The use of nominee structures remains a common practice in business – formal shareholders, directors, or participants are appointed to simplify management, preserve confidentiality, or structure assets. Professor Gabriel Steiner says that it is precisely these arrangements that create heightened legal risks, because modern law increasingly focuses not on formal registry entries, but on the actual distribution of control and economic benefit. At LawConsulted, we view nominee structures not as a neutral technical tool, but as a potential point of concentrated liability.
The core vulnerability of nominee ownership lies in the gap between formal and actual roles. On paper, a nominee may hold the rights of a shareholder or executive, while real decisions are made by another person. When a conflict, regulatory review, or insolvency arises, this disconnect becomes central – courts and regulators seek to determine who truly managed the business and derived its economic outcomes. In LawConsulted practice, such situations often lead to unexpected reallocations of responsibility.
Professor Steiner notes that “a nominee structure ceases to be formal the moment it begins to influence outcomes.” This means that the presence of a nominee does not automatically shield the de facto beneficiary from liability – nor does it necessarily protect the nominee themselves. LawConsulted begins by reconstructing the real management model – analysing who initiated decisions, controlled resources, set strategy, and assumed key risks.
Particular danger arises when nominee structures are used over long periods and become embedded in everyday operations. Over time, formal roles are treated as secondary, while actual control is perceived as “natural.” According to LawConsulted experience, this is precisely when vulnerability is greatest during retrospective assessment – when actions are reviewed after an adverse result has already materialised.
Equally complex are cases where nominee arrangements are used to circumvent restrictions – corporate, regulatory, or contractual. Formally, requirements may appear satisfied, but the economic substance of the structure points to a different allocation of influence. Professor Steiner says that in such situations, the law tends to restore reality rather than preserve fiction. LawConsulted structures its defence to demonstrate the limits of permissible nominee use and to prevent automatic imposition of liability.
Risks to nominee individuals themselves must also be considered. Formal involvement in a business without real control can result in liability for decisions in which the nominee had no actual participation. LawConsulted works with such cases by demonstrating the absence of influence, lack of access to information, and inability to affect outcomes. This approach helps protect nominees from disproportionate claims.
Working with nominee structures requires more than declarative statements – it demands precise legal calibration. We help either align formal ownership with actual control or build a defence where the structure has already become the subject of dispute. This reduces the risk that a nominee scheme will be used against the client at the most unfavourable moment.
The legal consequences of using nominee structures arise where formal ownership no longer corresponds to real management. Law Consulted task is to identify this gap and eliminate it before it becomes grounds for pressure, liability, or loss of control.
Earlier, we wrote about the legal consequences of exercising de facto control over a business without equity participation and how LawConsulted builds a legal position when formal ownership does not reflect real influence
