Instruments
Nominee vs direct shareholding
Also called Nominee structure, Bare trust
Whether your shares are registered in your own name or held for you by a nominee company that appears on the register in your place — a distinction that decides who votes, who is informed, and how easily you can sell.
In plain English
When you invest through a crowdfunding platform or a syndicate, your shares are usually held by a nominee: a company that is the legal owner on the register while you remain the beneficial owner. Economically the shares are yours. Legally, the person the company recognises is the nominee.
This matters in four concrete ways. The nominee votes, usually by aggregating the wishes of the underlying holders or, in some structures, at its own discretion. The nominee receives the information rights, and passes on what it chooses to pass on. The nominee signs documents in a sale, which is why nominee structures make exits administratively easy for founders. And the nominee is a company that must continue to exist and function for the entire life of your investment.
Direct shareholding gives you all of that back and imposes the corresponding burden: you sign every consent, you appear in every register, and the company deals with you individually. Founders find a hundred direct small shareholders genuinely painful, which is precisely why nominee structures exist.
A nominee arrangement is not an SPV. In a nominee structure the shares are held on bare trust for you specifically — your holding is identifiable and separable. In an SPV you own an interest in a company that owns shares, which is a different and more layered thing, with different tax consequences.
What it means for your cheque
For most small cheques a well-run nominee is the better outcome. It costs you almost nothing, keeps you off the company's administrative critical path, and means an acquirer will not need to chase your signature during a sale — which, in a tight deal, is a genuine risk to the transaction.
The thing to verify is the nominee's own resilience. Read what happens if the nominee company is wound up or the platform behind it fails. A properly structured bare trust protects your beneficial ownership in that event; a loosely drafted arrangement can leave you arguing about it. This is the question to ask before investing, because it is unanswerable afterwards.
Do the arithmetic
The same £5,000 held two ways
Two angels each put £5,000 into the same round. One holds directly, one through the platform's nominee. Four years later the company is acquired and there is a follow-on round in between.
| Follow-on round — who is offered pre-emption | Direct: offered individually. Nominee: only if the nominee passes it on |
|---|---|
| Shareholder vote on the acquisition | Direct: votes personally. Nominee: nominee votes, usually on aggregated instructions |
| Signature pages at the exit | Direct: signs. Nominee: nominee signs on behalf of all holders |
| Annual accounts and updates | Direct: from the company. Nominee: whatever the nominee forwards |
| UK SEIS/EIS relief | Available under both, provided the nominee holds on bare trust |
| Time cost over four years | Direct: several hours of paperwork. Nominee: near zero |
The nominee holder traded influence for convenience. On a £5,000 cheque that is almost certainly the right trade; on a £200,000 cheque it is not.
At the table
What to negotiate
- Ask whether the nominee holds on bare trust with your beneficial ownership recorded separately — this is what protects you if the platform fails.
- Ask how voting instructions are collected, and what the nominee does when holders disagree.
- Establish whether pre-emption offers in future rounds are passed through to you individually.
- If you hold directly, ask to be added to the company's investor update list explicitly. Being on the register does not automatically get you the email.
- For UK investors: confirm in writing that the nominee structure preserves SEIS/EIS relief before you subscribe.
Around the world
How this differs by market
Less common as a nominee per se; the equivalent function is usually performed by an SPV, with different tax reporting for you.
EUThe dominant model on UK equity crowdfunding platforms, and HMRC accepts it for SEIS/EIS where the nominee holds on bare trust.
APACUsed by Australian and Singaporean platforms; nominee arrangements interact with local trust law, so the protections vary more than the marketing suggests.
Nominee vs direct shareholding: common questions
Do I still own the shares if a nominee holds them?
Does a nominee structure affect SEIS or EIS relief?
Can I convert a nominee holding into a direct one?
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