Nominee services are used as a legitimate way to ensure confidentiality of personal details, to protect your personal information and your business activities.
In Cyprus, Hong Kong, Singapore and many other jurisdictions it is a legal requirement that the names and addresses of the company Directors and Shareholders are placed on public record and can be searched. This means that if you are a Company Director or Shareholder of a limited company then your name, address and association with that company is available to any third party that carries out a company search. By using nominee Directors and nominee Shareholders this issue is avoided.
Eltoma provides professional nominee services in order to facilitate confidentiality for your business thereby securing your corporate and financial privacy and anonymity. We are committed to providing first class support and have extensive knowledge and experience in order to provide an outstanding service. Eltoma will never disclose any personal details of the beneficial owners of a company without prior consent, the only exception being that the information is available for banking purposes as is the legal requirement.
Eltoma offers two types of nominee services; nominee Director services and nominee Shareholder services.
Nominee Director Services
The basic function of a nominee director is to act on behalf of the beneficial owner and to protect the beneficial owners of limited companies from public disclosure requirements. Using a nominee director is a perfectly legal device in order to protect the privacy of an individual and is designed to help those persons who would rather not disclose their interest or association with a company. Using a nominee director fulfils statutory compliance; they do not get involved in any management, financial or operational matters of the company.
How the Process Works:
A nominee director acts on behalf of the beneficial owner. During the process of incorporation, a Power of Attorney is drawn up. A Power of Attorney is a document which is issued to the beneficial owner that guarantees the rights to your company will transfer back to you upon the completion of the tasks by the nominee director. Basically, it recognizes and protects the rights of the beneficial owner.
The nominee director does not have any rights over the company and will only act with regards to the maintenance activities in order to comply with local regulations. The appointed nominee director is not entitled to manage the company or enter into any business contract or any financial contract therefore the beneficial owner retains full control over the company.
Nominee Shareholder Services
The main reason that nominee shareholders are used is in order for the beneficial owner of a company to retain anonymity. As mentioned previously, the identities of shareholders are public records and can be identified by undertaking a company search. In order to retain privacy it is common practice to use nominee shareholders to maintain complete confidentiality of ownership. The name of the nominee shareholder will appear on public records and not the name of the beneficial owner.
How the Process Works:
In order to protect the interest of the beneficial owner then a Declaration of Trust is executed between the nominee shareholder and the beneficial owner. The Declaration of Trust is a document in which the nominee shareholder agrees to absolve all voting rights and deal with the shares only in accordance with the instructions of the beneficial owner.
The Declaration of Trust, along with a Share Transfer Document, is given to the beneficial owner thereby putting them in complete control of the company. The nominee shareholder only acts on instructions given by the beneficial owner.
Risks Associated with using Nominees:
Using the nominee system is the perfect way to protect confidentiality and is entirely legal. If the process of appointing a nominee director and nominee shareholder is done correctly there is no apparent risk involved. Eltoma only uses carefully selected persons for nominee director and nominee shareholder roles who will act upon the instruction of the beneficial owners whilst ensuring all local obligations are satisfied. Eltoma practices thorough due diligence at all times and therefore any risks associated with using nominee directors and shareholders are minimised.
Potential Risks to Beneficial Owners:
The potential risks a beneficial owner faces when using a nominee director or nominee shareholder lays in the fact that misconduct could theoretically occur in the form of misappropriation of company assets or liabilities or disposal of the entrusted company. Eltoma negates this risk by efficiently ensuring the nominee process is completed in a professional and timely manner ensuring that the appropriate paperwork is completed. Eltoma protects the beneficial owner by ensuring that the nominee director signs a resignation letter with an open date which would make any unsolicited action by a nominee director illegal. Similarly the nominee shareholder signs an instrument of Transfer of Shares with an open date effectively making transfer of company shares illegal. Throughout the process Eltomas top priority is to protect the beneficial owner at every step of the process and to ensure compliancy and legality.
Potential Risks to Nominees:
Nominee directors have legal obligations towards the company which inherently creates risk however Eltoma practices the KYC (Know-Your-Client) Process thereby significantly reducing any associated risks for the nominee directors and shareholders. The KYC Process is used by finance professionals to analyse clients’ requirements and collect information thereby ensuring all activities are legal.
Another layer of protection is added by ensuring the beneficial owner signs an indemnity letter and trust deed with the nominee director thereby indemnifying the nominee from any illegalities carried out by the beneficial owner. In the case of Singapore companies a security deposit is required for the provision of nominee director services. This is in order to safeguard the interests of the nominee director. There is no intrinsic risk to a nominee shareholder.
At each and every stage of the process Eltoma offers professional and efficient support. We go through the process and clearly explain each step in detail in order for you to understand the process and feel safe and secure.
Please do not hesitate to contact us for an obligation free consultation to answer any queries you may have or to discuss your requirements.
Got a question? We’d love to hear it!
+357 25 02 50 34
+65 315 91 676
+7 812 458 46 22