Legal Definitions - bare ownership

Bare ownership describes a legal arrangement where an individual or entity holds the legal title to an asset, such as real estate, shares, or other property, but does not possess the full rights typically associated with ownership. This means they do not have the right to use, enjoy, or personally benefit from the asset. Instead, they hold the legal title on behalf of another person or entity, known as the "beneficial owner," who is entitled to the asset's use, income, and benefits. The bare owner's role is primarily administrative, managing the asset according to the beneficial owner's instructions or the terms of a specific agreement, such as a trust.

• Example 1: Property held in trust for a child

  A parent decides to purchase a house and place it into a trust for their young child, who is currently five years old. The parent appoints a professional trustee to manage the property until the child reaches adulthood. The trustee holds bare ownership of the house; they are the legal owner on paper and are responsible for its upkeep, paying taxes, and managing any rental income. However, the trustee cannot live in the house themselves or sell it for their own profit. Their actions must always be for the benefit of the child, who is the beneficial owner and will gain full control of the property later.

• Example 2: An executor managing an estate

  When an individual passes away, their will typically names an executor to manage their estate. After the person's death, but before the assets are distributed to the beneficiaries, the executor holds bare ownership of all the deceased's property, including bank accounts, investments, and real estate. The executor has the legal authority to sell assets, pay debts, and handle administrative tasks, but they must do so strictly according to the will and for the benefit of the designated heirs, not for their personal use or gain.

• Example 3: Nominee shareholder arrangement

  A group of private investors wishes to acquire a significant stake in a publicly traded company, but they prefer to remain anonymous. They arrange for a "nominee company" to purchase and hold the shares on their behalf. The nominee company holds bare ownership of these shares; it is the registered legal owner in the company's records and receives official communications. However, the nominee company has no voting rights or entitlement to dividends for itself. It acts solely on the instructions of the actual investors, who are the beneficial owners and receive all the financial benefits and exercise the true control over the shares.