Offshore Companies: What Do the Declaration of Trust and the Beneficial Owner Declaration Say?

In the context of international companies, the Declaration of Trust is a document that regulates the rights of the company’s beneficial owner. With this document, the beneficial owner is able to actually control the actions of a nominee or trustee shareholder. What information can we find in the Declaration of Trust and the Beneficial Owner Declaration?

Declaration

When Could I Need the Registered Shareholder Service?

The practice of using a  nominee shareholder services used to be quite common in the offshore industry. One can tackle a whole range of relevant tasks and enjoy certain benefits with the help of professional directors, nominee shareholders and secretaries, for example:

  • Protection of one’s reputation. Not every business project turns out to be a success. Many business persons explore other niches, testing the waters in a previously unknown business field – which, of course, is associated with the risk of failure. In this case, the owners of successful businesses are especially worried about their reputation, because each failure could affect the overall image of their company. In this case the best solution is to use professional services.
  • Requirements of certain offshore jurisdictions for the residency of company managers. Quite often, countries impose requirements for the presence of at least a single resident director in the company’s top management.
  • Data security of the beneficial owner. This point is of special relevance if the country of incorporation of the international company has a public register, i.e. information on the company’s directors and shareholders can be found in the public domain.

If the international company does not act as an independent unit, but in conjunction with other companies, where the beneficial owner is the same person, the use of a nominee shareholder will help avoid a conflict of signatures. Another important aspect is enhancing the company’s image by incorporating it in a prestigious jurisdiction and hiring a resident director.

Protection from the Risks Related to the Use of Nominee Shareholders

Although the professional director is a kind of figure-head, they still have certain leverage over the company. In fact, decisions in the company might be made by the beneficial owner, but they act through the professional director. In practice, any abuse of authority on the part of professional directors/nominee shareholders/secretaries is very rare. After all, prudent business persons know how to ensure security for their international company security using properly drafted legal documents.

The Declaration of Trust is one such document that protects the beneficial owner from risks when using the services of a nominee shareholder.

What is the Declaration of Trust?

The Declaration of Trust is an instrument that allows the international company owner to ensure protection from possible arbitrary decisions of a nominee shareholder. The Declaration of Trust is often combined with a sdigned, undated share transfer form, which allows the beneficial owner to regain control of their international company at any time. The document confirms that the registered shareholder holds the shares on behalf of the beneficial owner, and has no voting rights and cannot dispose of the securities at their discretion.

Let’s look at an example of the standard Declaration of Trust of an international company registered in the Seychelles:

“I, Mr./Ms. (nominee shareholder’s name), born on (date of birth), holder of the passport/ID (passport/ID number), hereby acknowledge and declare that I hold N number of shares of the ABC LIMITED (the Assets), registered in the Seychelles (date of incorporation), with the registered number (company number), with an office located at Tenancy 10, Marina House, Eden Island, Mahé, Seychelles, registered in our name as trustee of Mr./Ms. ( the Beneficial Owner), born on (date of birth), holder of passport/ID (passport/ID number).

I hereby irrevocably undertake not to transfer, deal with or dispose of the Assets save as the Beneficial Owner may from time to time direct in writing.

I hereby deposit with the Beneficial Owner the Certificate of said Shares and authorize the Beneficial Owner to complete the transfer at any time by entering the date. I declare with all firmness that this instrument is irrevocable. I reserve to the Beneficial Owner the right to receive dividends and any other profits that may be payable on said Shares, and all other funds and earnings that may be payable in respect of said Shares. 

I hereby undertake to vote the said Shares at Shareholders’ meetings in accordance with instructions received from (name of the Beneficial Owner) and to their best interest. 

The document is to be signed by the nominee shareholder. The content of the Declaration of Trust can be amended. It all depends on the current tasks and legislation of the country of business incorporation. The main thing is that this document confirms the actual Beneficial Owner, and serves their security.

What the Declaration of Trust is most often used for:

  • To ensure security of the personal data of the actual beneficial owner of the international company;
  • To hold shares in the name of the Beneficial Owner;
  • To own other assets (e.g., real estate).

A Declaration of Trust shall be made in writing and shall contain the following information:

  • Name of the actual owner of the international company;
  • Name or details of the registered shareholder;
  • Information on the assets or other property to be managed by the registered shareholder or professional director;
  • Identity confirmation of the beneficial owner and the registered shareholder;
  • Information on specific instructions to the registered shareholder.
  • It should be signed as a deed meaning an independent witness is required (at least under English law)

The Declaration of Trust also specifies the value of shares, and warns that the registered shareholder has no right to transfer, sell or engage in other transactions with the shares without instructions from the beneficial owner.

In addition to the Declaration of Trust, the beneficial owner might also request a limited Power of Attorney in the name of the beneficial owner, a deed of transfer, and a letter of resignation. 

Data security when opening a bank account

When it comes to opening a bank account for an international company, even when using the nominee registered shareholder and professional director services, any bank will require data of the actual owner of the business. In addition to the Declaration of Trust one will also need the documents confirming the identity of the ultimate beneficial owner. We recommend you get a free consultation on selecting a suitable bank account for your offshore business.

Today it is possible to open a bank account remotely. The main thing is to be properly prepared and to consider any possible risks. That is what professional support from our experts is essential for. Please do not hesitate to send us an e-mail or leave your contacts in the box above right now.

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