Legal Definitions - prête-nom

A prête-nom refers to an individual or entity who acts as a nominal owner or party in a transaction, holding legal title or appearing publicly on behalf of another person or entity (the true principal). While the prête-nom's name is used, they do not have the real beneficial interest or control; they are merely a front for the undisclosed principal.

Here are some examples to illustrate this concept:

• Real Estate Purchase: Imagine a prominent business executive who wishes to acquire a large tract of land for a new development project without their identity being known to the sellers or the public, as this might inflate the price. They ask a trusted associate to purchase the property in the associate's name. The associate signs all the necessary documents and is listed as the legal owner on the deed.

  In this scenario, the trusted associate is the prête-nom. They are lending their name to the transaction and holding legal title to the property, but the executive is the true beneficial owner who provides the funds, makes the decisions, and will ultimately control the development.

• Business Ownership: Consider a situation where an individual is legally prohibited from owning a controlling interest in a specific type of business due to past regulatory violations. To circumvent this restriction, they arrange for a close family member to be listed as the sole owner and director of a new company in that industry. The family member handles the public-facing aspects, but all significant decisions and financial control remain with the prohibited individual.

  Here, the family member acts as the prête-nom. Their name appears on all official business registrations and documents as the owner, but they are merely a front for the individual who is the true, undisclosed principal exercising control and benefiting from the business.

• Contractual Agreement: A consulting firm wants to secure a lucrative government contract, but one of its key partners has a conflict of interest that would disqualify the firm if their involvement were known. To avoid this, the firm uses a smaller, seemingly independent consulting company, owned by a former employee, to bid for and secure the contract. The smaller company then subcontracts the actual work to the larger firm, effectively allowing the key partner to contribute behind the scenes.

  The smaller consulting company, through its named owner, serves as the prête-nom. It lends its name to the government contract, appearing as the primary contractor, while the larger firm and its partner are the true parties performing the work and receiving the ultimate financial benefit, operating through the smaller company as a proxy.