A key feature of the Spark CrowdFunding model is the nominee structure. This is a process whereby the start-ups’ shares are held and managed on behalf of the investors after an investment has been made.
A nominee structure is crucial for any equity crowdfunding campaign as it protects investors’ interests and provides direc communication for the start-ups to their investors. We will explain the process in greater detail below.
What is a nominee?
A nominee is a person or company that holds assets such as shares on behalf of another, enabling the nominee to handle complicated administrative matters.
How does the nominee structure work?
Instead of the shares being issued directly to the investor, they are instead issued to a nominee company. In Spark CrowdFunding’s case, this company is Pearse Trust. The nominee is named in the company’s register of shareholders and will be the legal holder of the shares.
Pearse Trust (the nominee company) will hold the shares on trust for the investor (the beneficial owner) and Pearse Trust will administer the holding on the terms set out in the Investor Terms to safeguard the investors’ rights and entitlements.
Benefits for Investors
If you were to crowdfund without a nominee structure in place, investors would be left managing the administration of their investments on their own, which becomes very cumbersome, especially if they have made multiple investments.
By employing a nominee structure, Spark CrowdFunding removes the administrative hassle for investors by taking care of all the technical shareholder work allowing them to just focus on their investments directly through the Spark platform.
Benefits for Start-ups/Companies
Without a nominee structure in place, companies would have to communicate with each investor who pledges with them, which would be time-consuming and difficult to track and manage.
However, a nominee structure vastly improves the communication process as the startup only needs to communicate with one legal shareholder (the Nominee).
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