as long as a written agreement or Declaration of Trust was established. However, with the implementation of The Register of People with Significant Control Regulations 2016, achieving anonymity now requires a strategic approach.

In this article, we aim to explain the concept of a nominee shareholder and explore the potential risks to maintaining beneficial owners' anonymity.

What is a nominee shareholder? A nominee shareholder is an individual or entity that holds shares on behalf of someone else. The most common form of a nominee is a trustee holding shares in a trust for beneficiaries or a company acting as a nominee for overseas investors.

Why appoint a nominee shareholder? Beneficial owners appoint nominee shareholders when they prefer not to have their shares registered in their own name. By appointing a nominee, they can ensure their anonymity and privacy. Personal information, such as their home address, will not appear on publicly accessible documents held by Companies House.

Does a nominee shareholder guarantee privacy? Having a nominee shareholder can protect your identity and keep personal information, including your address and owned assets, confidential. Additionally, it is challenging for outsiders to ascertain that a listed shareholder is indeed a nominee, as the arrangement is typically known only to the beneficial owner and the nominee.

Are nominee shareholders legal? It is entirely legal for company shares to be held by one or more trustees on trust for the beneficiaries of a trust or for a nominee to hold shares on behalf of actual shareholders. The name of the trustee(s) or nominee will be recorded in the company's register of members as the holder (or joint holders) of the shares. Consequently, the trustee(s) or nominee becomes a company member rather than the beneficiary of the shares.

How to appoint a nominee shareholder? To appoint a nominee shareholder, a nomination form must be completed and submitted to the Company Secretary before the next Annual General Meeting (AGM). According to the Companies Act 2006, a UK company only needs to acknowledge shareholders listed on the register. This principle is reinforced by the Model Articles of Association for both private and public companies. These articles state that, except as required by law:

• The company will not recognize any person as holding shares in trust.
• The company will only acknowledge the registered owner's absolute right to the shares and will not recognize any other interest in them.

From the company's perspective, a nominee shareholder can:

• Exercise voting rights attached to the shares.
• Receive dividends, distributions, and returns on capital.
• Transfer their shares.
• Be responsible for payments owed on the shares and fulfill all other membership obligations. The company can only address any issues with the shares through the nominee.

A nominee and the beneficial owner should enter into an agreement or Declaration of Trust to regulate their relationship and define the rights and responsibilities of each party.

How are nominee shareholders treated for tax purposes? The beneficial owner is accountable for any taxes associated with shares held by a nominee. This should be outlined in the agreement or Declaration of Trust. The nominee will transfer dividends to the beneficial owner and provide a consolidated certificate of total dividends and interest received. The beneficial owner will report this income on their tax return and pay taxes accordingly. Capital Gains Tax on shares is automatically charged to the beneficial owner.

Can a company act as a nominee shareholder? Yes, a nominee shareholder can be either an individual or a company.