Some of the companies on our platform issue shares to investors via a nominee. We have put together this guide to explain what this means for you.
How does the nominee structure work?
Rather than issuing the shares to you directly, the shares are instead issued to a nominee company: Crowdcube Nominees Limited. The nominee is named in the company’s register of shareholders and will be the legal holder of the shares.
The nominee will hold the shares on trust for you, the beneficial owner. The terms of the trust are set out in a declaration of trust, which will be attached to the email you are sent after the pitch closes to investment. Please read the document carefully and make sure you are happy with the terms on which your shares will be held.
How does voting work?
The nominee will not have discretion to make decisions on your behalf. When the nominee is notified of a matter that requires a decision to be made by the shareholders (e.g. a vote on a resolution), the nominee will poll all Crowdcube investors in that company electronically, and act in accordance with the wishes of the majority of investors who respond.
For example, if:
- the nominee holds 100,000 shares on behalf of Crowdcube investors;
- the beneficial holders of 60,000 shares respond; and
- of these, the holders of 54,000 shares (94% of the shares held by the respondents) indicate that they want to vote for the resolution,
then the nominee would vote in favour of the resolution with all 100,000 of its shares (including those held on behalf of investors who did not vote or who voted against).
Will I get pre-emption rights?
You should read the legal review/explanatory note attached to the pitch and the company’s Articles of Association to check the circumstances in which your shares would have pre-emption rights.
Where the company does offer its investors the opportunity to exercise pre-emption rights, the nominee would make its allocation of shares available to investors via a private pitch on Crowdcube. Please note that the shares would be made available on a first- come-first-served basis.
What happens if the company is sold or pays a dividend?
Any returns on your shares (e.g. dividends or the proceeds of any sale) would be transferred to you by the nominee. In these circumstances you would be asked to confirm your bank details.
Will my investment still be eligible for EIS/SEIS?
Provided the company, the shares being offered and the investor meet all of the requirements to qualify for EIS/SEIS, the fact that the shares are held by a nominee will not affect EIS/SEIS eligibility.
How do I know if my shares will be held by a nominee?
Most of the investment opportunities on Crowdcube are direct share offerings, meaning you would hold the shares yourself, not via a nominee.
If the shares are being offered via a nominee, this will be noted in the “Share Types” section of the pitch page and the legal review/explanatory note attached to the pitch.