HopefullyInLawSchool
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LSDefine
Simple English definitions for legal terms
dummy shareholder
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A quick definition of dummy shareholder:
A dummy shareholder is someone who owns shares in a company, but they don't really have any power or control over the company. They are just holding the shares for someone else who wants to keep their identity a secret. It's like pretending to be the owner of something, but really you're just holding it for someone else.
A more thorough explanation:
A dummy shareholder is a person who appears to be a shareholder of a company, but in reality, they do not own the shares. The shares are owned by someone else, and the dummy shareholder is holding them on their behalf. The true owner's identity is usually kept secret.
For example, if a company is owned by a foreign national who is not allowed to own shares in that country, they may use a dummy shareholder to hold the shares on their behalf. The dummy shareholder's name will appear on the company's records, but they have no real ownership or control over the company.
Another example is when a company wants to hide the identity of its true owners. They may use a dummy shareholder to hold the shares and keep the real owners' identities a secret.
These examples illustrate how a dummy shareholder can be used to conceal the true ownership of a company. It is important to note that using a dummy shareholder for illegal purposes, such as money laundering or tax evasion, is illegal and can result in severe penalties.