What is Nominee shareholder?

A nominee shareholder is an individual or entity that holds shares on behalf of another person or party, known as the beneficial owner. The nominee shareholder acts as the registered owner of the shares and appears in the company’s official records, but they do not have any rights to the underlying economic benefits, such as dividends or voting rights, which belong to the beneficial owner. This arrangement is commonly used for privacy, asset protection, or to comply with specific legal or regulatory requirements. In Switzerland, nominee shareholder services are offered to facilitate investments while maintaining the confidentiality and privacy of the actual shareholder.

Key Features of a Nominee Shareholder

  • Confidentiality and Privacy: One of the main reasons for using a nominee shareholder is to maintain privacy. The nominee shareholder’s name appears in public company records, which can protect the identity of the actual beneficial owner. This is particularly useful for high-net-worth individuals or entities wishing to shield their personal or corporate involvement in a business.
  • Nominee Agreement: A nominee shareholder is bound by an agreement with the beneficial owner that outlines the rights and duties of the nominee. This includes instructions on how the shares should be managed and how any returns (dividends, voting rights) should be handled. While the nominee is the registered shareholder, the beneficial owner retains full control over the shares.
  • Limited Rights: A nominee shareholder typically has no rights to the shares other than the right to hold them on behalf of the beneficial owner. The nominee cannot sell, transfer, or vote the shares without the instructions of the beneficial owner. The nominee’s role is essentially administrative and does not affect the control or financial benefits of the shares.
  • Legal Framework: The use of nominee shareholders is governed by contract law, and the relationship is formalized through a nominee agreement. While the nominee shareholder holds the shares in their name, the beneficial owner is entitled to all rights and obligations associated with the shares, including voting rights and receipt of dividends.

Nominee Shareholders in Switzerland

In Switzerland, nominee shareholders are commonly used in both personal and business contexts, particularly when the beneficial owner wants to maintain privacy or ensure their ownership remains anonymous. The Swiss legal framework allows for the use of nominee shareholder services while ensuring compliance with regulations regarding transparency and corporate governance.

  • Legal Considerations: Under Swiss law, companies are required to maintain accurate records of their shareholders, including the beneficial owners of shares. While nominee shareholders are allowed, Swiss law mandates that the true beneficial owner be disclosed to the company, even if their identity is not made public. This is to ensure compliance with anti-money laundering (AML) regulations and to prevent the misuse of nominee arrangements for illegal activities.
  • Tax Compliance: The use of nominee shareholders in Switzerland must comply with tax reporting requirements. Although the nominee shareholder holds the shares on behalf of the beneficial owner, the beneficial owner remains responsible for any taxes associated with the shares, such as income tax on dividends and capital gains tax on the sale of shares. Swiss tax authorities may require disclosure of the beneficial owner for tax reporting purposes.
  • Corporate Governance: While nominee shareholders can hold shares for confidentiality purposes, Swiss corporate governance rules still apply. Nominee shareholders are bound by the same rules as other shareholders, including voting in shareholder meetings or transferring shares, but only as instructed by the beneficial owner. It is crucial that the nominee shareholder follows the instructions of the beneficial owner to ensure legal and regulatory compliance.

Nominee shareholders in Switzerland provide a legal and effective means of maintaining privacy while allowing the beneficial owner to retain control over their investments. However, it is essential to ensure that nominee arrangements comply with Swiss legal and regulatory requirements, especially concerning transparency and tax obligations. By using a nominee shareholder, investors can protect their identity while remaining fully entitled to the economic benefits and control of their shares.