Reasons to split beneficial and legal ownership, and the use of Vestd Nominees.
When shares are normally issued, the same person has complete ownership. However, they can also be issued with differing legal and beneficial ownership. Or indeed, post-issuance, either legal or beneficial ownership alone could be transferred to a separate person or entity.
In these cases, the beneficial owner is the one who has the commercial "benefit" of the shares, typically rights to capital and dividends, and sometimes voting rights.
Legal ownership is slightly different. The legal owner of the shares is someone who simply holds the legal title of the shares under their name or company. The legal owner isn't entitled to any economic or voting rights, that is rather for the beneficial owner.
The legal owner is the one who appears on Companies House as the legal shareholder, as informed to them by your annual confirmation statement.
Why have a legal owner?
Companies may choose to use a legal owner for a variety of reasons, the most common of which is to minimise the number of names on their cap table, but there are other reasons such as nominee arrangements to simplify share movements, or to enable an Employee Benefit Trust.
What's Vestd Nominees Ltd?
As a Vestd customer, you have the ability to use Vestd Nominees as a legal owner of the shares you wish to distribute to large groups of people, so long as you are on the appropriate plan/fee structure.
This is a structure that has been adopted by a number of share-related platforms (for example Seedrs, Syndicate Room and Crowdcube).
This doesn't entitle Vestd Nominees – or Vestd – to any economic rights at all.
Vestd is authorised by the FCA to safeguard and arrange transactions in shares and share options.
When a company leaves Vestd but has shares with Vestd Nominees as the legal owner, legal ownership will either need to be transferred to the beneficial owner, or another agreed Nominee company.
What can I do on the platform if I have or want to have split beneficial and legal ownership?
The Vestd platform has been developed to allow the issuance of shares with split ownership, as well as the transfer of either legal or beneficial ownership between individuals and companies. This is something that needs to be enabled by our Customer Success team, so please contact us if you wish to use it.
You are also able to manage buybacks and other share movements that involve split ownership.
The platform will step you through the various steps involved in order for this to be executed as simply as possible.
If you want to use Vestd Nominees as the legal owner, please contact us to set it up for you.
Our team, content and app can help you make informed decisions. However, any guidance and support should not be considered as 'legal, tax or financial advice.'