First of all, it is essential that a shareholder agreement be prepared and stamped with the National Income Control Authority or the relevant tax office of the country in which the shares are located, with clear and appropriate provisions for the beneficiary. Stamping is essential in Singapore for the nominating shareholder agreement to be presented in evidence in Singapore courts. The person designated as the owner is the candidate, while the person who actually paid for the shares is the beneficiary. The beneficiary often feels that it is necessary not to be registered as a shareholder and therefore concludes such an agreement. As far as the designated director is concerned, you should have him sign a properly drafted document indicating that he will only respond to your instructions. You can also enforce a warrant so you can act on behalf of the company, sign contracts and open bank accounts. It is also customary for an undated letter of resignation to be signed by the designated director to protect the company from the company`s claims and make it easier to remove it at the appropriate time. In our experience as corporate lawyers, we have uncovered cases where appointed directors and shareholders are appointed without written proof of the agreement and where the economic beneficiary needs a verbal agreement or a “gentlemen`s agreement” with the candidate. The assets held by the bank are separated from general business activities. While it is possible that the World Bank could go bankrupt, the consequences of this magnitude would most likely lead to a bailout that would protect investors` assets. However, in smaller emerging countries, a custodian without a local department may hire a sub-conservative to hold shares on its behalf.
Where the sub-depository is prior to insolvency, the principal custodian may not be held responsible for the assets of the sub-depository. The most common possibility of creating a contract of nominal shareholders is for the candidate to declare, to your advantage, a trust on the shares and sign a declaration of confidence. While there are other ways to do this, such as the use of call option or loan contracts, they are more complex and appropriate for countries that do not recognize the concept of trust or prohibit the use of nominated structures. Although regulators and stock exchanges regularly check nominee accounts, the process is not done on a daily basis. Because a stockbroker can postpone or sell Nominee account shares at any time, there can be fraud. This is particularly common when a company is on the verge of bankruptcy and needs cash or assets to cover its debts. A stockbroker`s records may change, making it more difficult to determine which investors hold assets in a Nominee account.