06 July 2024
Having a different registered owner and beneficial owner of an asset or entity can be legally permissible in various structures, depending on the jurisdiction and the type of asset or entity. Here are some common structures where the registered owner and beneficial owner may differ:
1. Trusts
In a trust structure, the trustee is the registered owner of the trust assets, while the beneficiaries are the beneficial owners. The trustee holds and manages the assets for the benefit of the beneficiaries according to the terms of the trust deed.
• Trustee: Legal owner, registered owner of the trust assets. • Beneficiaries: Beneficial owners who receive the benefits from the trust assets.
2. Nominee Arrangements
Nominee arrangements involve appointing a nominee to hold legal title to assets on behalf of the beneficial owner. This is often used for privacy reasons or to simplify administrative processes.
• Nominee: Registered owner, holds the assets in name only. • Beneficial Owner: Retains the beneficial interest and controls the assets.
3. Corporate Structures
In some corporate structures, shares may be held in the name of a nominee or trustee on behalf of the actual beneficial owner. This can occur in various scenarios, such as when shares are held by a holding company or an intermediary.
• Registered Shareholder: Legal owner of the shares, listed in the company’s register. • Beneficial Owner: Holds the economic interest and benefits from the shares.
4. Custodial Accounts
Custodial accounts are commonly used in the context of investment securities, where a custodian holds securities on behalf of the beneficial owner.
• Custodian: Registered owner of the securities, responsible for safekeeping. • Investor: Beneficial owner who holds the economic interest in the securities.
5. Bare Trusts (Simple Trusts)
A bare trust is a type of trust where the trustee holds the assets without any active duties other than to transfer them to the beneficial owner upon request.
• Bare Trustee: Registered owner with nominal duties. • Beneficial Owner: Has full entitlement to the trust assets.
Legal Considerations
• Transparency and Reporting: Jurisdictions often have laws requiring transparency regarding the true beneficial owners of assets or entities to prevent money laundering and tax evasion. • Regulatory Compliance: Proper documentation and disclosure are essential to ensure compliance with relevant laws and regulations, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. • Tax Implications: Different structures can have various tax implications for both the registered and beneficial owners. It’s important to consider tax consequences and seek professional advice.
Examples of Documentation
• Trust Deeds: Legal documents outlining the terms and conditions of a trust arrangement. • Nominee Agreements: Contracts specifying the relationship between the nominee and the beneficial owner. • Custodial Agreements: Contracts between custodians and investors detailing the terms of custodial arrangements.
These structures provide flexibility in asset ownership while addressing various legal, financial, and privacy considerations. However, it is important to consult with legal and financial professionals to ensure that the chosen structure is compliant with local laws and serves the intended purposes.
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