Understanding of Nominee Shareholder in Singapore
In Singapore, the use of nominee shareholder is common for various reasons, including maintaining privacy, protecting assets, or facilitating complex ownership structures. However, it’s important to note that Singapore has implemented stricter regulations regarding the use of nominee shareholders to prevent money laundering and illicit activities. The following information provides a general understanding of the role and guidelines related to nominee shareholder in Singapore.
- Definition of a Nominee Shareholder
A nominee shareholder is an individual or entity that holds shares on behalf of another person or entity, commonly known as the nominator (or beneficial owner). The nominee shareholder’s name appears on the company’s registers, while the nominator retains the actual ownership and control of the shares. The purpose of using nominee shareholder is often to maintain anonymity.
- Duties and Responsibilities of Nominee Shareholder
Nominee shareholder fulfills various duties and responsibilities, including:
(1)
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Voting Right and Dividend: Nominee shareholder typically votes in accordance with the instruction of the nominator and receives a dividend on him/her behalf.
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(2)
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Legal Compliance: Nominee shareholders ensure compliance with relevant laws, regulations, and reporting obligations, including filing annual returns and maintaining proper corporate records.
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(3)
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Fiduciary Duty: The nominee shareholder has a fiduciary duty to act in the best interest of the nominator. They must avoid using their position for personal gain. The nominator retains the right to receive dividends, attend meetings, and exercise other shareholders?rights.
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- Nominee Shareholder Agreement
A nominee shareholder agreement is a legally binding contract between the actual nominator and the nominee shareholder. It outlines the rights, obligations, and limitations of the nominee shareholder and establishes a mutual understanding regarding the shares held under the nominee’s name. It is highly recommended to have a nominee shareholder agreement when appointing a nominee shareholder. This agreement protects the interests of all parties involved and clarifies their roles and responsibilities.
Having a nominee shareholder agreement ensures that the nominee shareholder follows the instructions and preferences of the nominator. It provides clarity on voting rights, dividend distribution, share transfers, and the nominee’s role in managing the shares on behalf of the nominator. It is advisable to seek guidance from legal professionals to draft a nominee shareholder agreement tailored to the specific requirements and circumstances.
- Accounting and Corporate Regulatory Authority (ACRA) Regulatory Framework and Guidelines
ACRA has established comprehensive guidelines pertaining to nominee shareholder which aims to prevent money laundering, ensure transparency, and maintain the integrity of the corporate ownership structure. Companies are required to keep a Register of nominee shareholder containing the particulars of the nominators of the company’s nominee shareholder. It is mandatory for a nominee shareholder to promptly notify the company regarding their status as a nominee, as well as provide accurate and complete information about their nominator.
For individual nominators, the provided information should include their full names, identification details, and the date on which the individual became the nominee for the shareholder. In the case of nominators that are legal entities, the information must encompass the legal entity’s name, registration number, legal form, jurisdiction of incorporation, name of the corporate entity registers, and the date on which the shareholder became the nominee for the legal entity.
It is the responsibility of the nominee shareholder to provide information to the company within 30 days after incorporation of company; upon becoming a nominee; update particulars of nominators and/or cessation of nominee shareholder status. Whenever changes occur in the nominee arrangement, such as share transfers or shifts in beneficial ownership, the register should be promptly updated to reflect these modifications in Registers of nominee shareholders.
The Register of nominee shareholder must be diligently maintained at the registered offices or at the registered offices of registered filing agent. It is crucial to note that these registers are strictly confidential and not accessible for public inspection or disclosure to auditors. Only regulatory authorities, such as the Company Registrar, and authorized public agencies, specifically law enforcement agencies, possess the legal authority to access this information. Such access is granted solely for the purpose of regulatory oversight and conducting investigations as mandated by law.
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