What is a nominee and what is the Seedrs nominee structure?
One of the most important features of Seedrs is our nominee structure. At its simplest, ‘nominee’ is a legal term for a person (or company) that holds shares on behalf of others. At Seedrs, we hold the shares in our portfolio companies on behalf of our investors. This structure is used in private investing to simplify the process of managing multiple investors in a single startup.
While Seedrs will be registered as the legal shareholder in the company and take care of all the administrative shareholder work on your behalf, the full economic interest in the shares will always flow back to you. The nominee structure means our investors receive the professional-grade protections they deserve and entrepreneurs don’t end up with messy and hard-to-manage cap tables.
The benefits of the Seedrs nominee
- Investors do not need to worry about the administrative burden of their investments.
- Individuals can buy shares for as little as £10 because investments are pooled.
- Investor protections: we enforce shareholder rights, ensure compliance by the company with its subscription agreements, and generally ensure that our investors get the best outcome possible from their investments.
- It enables our Secondary Market. As the nominee is the legal shareholder of all investments made by Seedrs investors, we can enable trading within the structure by transferring beneficial ownership between underlying investors. The Secondary Market, powered by the nominee structure, is solving the liquidity problem of private investing.
- The platform ensures that everything the company shares in its pitch is ‘fair, clear and not misleading’ — and runs basic background checks to ensure that the founders and business are above board. This ensures that the investment decision you make is well-informed. We encourage all investors to complete their own due diligence before making any investment decisions.
We have investors’ best interests at heart
As nominee, Seedrs is generally empowered to take decisions on behalf of our investors as a whole, and will always act in their best interests with the intention of (a) maximising potential returns, and (b) ensuring that investors are being treated equitably. We do not typically pass votes back to individual investors unless there is a choice that needs to be made by each individual investor (e.g. exercising available pre-emption rights).
Our Portfolio Team
We have an impressive (and growing!) portfolio team at Seedrs. This team spends their time dealing with our portfolio of businesses and acting on behalf of our investors. This involves helping companies with exits, wind ups, and pre-emption rounds, enforcing and protecting shareholder rights, monitoring business performance, and chasing businesses to update consistently.
We hope that helped in outlining what the nominee is and how it benefits you as an investor. If you’d like more information, you can read more about our nominee structure from our founder Jeff Lynn, here.
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