Learn what it means when you benefit from a business
Business owners are not always the people behind the counter.
Some owners prefer to remain out of sight.
Employees may not even know who owns the business.
When a company’s structure includes a primarily silent partner, it’s referred to as beneficial owner.
When Owner and Title Name Differ
Beneficial ownership can apply to a single individual or a group who enjoys the benefits associated with owning a company, even though the organization’s title may be in a different name.
Along with receiving a share of the profits, this type of ownership also allows the individual/s to influence decisions relating to the company.
Some key points include,
- The legal and beneficial owner can differ, although in most cases it is the same individual or group.
- It’s more common in publicly traded companies. The registered owner is often the broker. It is primarily done for the business owner’s convenience and safety.
Wealthy business owners often list their companies under a trust. It can provide an added layer of protection for the individual and the company.
A simple explanation of an ultimate beneficial owner is an individual owning 25% or more of a company.
Different Types of Ownership
An ultimate beneficial owner is not limited to owning all or a percentage of a company. It applies to a variety of assets, each with different regulations. Some of the most common types of assets include securities, real estate, and estate protection.
Securities are a common type of asset that is often listed in a broker’s name. The practice is legal, as long as the individual is compliant with tax laws.
Other regulations may also apply, depending on the type of security and the country.
Different countries have varying laws regarding the ownership of publicly traded securities.
It’s best to get advice from a legal expert when you are unsure of the specific regulatory requirements.
Registries typically indicate the property’s owners. It is a common practice in most countries.
A simple search of public real estate records provides you with the owner’s name and address.
Celebrities and politicians often do not want the public to easily find their properties and/or home addresses.
To help ensure their privacy, the property is often listed under a trustee.
Another common reason to create trusts as the legal owner of assets is for protection. The owner may be facing litigation and is searching for a way to protect their estate.
Allowing the trust to function as the asset owner is legal but the practice is heavily regulated. Depending on the type of litigation, and its outcome, this practice may not preserve your estate.
This type of ownership can also apply to intellectual property.
For example, the legal rights of a trademark, copyright, or patent may belong to another individual, but you are also benefiting from the property.
It typically occurs when some of the intellectual property rights are assigned to someone else.