Very often offshore companies are created not only to build a convenient business structure, but also to ensure the confidentiality of the owner of the company (beneficiary). In this case, when registering an offshore company, nominee service is used.
In essence, nominee service is the services of a local hired director or shareholder (nominees). The use of nominee service makes sense in those countries where the data of the owner and director of the company are recorded in the state register, and, in particular, if these data are available to the public.
In many countries, the presence of a local (resident) director in the company is a legal requirement or desirable in practice (e.g. Switzerland, Netherlands, Panama). In addition, the presence of a resident director facilitates the filing of financial and tax returns, or enables the opening of a current account with a local bank (e.g. Hong Kong, Cyprus, Singapore).
If a nominee service is used, at the time of incorporation, shares are issued in the name of nominee shareholders and representation powers are given to nominee directors, and accordingly the names and addresses of the nominee shareholders and directors are entered in all official documents and registers. At the same time as the nominee shareholders' names are filled in, a document called a "Declaration of Trust" is filled in, which serves to confirm ownership of the company and at the same time prove who is the true owner of the company's shares. This document implies the liability of the nominee shareholders to the court in case they exceed their powers.
If nominee directors are used, the owners of the company have the right to dismiss the director without notifying him. For this purpose, a resignation letter is additionally produced - a resignation letter of the company director with an open date "Letter of Resignation", which allows the owner to refuse the services of a nominee director at any time by putting the necessary date under the application.
The above mentioned documents "Declaration of Trust", "Letter of Resignation", as well as the nominee service agreement are the documents confirming the ownership of the company and guaranteeing security for the beneficiary. For example, in case the company acquires real estate, corporate rights, securities, etc., the ultimate and sole owner is the beneficiary of the company. In addition, the manager of the company's bank account is the beneficiary of the company or a person authorised by the beneficiary, and the nominee director has no information about the existence of the account, access to the company's account, or the possibility to dispose of the company's funds.
Very often business owners are interested in when information about the real owner of the company can be disclosed by the state authorities of the country where the company is registered. Information about the real owner of the company cannot be disclosed without his knowledge and without his direct instruction. Disclosure of information about the real owner is required only when opening a bank account. With the customer's consent and knowledge, such information is provided to the bank for compliance procedures. Thus, banks implement their internal KYC policy - "know your client". Perhaps the only case of disclosure of information about the beneficiary may be a court decision or an official request of the state authorities of the country of registration / residence of the beneficiary (in case of suspicion of international terrorist activities, drug trafficking, human trafficking, etc.).
