What are the relations between a Beneficiary and a Nominal Shareholder of an offshore company?

The relations between an offshore company’s Beneficiary and Nominal Shareholder are governed by Trust Law. It should be mentioned that trusts exist only in the UK and its former colonies still under common law ruling; having appeared during the period of knights, who made necessary arrangements before leaving for Crusades in order to avoid their property being appropriated by someone else in case of their passing away. The property was traditionally made over to relatives or companions, who owned it until the knights’ return. Thus the ownership right was divided into legal and beneficiary.

A Nominal Shareholder holds the property (in our case, shares) for the benefit of a Beneficiary. If a Nominal Shareholder breaches the Beneficiary’s rights, the court backs the Beneficiary and recovers the due amount from the Nominal Shareholder.

A trust established by a Beneficiary and a Nominal Director  on behalf of an offshore company is called the “bare trust”. This type of trust implies that apart from holding shares in a Beneficiary’s favour, a Nominal Shareholder also owns the profit from these shares as well as dividends that only a Beneficiary can claim for.