ContractsCounsel Logo
Home Types of Contracts Stock Nominee Agreement

Stock Nominee Agreement

Jump to Section

What is a Stock Nominee Agreement?

A stock nominee agreement is a form of nominee agreement where one person, the nominee, agrees to act on behalf of another person in legal matters involving shares of company stock. It can be compared to a power of attorney, but it has a wider scope. For example, in some cases, the nominee is paid for holding shares, but in others, they may not.

A nominee can be a third-party person or a firm certified in securities and given specific parameters outlined in the stock nominee agreement necessary to fulfill the agreement. It is common in real estate dealings for a stockholder agreement like this to temporarily transfer legal ownership of a property to someone else.

In a nominee account situation with a firm, a stockbroker typically holds shares belonging to clients, which makes buying and selling investments easier and holds the stock for safekeeping. In this arrangement, the shares of stock are said to be held in street name.

Here is an article about nominees.

What’s Included in a Stock Nominee Agreement?

The basic sections included in a stock nominee agreement should be:

  • Definitions of terms used in agreement
  • Business contracts involved, if any
  • Term of contract and/or termination reasons
  • General obligations of the nominee and standard of care, which sets the parameters of action by the nominee
  • Indemnification to protect the nominee
  • Miscellaneous details

Here is an article outlining a sample stock nominee agreement.

Meet some lawyers on our platform

Nicholas M.

55 projects on CC
CC verified
View Profile

Leonid G.

4 projects on CC
CC verified
View Profile

Faryal A.

187 projects on CC
CC verified
View Profile

Pura R.

55 projects on CC
CC verified
View Profile

What Does It Mean to be a Nominee Shareholder?

A nominee shareholder means you hold shares of stock in a company on behalf of another person or company. While you hold investments under your name and would be considered the legal owner, the original owner of the stock still controls the shares and investments.

Depending on the shareholders agreement, a nominee shareholder would have certain access to buy or sell stocks on behalf of the owner. In contrast, the owner remains protected against the possibility of fraud.

Being appointed as a nominee shareholder does not mean you own part of the company or that you will benefit at all from the shares. It only refers to a custodial arrangement where you have access but no legal claim over the shares.

You would not have access to bank accounts or any other assets owned by the company, nor would you be able to sign documents related to stock ownership. This arrangement could come with a stipulation for financial compensation, but that is not always the case.

Here is an article about what a nominee shareholder is.

What is the Structure of a Stock Nominee Agreement?

A stock nominee agreement follows the structure outlined below:

  • First, the nominee will declare a trust over the shares, for the other party's benefit, by filling out and signing a Declaration of Trust. Using a call option or loan agreement is feasible to accomplish the same thing, but those arrangements tend to be more complex.
  • The Declaration of Trust outlines the guarantee for the nominee to act only under the owner's instruction and that funds will be transferred back to the owner when requested. An excellent way to ensure this part of the arrangement is honored is to fill out a share transfer form without a date and keep it on hand.
  • You should also obtain a signed document from the nominee director, if one has been appointed, to ensure that they will only act on your instructions.
  • At this point, obtaining a Power of Attorney is recommended, as it will allow you to access contracts and gives you authority to open bank accounts in the company’s name.
  • If the shareholder passes away, the shares are automatically transferred to the nominee shareholder, who acts as trustee for the legal heirs of the deceased.
  • The only way the nominee shareholder would obtain full ownership of shares is if it is written in the will by the original shareholder.

Here is an article about being a stock nominee.

ContractsCounsel Stock Nominee Agreement Image

Image via Pexels by George Morina

How Long Does a Stock Nominee Agreement Last?

How long a stock nominee agreement lasts is really up to the parties involved. This detail is part of the nominee agreement. It should be defined along with the inclusion of an effective date and an expiration date.

A stock nominee agreement also includes a portion that outlines what should happen if there is a breach or how to handle a situation where one or both parties want to rescind the agreement.

Here is an article about what it means to be a nominee shareholder.

Benefits of a Stock Nominee Agreement

Depending on the exact arrangement, there are many benefits of a stock nominee agreement, including:

  • Dispute Protection: This agreement is beneficial to avoid heirs disputing legal entitlement to shares from a deceased shareholder.
  • Personal Convenience: one of the more common situations behind a stock nominee agreement is personal convenience. Brokers overseas use nominee companies to help facilitate quicker transactions while still maintaining ownership.
  • Administrative Convenience: appointing a nominee shareholder is also a way to compartmentalize separate from operational activities like shareholding.
  • Place-Holding: A group of companies may find it easier to create a nominee shareholder to provide intermediary support as trustee of shares. At the same time, a more permanent solution is agreed upon.
  • Confidentiality: There are many legitimate reasons a company or individual would want to keep their investments in whole or part, private from public scrutiny. Using a nominee helps accomplish this.
  • Concealing Buyout: If a company may be leveraging stock ownership for a take-over, they could use a nominee shareholder to mask their intent.
  • A Benefit to Brokers : It is common for investment firms to use nominee relationships to safeguard their assets on behalf of their clients. These accounts are a popular method to hold stocks in the industry, as they reduce costs and improve trading efficiency for the broker.
  • Employee Incentive: An employee stock option agreement can be used as part of an employee incentive or bonus program. The stock option agreement would be active if an employee remains employed. However, the ESO does not give the employee voting rights, nor does it include a financial benefit like a dividend.

