Appointing a Nominee Shareholder

A nominee shareholder, in Singapore law, can be either an individual or corporate, authorised by the share owner to step in. Individuals with shares are not limited to Singapore citizens, but as well as those with Permanent Resident, Employment Pass holders or Dependent Pass holders.

Nominating a company shareholder is legal under Singapore law, as long as you have legitimate reasons for the arrangement.

In Singapore, the public can identify directors and shareholders of any company by a simple search. For a small fee, anyone can have access to the personal details of the directors and shareholders searched.

By nominating a shareholder, only the name of the registered nominee shareholder will appear on the records of Singapore Accounting and Corporate Regulatory Authority (ACRA). Thus, the share owner gets to enjoy complete anonymity from the public, while at the same time, still holds complete ownership of the shares ‘held’ by the nominee shareholder.

This holds great advantage if the objective is to conceal from competitors or simply to keep one’s personal details confidential.

It is important to appoint a shareholder in a professional way, rather than a simple “verbal agreement”.

Otherwise, there may be possibility that:

• The nominee assuming or claiming that the share is a “gift” from you.
• The nominee demanding for unreasonable large payment for the appointment.
• The nominee dies, with his or her heirs assuming the shares as property of the deceased.
• The nominee loses mental capacity, with his or her heirs assuming the shares as property of the mentally incapacitated individual.
• You lost contact with the nominee.
• The nominee uses the shares as authority for actions such as selling them, act as a security for a loan or making company decisions without your approval.
• The nominee reveals the arrangement to others.

In all cases above, you risk:

• Losing ownership of the shares ‘held’ by the nominee shareholder
• Losing your anonymity and confidentiality to public
• Dealing with undesired consequences of the unprofessional nominee shareholder
• Legal lawsuit and legal costs

When appointing a nominee shareholder, we highly recommend executing it with a nominee agreement known as the Declaration of Trust. This agreement, signed by both parties, should include acknowledgement that the nominee has no power over the shares and not the legal owner of the shares. All income and capital gains on the shares belong to the beneficial owner and transferring or returning of shares are executed upon the owner’s instructions.