Understanding the Nominee structure

Understanding the benefits of raising your new financing round through nominee structures:. Discover how the nominee structures simplifies investments and governance.

What is a Nominee structure?

A nominee structure is like having a trusted, legally-appointed representative for you and other investors in a company. This representative (called a nominee) acts on behalf of all investors, ensuring compliance with regulations and protecting your interests.

How does the nominee work?

• Grouping: Multiple investors pool their investments under one regulated entity (the nominee).

• Representation: The nominee appears on the company's official list of shareholders (called the cap table), simplifying administration while maintaining legal compliance.

• Behind the Scenes: The nominee keeps detailed, auditable records of each investor's ownership, ensuring transparency and legal protection.

• Communication: The company communicates with the nominee, who then passes information to all investors, maintaining confidentiality and regulatory compliance.

• Decisions: For company votes, the nominee collects investors' opinions and votes on their behalf, adhering to legal requirements and fiduciary duties.

Think of it as a secure, legally-compliant group chat where a professional summarizes everyone's thoughts to communicate with the company, ensuring all legal and regulatory requirements are met.

Legal Assurance: The nominee structure operates under strict regulatory oversight, ensuring that your investments are managed in compliance with all applicable laws and regulations. The nominee has a fiduciary duty to act in the best interests of all investors it represents.

Why use a Nominee structure?

Nominee structures simplify investments for both companies and investors, all while maintaining legal compliance and protecting your interests.

Nominee structure - company benefits

• Cleaner Cap Table: Simplify your ownership list with one legally-recognized entry instead of many.

• Less Paperwork: Communicate with one regulated entity instead of multiple investors, reducing administrative burden while ensuring compliance.

• Easier Fundraising: Attract future investors with a streamlined, legally-sound ownership structure.

• Simpler Decision-Making: Coordinate votes through one channel for faster, legally-compliant results.

Company FAQs

How does this ensure we're compliant with securities laws?

The nominee structure is designed to comply with securities regulations. It simplifies your cap table while ensuring that all necessary information about beneficial owners is properly recorded and can be reported to relevant authorities when required, helping you meet your legal obligations

Does this change how we issue shares or dividends?

You'll issue shares and dividends to the nominee entity, which then distributes to individual investors based on their ownership percentages. This process is governed by clear legal agreements and is fully compliant with corporate and tax laws.

How does this affect our legal obligations to shareholders?

Your legal obligations remain the same, but they're streamlined. You'll primarily interact with the nominee, who is legally bound to pass on information and collect feedback from the beneficial owners. This simplifies your processes while ensuring you meet all legal requirements for shareholder communication and rights.

Can we still have a direct relationship with major investors?

Yes, major investors often have direct relationships alongside the nominee structure. The nominee mainly simplifies managing numerous smaller investors. Your agreements can be structured to allow for this flexibility while maintaining legal compliance.

Nominee structure - investor benefits

• Privacy: Keep your investment details confidential while still complying with all legal requirements.

• Easier Selling: Transfer your shares with less hassle when you want to exit, all within a legally-sound framework.

• Simplified Taxes: Potentially easier tax reporting, especially for global investments, while ensuring full tax compliance.

• Professional Management: Benefit from experts handling complex legal and administrative tasks, ensuring compliance with all regulations.

Investor FAQs

What do I actually own in a nominee structure?

You own a legally-recognized portion of the nominee entity, which in turn owns shares in the company. Your ownership is like having a slice of a regulated pie (the nominee) that owns a bigger pie (the company). This structure is fully compliant with securities laws and provides you with legal protections.

How are my legal rights protected?

The nominee has a fiduciary duty to act in your best interests. This legal obligation is enforced by regulatory bodies, ensuring that your rights are protected. Additionally, detailed contracts and agreements clearly outline your rights and the nominee's responsibilities.

Do I have voting rights?

Yes, you maintain your voting rights. The nominee is legally obligated to vote according to your instructions, proportional to your ownership. This process is governed by clear legal agreements and regulatory oversight.

How do I know my investment is safe and compliant?

The nominee is a regulated entity, often overseen by financial authorities. They must comply with strict legal and regulatory requirements, including regular audits, transparent record-keeping, and adherence to anti-money laundering laws. Your investment is protected by these robust legal safeguards.