nominee shareholding

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A shareholding held in the name of a bank, stockbroker, company, individual, etc., that is not the name of the beneficial owner of the shares (the indirect shareholder). A shareholding may be in the name of nominees to facilitate dealing or to conceal the identity of the true owner. Although this cover was formerly used in the early stages of a takeover, to enable the bidder clandestinely to build up a substantial holding in the target company, this practice was prevented by the Companies Act 1985, which made it mandatory for anyone holding 5% or more of the shares in a public company to declare that interest to the company. The earlier Companies Act 1967 made it mandatory for directors to openly declare their holdings, and those of their families, in the companies of which they are directors. The Companies Act 2006 extends information and voting rights to indirect shareholders.

Subjects: Financial Institutions and Services — Accounting.

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