In the global village that is our world management and other services have become a hot commodity for many reasons. In many cases owners may prefer a director with credited managerial experience in the jurisdiction of registration, someone familiar with local laws, the local language and mentality – a person capable of increasing company profits and streamline its business management. In fact, many countries impose regulatory requirements of companies choosing to incorporate within their jurisdiction that they appoint at least one local director. For example, in Singapore at least one company director must be a local citizen.
Another reason is rooted in politics – companies owned or managed by Israelis may not conduct business in Arab states, and so are required to keep their Israeli nationality confidential.
In the case of nominee shareholders the situation is slightly different. They differ from trustees (described in the Trust page of this site - click here). While trustees play an active role in managing the assets under his/her care and distribution of profit to beneficiaries, nominee shareholders hold the registered capital of the company for the beneficial owner: they may not do anything, including make managerial decisions or transfer shares to a third party without explicit permission of the beneficiary.
In order for the beneficial owner to act on behalf of the company, including sign documents, commit to contracts, and manage its bank account, authorization must be given through power of attorney. Moreover, nominee shareholders must sign a document called a “Declaration of Trust” to insure the beneficiary’s continued ownership of the asset.
There are many varied reasons for acquiring professional management services:
- Ensuring beneficiary anonymity – An advantage, especially for Israelis, who oftentimes wish to maintain their privacy and nationality confidential, such as when dealing with Arab countries;
- In cases where the country of registration requires the appointment of a local shareholder;
- When it is necessary to appoint someone versed with local law;
- For tax purposes;
- To expedite the opening of a bank account with a local director, although the declared beneficiary is a non-resident or foreign citizen.