How A Nominee Can Protect Your Privacy

As a business owner, you may want to keep your identity private and out of the public record. To do this, we recommend using the services of a nominee to place the nominee’s personal information on your business records instead of using your personal information.

These records typically include articles of incorporation and annual financial reports, whereby the business lists the nominee as a company officer, member, director, or manager. Nominee services can protect your privacy, which can be useful for a person who likes the idea of running his or her own business but wants to avoid the attention that can come along with it.



According to the Stolen Asset Recovery Initiative (StAR) of The World Bank, a nominee is an individual or corporate entity that rents its name to someone else to protect that person’s identity. Nominees can be any individual, including friends, family members, or professionals like accountants or lawyers. Often, business owners will look for companies that specifically offer nominee services rather than individuals.


The primary reason for company owners to use nominees is to legally ensure the owner’s privacy. However, the Internal Revenue Service (IRS) notably requires the actual business owner’s information when you apply for an employer information number (EIN) for your business. This means that, while the true business details are not publicly available, the IRS does have record of who actually owns the business.


There are two main types of nominees that a business owner may be able to install. Both of the following types remain in effect for one year, and the true owner may revoke or renew the nominee service at any time: 

  • Directors
  • Shareholders


Nominee directors act as company directors, and some business owners may appoint them to function as a business’s treasurer, president, or secretary. Company directors must be listed on a business’s records. For this reason, business owners may hire nominee directors in order to list the nominee’s personal information on the records instead of their own. To appoint these individuals, the true business owner issues a power of attorney (POA) document, which we would create for you should you decide to use the services of a nominee director.



Nominee shareholders protect your identity by holding company shares on the true owner’s behalf. The true business owner can appoint these nominees by issuing a declaration of trust. This document outlines the real owner’s instructions regarding his or her shares, such as how to allocate dividends and transfer shares. 



Before deciding to utilize nominee services, business owners should understand what they can and cannot do with these services, including the following important topics:

  • Gaining privacy from non-governmental institutions
  • Revealing the owner’s true identity
  • Remaining involved in business activities


Business owners may use nominee services to prevent non-governmental institutions from learning their true identities. This can be beneficial for businesses because it shields asset allocations and investment strategies from competitors, creditors, and other non-governmental institutions. However, businesses cannot use these services to hide their assets from federal and state authorities due to laws created to prevent money laundering and tax evasion.



Business owners typically use nominee services to prevent competitors, the media, and other members of the public from learning their true identities. However, selecting a nominee does not prevent the true business owner from choosing to reveal his or her identity at a later date. Sometimes, revealing the owner’s identity might be beneficial for the company. If, for example, the business is under intense scrutiny, the business owner may want to publicly reveal his or her identity to defend the business’s actions more effectively.



Nominees are only company shareholders or directors according to public records. The true business owner remains in control of the company and is still actively involved in the daily business activities. Additionally, the true owner still reaps the benefits associated with his or her involvement.




There are some risks associated with using nominees, which include the following:


  • Nominee acts contrary to the agreement—Business owners usually have a contract with their chosen nominees to outline what the nominee can and cannot do. However, there is still a risk that the nominee may act contrary to the agreement. While the owner may be able to seek damages in court if this happens, the nominee might do considerable damage to the business before the issue can be resolved, and such legal disputes can be costly and time-consuming. Moreover, a business owner who takes a nominee to court will reveal his or her identity to the public, making the whole process a waste of time.
  • Nominee becomes incapacitated or dies—A business owner might select a very trustworthy and competent individual to act as his or her nominee. However, the owner may encounter issues if the nominee becomes incapacitated or dies. The nominee’s heirs might fulfill the role, but the business owner may prefer to revoke the declaration of trust or POA if the heirs are not as willing or competent as the original nominee. This is one reason it could be more beneficial to utilize a corporate nominee, which has perpetual life.
  • There is a potential for fraud—Even a trusted nominee might inadvertently commit fraud due to a lack of knowledge regarding state and federal laws. For instance, the nominee may not stay up to date with business regulations, which might pose a risk to the business owner. Due to this, business owners should thoroughly research potential nominee services before signing a contract to ensure that the nominee is credible, knowledgeable, and trustworthy.



There are other things that business owners can do to legally maintain their privacy. Business owners can choose to use a specific business address to list on the business’s public documents. While this does not protect the identity of the business owner, it can prevent others from obtaining the owner’s personal address. Additionally, you may consider establishing your business in a state that does not require declaring the owner’s information in public records. Alternatively, business owners can establish multiple LLCs to help maintain their privacy.


If you want privacy, we can help. Contact us, your Personal Family Lawyer® with business planning expertise to learn more about all the ways we can support the protection of your privacy in life & business. 

Like what you're learning?

Sign up for our free newsletter

Notes from the Chief Counsel's Desk 

and get more legal insights sent directly to your inbox.

* indicates required

To support our community in response to COVID19, we're providing

FREE Health Care Directives and HIPAA Waivers

to any one residing in the state of California

This article is a service of Sky Unlimited Legal Advisory PC, Personal Family Lawyer®. We're not your traditional law firm, we stand apart from the rest by helping you make informed and empowered decisions on how to deal with your business throughout life and in the event of an emergency. We offer a complete spectrum of legal services, including a New Business Planning Session or an Existing Business Review Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. You can begin by calling our office at (650) 761-0992 today or book online to schedule a Business Planning Session and mention this article to find out how to get this $950 session at no charge.


Having a will simply is not enough.  It doesn't guarantee the care of your children if the unthinkable happens!  See how we do it differently...

The strategies that are appropriate for protecting your assets are different for every family.  Check out our proven process that gives you peace of mind...

Our unique legacy process gives your loved ones a precious gift - a lasting expression of your love.  Find out what we offer with every plan...