Nominee Shareholders in Unlimited Companies

[patricklynch82]

Hi

I wonder could anyone give me a viewpoint on this question.

If all the share capital of an unlimited company is held by a nominee shareholder on behalf of an individual, and that unlimited company fails...who would the creditors be able to seek recourse from, the nominee or the ultimate beneficial owner of the shares?

Thanks all in advance.

 

[Alan R Price]

"Unlimited company" - blimey, they're rare! Most of us only come across them in our studies. It's not a situation I have encountered however the nominee appears to me to be a trustee on behalf of the ultimate beneficial owner of the shares and he would therefore be liable, in the same way that the trustee of a deceased's estate is personally liable for the trust's expenses (such as tax on interest received), rather than the beneficiaries of the estate.

 

[patricklynch82]

Thanks for the reply Alan.

If we take it a bit further, and the nominee shareholder is a limited company, is any possible recourse stopped dead in its tracks?

 

I think a nominee shareholder who did not require a full indemnity from the beneficial owner would be very foolish .. especially with share in an unlimited company.

 

[NickMoore]

If the idea is to use an unlimited company to avoid publishing accounts, then be aware that if the company's parent is a Ltd Co then the exemption from CH account filing does not apply.

 

[patricklynch82]

If the UBO was an individual then would the Ltd Parent provision would not apply?

The Ltd Nominee would just keep the UBO details out of the public domain.

 

[Alan R Price]

Thanks for the reply Alan.

If we take it a bit further, and the nominee shareholder is a limited company, is any possible recourse stopped dead in its tracks?

I would have thought so because the owners/managers of the company are ring-fenced from its liabilities in the ordinary course, although the company itself would be liable on the same way as if it were an individual.

 

[patricklynch82]

Looking at Nick's point, Does the Unlimited company with a nominee shareholder which is limited, does it escape the regulations regarding filing accounts or not?

 

I found this on some Companies House guidance.. It was revised last month
http://www.companieshouse.gov.uk/about/gbhtml/gp2.shtml

2. Do all companies have to file their accounts at Companies House?
All private limited and public companies must file their accounts at Companies House.
Unlimited companies need only deliver accounts to Companies House if, at any time during the period covered by the accounts:

• the company was a subsidiary undertaking or a parent of a limited undertaking;
• the company was a banking or insurance company (or the parent company of a banking or insurance company); or
• each of the company's members was:
  - a limited company;
  - another unlimited company each of whose members was a limited company; or
  - a Scottish partnership each of whose members was a limited company.

 

[patricklynch82]

Reading the CA, specifically the ref about "each member"

What would you think of a company with 2 unlimited shareholders and 1 limited company equal split of ordinary shares?

Should it have to fill accounts or not?