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 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 day-to-day company votes, the nominee votes on behalf of the investors as it believes to be in their best interests, adhering to legal requirements and fiduciary duties. For decisions of material importance for the investor’s economic interests (such as an exit) the nominee collects investors’ opinions and votes according to how the majority decides
Legal Assurance: The nominee structure operates under strict fiduciary rules, 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
Does this change how we issue shares or dividends?
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?
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?
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?
What do I actually own in a nominee structure?
Since it is not an SPV, you do not own anything in the nominee structure. In fact, you own the shares directly in the company. Think of it like a custodian: you basically appoint the nominee to hold legal ownership in your shares while you retain full beneficial ownership in such shares.
How are my legal rights protected?
How are my legal rights protected?
The nominee has a fiduciary duty to act in your best interests. This obligation is further enforced by detailed agreements clearly outlining your rights and the nominee’s responsibilities
Do I have voting rights?
Do I have voting rights?
The nominee votes on behalf of the investors as it believes to be in their best interests in respect of day-to-day company decisions. However, for decisions of material importance for your economic interests (such as an exit) the nominee collects investors’ opinions and votes according to how the majority decides
How do I know my investment is safe and compliant?
How do I know my investment is safe and compliant?
The nominee must comply with strict legal and fiduciary duties, including regular audits, transparent record-keeping, and adherence to anti-money laundering laws. Your investment is protected by these robust legal and contractual safeguards.