Nominee Shareholders: Declaration of Trust (Long Form Agreement)
This Declaration of Trust (Nominee Agreement) should be used where a nominee shareholder, who is the registered owner of shares, holds shares for the benefit of another person (the beneficial owner). A beneficial owner may choose as part of the shareholding arrangements of a company to appoint a nominee as it does not wish its name to appear on the share register or it may be required to appoint a nominee, for example by the company’s articles of association.
A company will not record details of any trust arrangement on its share register (register of members) and so as far as the company is concerned, the person named in the company’s share register is the registered shareholder. The beneficial owner of the shares will therefore often want its nominee to execute a declaration of trust in order to document the terms upon which its nominee holds the shares. A nominee can be either an individual or a body corporate.
Since 6th April 2016, most UK companies are required to identify and record the people with significant control over them (PSCs). This includes those who own or control (directly or indirectly) more than 25% of the company. Further details are available here. This template has been updated to take account of the PSC regime.
Notwithstanding the PSC regime nominee arrangements may still be used. However, depending on the level of shareholding concerned and the reason(s) for putting the arrangement in place, whilst the beneficial owner’s details will not be recorded on the company’s register of members, it may be caught by the PSC regime. The PSC regime looks behind the legal ownership structure. Independent legal advice may need to be obtained.
This is a long form declaration of trust which covers both shares in a company as well as other securities (options, warrants etc) that may also be being held on trust by the nominee. This agreement as well as setting out the declaration of trust provisions, includes a long form list of undertakings between the nominee and beneficial owner in relation to the securities. For a more basic agreement, please see Nominee Shareholders: Declaration of Trust – Basic Agreement.
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This template can also be found in the Company & Asset Sale Documents – Share Sale Documents.