Beneficiary and Nominee in Cyprus – guarantees and risks
A beneficiary is a person (both individual and legal), who has transferred the management of his property (company) on a trust basis to an appointed official (nominee director or shareholder), and receives a profit from the activity of the transferred company or block of shares.
Reasons for transferring property management to nominees in Cyprus
• Maintain confidential information about the actual owner of the property.
• Protection from creditor abuse.
• Asset Protection.
• Getting a tax registration in Cyprus.
To obtain the above benefits, the actual owner uses the services of nominee directors. In the first three cases, the beneficiaries enter into a contract with nominee shareholders. In order to receive a tax registration in Cyprus, it is necessary to appoint the secretary of the office of Cyprus and obtain the local legal address.
Purpose of nominees
The main task of nominal secretaries, shareholders and directors is to protect confidential information about the beneficiary, which appears in open source. Formally, the above-mentioned officials appear as directors, shareholders and secretaries only on paper. In reality, the enterprise is managed by the beneficiary by providing nominal written or oral instructions.
Risks of appointing nominees
The main fear of the uninitiated is the fear of loss of property as a result of illegal actions of nominees. According to the testimony of experienced beneficiaries, this situation is practically impossible. The main risk lies in a frivolous attitude to the drafting of contracts at the initial stages of the transfer of property management.
Before signing a contract with a Cyprus company engaged in providing services to nominee directors, request a license. Also read the reviews and reputation of the company (local companies value their good name, as it is earned for years and hard work).
When signing the Cooperation Agreement, it is recommended that you carefully read its provisions. Remove offers that do not meet your interests before signing the contract.
Ratings run the company only according to the instructions of the actual owner. If the beneficiary wishes to appoint to persons who have the right to transfer instructions to the nominee, he is obliged to sign the Notice of authorized persons, in which the names of the persons entitled to instruct the director are indicated. The notification indicates an example of the signature and the authority of proxies.
To protect the denominations from illegal actions of the beneficiaries, the KYC (Know Your Customer) system is provided. The beneficiary of the enterprise undertakes to provide confidential information to the controlling authorities.
The above series of papers protects both parties of the agreement. The actual owner in the appointment of the nominee avoids unnecessary trouble, while retaining the management of the company.