Here is an article about employee stock options (ESO).

Who Writes a Stock Nominee Agreement?

A stock nominee agreement has many implications and, as such, should be handled with care. It’s best practice to have someone be a nominee that is known to you, so keep this in mind if considering an agreement of this sort.

As with anything you sign that constitutes a legal agreement, it is best to consult the advice of a lawyer, who can draft a stock nominee agreement for you.

Lawyers with extensive backgrounds in nominee agreements are best, as they already know the ins and outs of the process and will likely save you time and aggravation in setting it up.

Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Stock Nominee Agreement Lawyers

Annie G. on ContractsCounsel
View Annie
Member Since:
September 5, 2023

Annie G.

Free Consultation
Chicago, IL
26 Yrs Experience
Licensed in OH
Capital University Law School

Attorney licensed and in good standing in the State of Ohio. Worked in the corporate division of a large law firm (Squire, Sanders & Dempsey), and as inside counsel for a technology company (America Online). Lived in 6 different states in a 12 year period. Took some time off of legal work to raise 4 kids. During that time kept active as a volunteer - Houston Volunteer Lawyers Program, Legislative chair of school board for 3 years, President of school PTA, PADS and local food pantry. Currently working as a Consultant for a health care company (Fast Pace Health). Looking to get back to transaction legal work. Can work remotely and travel to Ohio when necessary. Thank you.

Holly W. on ContractsCounsel
View Holly
Member Since:
September 5, 2023

Holly W.

Free Consultation
Tucson, AZ
20 Yrs Experience
Licensed in AZ
University of Arizona James E Rogers College of Law

I am a solo legal practitioner in Tucson, Arizona who focuses on Estate Planning, Probate, Business Formation and Mediation. I have expertise and experience in not only law but as a Registered Nurse and teacher. I use this background and knowledge to provide compassionate and individualized service for my clients.

Andre T. on ContractsCounsel
View Andre
Member Since:
September 6, 2023

Andre T.

Free Consultation
31 Yrs Experience
Licensed in IL, MO
University of Missouri - Columbia

Commercial Litigation attorney providing advice and counsel to management regarding employment related matters and risk management issues

Christopher L. on ContractsCounsel
View Christopher
Member Since:
September 6, 2023

Christopher L.

Business Lawyer
Free Consultation
Minneapolis, MN, United States
13 Yrs Experience
Licensed in MN
New England School of Law

I have worked in banking, financial technology and technology as a legal and compliance executive who negotiates and drafts contracts, ensures products and services comply with applicable regulations, implements policies and procedures, oversees litigation, and manages corporate governance programs.

Kim G. on ContractsCounsel
View Kim
Member Since:
September 6, 2023

Kim G.

Business Lawyer
Free Consultation
27 Yrs Experience
Licensed in FL
Florida State University College of Law

Attorney and mediator with extensive experience in negotiating, drafting, and managing contracts in the private, public, and nonprofit sectors.

Michael C. on ContractsCounsel
View Michael
Member Since:
September 6, 2023

Michael C.

self employed
Free Consultation
Sacramento area
43 Yrs Experience
Licensed in CA
Lincoln School of Law

40+ years handling litigation matters for employers and employees, defense and prosecution of personal injury matters, CalOsha defense, prepare employment contracts, non-compete clauses, established drug policies and franchise agreements. represented banks in commercial litigation , asset retrieval matters. conducted audits of insurance company claims on behalf of employers, defended contractors in toxic tort cases, handled appeals to the insurance commissioner on workers compensation rate classification matters

Christian D. on ContractsCounsel
View Christian
Member Since:
September 6, 2023

Christian D.

General Practice Attorney
Free Consultation
Austin, Texas
11 Yrs Experience
Licensed in TX
St. Mary's University - School of Law

Christian Davila received his Juris Doctorate from St. Mary’s University and becoming a member of the State Bar of Texas in 2013. Before law school, he studied at Texas A&M International University (TAMIU), and participated in multiple programs across various fields of study, including the University of Texas Medical Branch-School of Medicine’s “Early Medical School Acceptance Program,” and the Hispanic Association of Colleges & Universities’ “National Internship Program” at the Library of Congress in Washington, D.C. Christian’s legal experience includes criminal law (both prosecution and defense), family law, transactional law, business litigation, real estate litigation, and general civil litigation. Christian was previously in-house counsel for a multi-million dollar apartment construction and management company, handling all property acquisition, document drafting, negotiations, and litigation. Christian is a former member of the American Association for Justice (formerly the Association of Trial Lawyers of America), and he has been distinguished by the National Trial Lawyers as one of their TOP 40 Civil Plaintiff attorneys in Texas UNDER 40 years old. He likes weightlifting, reading comicbooks, and being silly with his kids in his spare time.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Financial lawyers by top cities
See All Financial Lawyers
Stock Nominee Agreement lawyers by city
See All Stock Nominee Agreement Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city