Share
A share is a small piece of ownership in a company. A person who owns shares may receive voting rights, dividends or money if the shares are sold.
Finance education / Ownership structures
Nominee Shares
A simple guide to the difference between the person whose name is written on the shares and the person who truly benefits from them.
Overview
What it means
A nominee share arrangement separates legal ownership from beneficial ownership.
The nominee is the person or organisation whose name appears on the company records. The beneficial owner is the person who receives the real financial benefit from the shares.
This can be useful when an investment platform, broker, professional service provider or trusted person holds shares on behalf of somebody else.
The arrangement does not mean the true owner disappears. Laws about ownership, control, tax and financial crime may still require the beneficial owner to be identified.
Simple example
Amelia invests £100 in a company through an online investment platform. The platform's nominee company appears on the official shareholder register. Amelia is still the person who benefits from the investment. The nominee holds the legal title, while Amelia holds the beneficial interest.
Key terms
Words you should know
Registered holder
This is the name written on the company's register of members. The registered holder is recognised by the company as the formal shareholder.
Beneficial owner
This is the person who receives the economic benefit from the shares, even when another name appears on the official register.
Nominee
A nominee is a person or organisation that holds legal title to shares for somebody else.
Dividend
A dividend is money that a company may pay to shareholders from its profits. In a nominee arrangement, the payment may pass through the nominee.
Voting rights
Some shares allow their holder to vote on company decisions. The nominee may vote according to instructions from the beneficial owner.
Declaration of trust
This is a document that can record that one person holds an asset for the benefit of another person.
People with Significant Control
PSC rules are designed to identify people who own or control an important part of a UK company.
Structure
How it usually works
01
The investment is made
The beneficial owner provides money or acquires the economic interest in the shares.
02
The nominee is recorded
The nominee's name is entered on the company's register of members as the formal shareholder.
03
The agreement sets the rules
The parties decide how dividends, votes, communications, transfers and sale proceeds will be handled.
04
The nominee follows instructions
Where the agreement allows it, the nominee acts according to instructions from the beneficial owner.
05
Benefits are passed on
Dividends and sale proceeds are usually transferred to the beneficial owner after any agreed fees or deductions.
06
Required information is disclosed
The true owner or controller may still need to be identified for company law, tax, anti-money-laundering or PSC purposes.
Common questions
Important things to understand
Does the nominee own the shares?
The nominee normally holds the legal title. The beneficial owner normally holds the right to the economic benefit. The exact position depends on the documents and the law.
Can the beneficial owner vote?
Sometimes the beneficial owner gives voting instructions to the nominee. In other arrangements, voting rights may be limited or handled by the platform.
Can a nominee hide the true owner?
A nominee arrangement does not automatically make ownership secret. UK transparency laws may require the true owner or controller to be identified.
What happens if the nominee fails?
The answer depends on how the assets are held, the legal documents and whether the shares are properly separated from the nominee's own property.
Is a nominee arrangement the same as owning shares directly?
No. Direct ownership usually places your own name on the register. Nominee ownership places another name on the register while you keep the beneficial interest.
Why do investment platforms use nominees?
Nominee structures can make administration easier because one nominee can hold shares for many investors while the platform keeps records of each person's interest.
United Kingdom