Updated
GL-N-06
Glossary · Structures and trusts
Nominee agreement - a contract with a nominee that does not hide the owner
01 / In 30 seconds
The short answer
- What it is
- An agreement between the nominee and the real owner on the nature of their relationship
- What it records
- That the nominee acts on the instructions and in the interests of the real owner
- What it does not do
- It does not hide the beneficiary: they are disclosed to banks and in registers
- Why it is used
- Local director requirements, everyday privacy, administrative convenience
- The main risk
- Reviewers treat such structures with caution
02 / In plain words
What Nominee agreement means
A nominee agreement is a contract between a nominee director or shareholder and the real owner that records the true nature of their relationship: the nominee holds the position formally and acts on the instructions and in the interests of the real owner. The document is usually accompanied by a waiver of rights, powers of attorney and pre-signed letters of resignation.
It is important to understand what such an agreement does not do. It does not hide the beneficial owner: when an account is opened, the bank establishes who actually controls the company, and registers of beneficial owners exist in a growing number of jurisdictions. The agreement governs the parties’ relationship with each other, not their relationship with the state.
There are lawful reasons to use nominees: some jurisdictions’ requirements for a local director, administrative convenience, everyday privacy. But in the context of compliance and due diligence such structures are treated with caution and require explanation. Where there is no real justification, direct ownership is almost always the calmer option.
A case from practice
A structure the client had inherited from earlier years contained nominees without any clear justification. In preparing for the programme, the structure was simplified and brought to direct ownership — there turned out to be nothing to explain, and the questions fell away.
Where it is encountered
- A jurisdiction’s requirement for a local director
- Administrative support for a company
- Everyday privacy
- A client’s legacy structures
- Reviewing the structure before applying for a programme
- Opening a company account
03 / What it covers
What the agreement contains
Parties
- The nominee
- The real owner
- Nature of the relationship
Powers
- Acting on instructions
- The nominee’s limitations
- Decision-making procedure
Protection
- Waiver of rights to the assets
- Letter of resignation
- Powers of attorney
Reality
- Disclosure of the beneficiary to the bank
- Registers of beneficiaries
- Compliance attitude
04 / How it works
How to approach it
Establish the real reason
Why a nominee is needed in your case.
Assess whether a nominee is needed at all
Whether direct ownership is simpler.
Put the agreement in writing
Contract, waiver of rights, powers of attorney.
Disclose the beneficiary to the bank
The real owner is disclosed to the bank.
Prepare an explanation for checks
A short note on the reason for the nominee.
05 / Key facts
What you need to know
01What it is
A contract with a nominee
A nominee director or shareholder acts on the instructions and in the interests of the real owner.
02What comes with it
Safeguard documents
A waiver of rights, powers of attorney, pre-signed resignation letters.
03What it does not do
It does not hide the beneficial owner
The bank identifies the real owner, and beneficial ownership registers exist in more and more countries.
04For checks
An explanation is needed
Compliance treats nominee structures with caution.
Common mistakes
Using a nominee to hide ownership
Disclose the beneficial owner to the bank and registers.
Working without a written agreement
Sign the contract and the safeguard documents.
Keeping a nominee without a reason
If there is no reason, move to direct ownership.
06 / Expert advice
How to prepare in advance
First, answer frankly why a nominee is needed: if the only reason is opacity, the structure will create more problems than it solves. Where there is a lawful reason, the agreement is put in writing in full, the beneficiary is disclosed to the bank, and an explanation of the structure’s purpose, with documents, is prepared for the check.
What we do for you. We always suggest simplifying the structure before filing: the fewer elements that require explanation, the more smoothly the check goes. Nominee structures without a real justification are the first candidates for review.
Klara RihterBanking compliance and source of funds specialist
07 / Questions
Frequently asked questions
A contract between a nominee director or shareholder and the real owner, recording that the nominee acts on the instructions and in the interests of the owner.
No. The bank establishes the real beneficiary when an account is opened, and registers of beneficial owners operate in a growing number of countries.
The structure itself is lawful and in some jurisdictions necessary — for example, where a local director is required. The question is the purpose for which it is used.
Without it the real owner is legally vulnerable: formally the assets and powers belong to the nominee.
With caution. Such structures require explanation, and without a clear justification they complicate both banking procedures and due diligence.
Review it before applying for the programme: either justify it with documents or simplify it to direct ownership.
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