transfer in a bank account, belongs to the UBO, so the director and shareholder who became nominee will not have the authority of the signatories of the bank and will not be able to manipulate the account illegally.


Advantage of the nominee system

Advantage of the nominee system

· Since the nominee system is primarily aimed at “confidentiality of information”, strict protection of personal information is a major advantage.
· Since it is possible to incorporation under the name of a third party without submitting UBO information, UBO information is not recorded in various corporate documents such as director information, shareholder information, company M&A.
· While UBO is not listed in corporate documents, directors and shareholders who became nominee lose their authority to transfer funds in bank accounts, so it is possible to avoid risk of escape of funds.

Disadvantages of the nominee system

Disadvantages of the nominee system

· It is necessary to pay renewal fee of nominee agreement every fiscal year.
· The procedure becomes complicated in contract with another company (signing contract, opening a bank account etc).
· Nominee’s name can not be used for actual business contracts or corporate activities.
· When a contract violation such as fraud and money laundering is discovered, there is a possibility it may evolve into agreement destruction, damages compensation, criminal punishment etc.

* Since there are both merits and demerits in the nominee service as described above, kindly consider using it carefully after judgment.

Should you have any queries, please do not hesitate to contact us.


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