- June 13, 2021
- Posted by: GBS
- Categories: Business, Legal
There are various legitimate reasons for using a nominee director and shareholder arrangement, though the most common reasons would be to keep one’s identity as the owner of a company confidential and to comply with the requirement that at least one director is a locally-resident person.
What’s nominee shareholder
A nominee shareholder is someone that “lends his name” to you to act as the registered owner of shares in a company, when in truth, he only holds the shares for your benefit. If you appoint a nominee shareholder, he would appear to the world to be the owner of the shares, and you get to keep the arrangement a secret.
The Law on Enterprises of Vietnam requires all companies to have at least one shareholder who is either an individual or a corporation. It is not necessary for the shareholder to be a Vietnam resident as 100% foreign shareholding of a company is allowed in the republic.
Related: Vietnam Company Formation
When incorporating your company or acquiring another company in Vietnam, you can become the shareholder of the company. Alternatively, GBS, a business and legal services company in Vietnam can provide you with a Nominee Shareholder which in turn, will help you secure your corporate privacy.
Why take up a Nominee Shareholder Service?
It is not uncommon for clients to engage the Nominee Shareholder Service for the purpose of confidentiality. GBS’s service entails the Nominee Shareholders holding the shares on trust for the beneficial owners. Only the Nominee Shareholder’s name will be identified on the Register of Shareholders.
3 things you need to know about the Nominee Shareholder Agreement
- The Nominee Shareholder Service provides each client with a signed declaration of trust in which the appointed Nominee Shareholder holds shares on behalf of the beneficial owner.
- The Nominee Shareholder is not the legal owner of the shares and the shares shall be returned to the beneficial owner when the service is terminated or transferred to another party as per beneficial owner’s request.
- All income and capital gains on the shares held belong to the beneficial owner.
The Nominee Shareholder Service guarantees complete confidentiality. Your identity as Beneficial Owner is only known to the services provider and not placed on public record at the Company’s Registry.
The risks of using nominee directors and nominee shareholders
In our experience as corporate lawyers, we have come across instances where nominee directors and shareholders are appointed without any written proof of the arrangement, and the beneficial owner relies on a verbal agreement or a “gentlemen’s agreement” with the nominee.