INTRODUCTION TO NOMINEE TRUSTEESHIP

With the continued awareness of various forms of Investments such as Real Estate, Capital Market, Money Market etc. and the unsolicited attendant publicity, especially where it involves High-Networth Individuals, public figures and investing corporate entities, many investors now seek ways of ensuring the confidentiality of their investments whilst ensuring that there is an enduring legal structure in place in the event of death or other incapacities.

To avoid unwanted publicity, an investor (individual or institutional) may decide to utilize the Nominee Trust option to acquire the shares of a company in situations where they would prefer that their actual identity be concealed. Also of importance is the issue of security and safety of beneficiaries.

As you are aware, a Trust is a legal arrangement that allows a Settlor to transfer assets to a Trustee – the party that holds and manages the assets on behalf of and for the benefit of named Beneficiaries. In certain cases, the Settlor may, through the use of a nominee trust, give specific instructions on the management and distribution of his estate (or a specific part of his estate) and, at the same time, shield his identity and that of the beneficiaries from the prying eyes of the public.

THE SOLUTION

The concept of Nominee Trust was conceived to address issues such as those raised above. Nominee Trust is an arrangement where a Trustee holds assets for a beneficiary, the identity and details of who are kept confidential from the public.

The concept operates in such a way that the Trustee acquires the assets (Equities, Real Estate etc.) in its name. At the same time, a separate document is executed where the terms and conditions regulating the arrangement are highlighted. Where it is a transfer of assets to dependents through a Trust, the identities of the Beneficiaries are not stated or mentioned in the executed Trust Deed but are indicated in a separate schedule, which is treated with the strictest confidence.

THE BENEFITS

1. The anonymity of Ownership.
2. Ease of title transferability: There is no need to re-record a deed every time the Settlor wants to change his decision about the beneficiaries or the proportion that beneficiary is entitled to.
3. Cost Benefits: with the benefit of not changing the Trust Deed every time there is a change in the proportion of benefits due to each beneficiary, the Settlor saves costs associated with the amendment of the Trust Deed.
4. Protection of Beneficiaries from imminent attack where their identity is revealed. For instance, the animosity experienced in a polygamous setting.
5. Ability to keep your investment activities away from the public and still enjoy all the attendant benefits associated thereto.

THE ROLE OF THE TRUSTEE

Where a nominee Trust arrangement exists, a Corporate Trustee (such as our in-house Trust Division) undertakes the under-listed roles:

Acquisition of Assets in the name of the Beneficiary in accordance with the instructions received.

It is expected to operate, in utmost good faith, in all its dealings as regards the Trust. The essence of the arrangement is to keep the identity of the beneficiary anonymous; this must be adhered to strictly.

Since the assets are registered in the name of the Trustee, it is expected to do everything legally possible to protect them and safeguard them from any loss or depletion in value.

Where the nature of the assets requires the appointment of a professional to manage them, the Trustee is expected to appoint such in the best interest of the beneficiaries.

It has been generally agreed that Nominee Trust Services is a viable and convenient way of achieving investment objectives without revealing the investor’s identity.

The concept is increasingly being embraced all over the globe, especially where the investor is a notable public figure, a high-net-worth individual or a corporate entity desiring anonymity.

It should be noted that Nominee Trust is not a tool to promote fraud, corruption, or money laundering activities. As such, all Corporate Trustees are expected to observe the KYC principle strictly.

Nominee Trust Service is conceived to afford the aforementioned categorized parties the confidentiality required to shield and conceal their transactions and investments from the public domain.

Please share this information with your clients who may require the above services.