We pride ourselves on ensuring that our investors’ rights are protected throughout the lifetime of an investment. We use a nominee structure and negotiate investment terms on behalf of our investors to ensure they contain, for example, appropriate anti-dilution protection and access to information.
WHAT IS A NOMINEE STRUCTURE?
Instead of investing directly into the companies looking for funding, we use one nominee company, which acts as the legal owner of your investments. You remain the beneficial owner of the shares and retain full economic rights to those shares at all times. This arrangement allows us to manage the investment for you on your behalf, while reducing the administrative burden on the company.
Venture Founders Nominee Limited (‘VFNL’) is the entity we have created to act as the nominee and it keeps share certificates on your behalf. VFNL’s registered address is 83 Victoria Street, London, SW1H 0HW and its Company No is 09050765.
HOW DOES THE NOMINEE STRUCTURE WORK?
After a company receives the investment funds from VentureFounders investors, it issues the relevant number of shares to VFNL. This company is known as a nominee and its sole purpose is to hold the shares on behalf of the VentureFounders investors.
VFNL is the legal owner of the shares. Its name is in the company’s share register, the share certificates are issued in the name of VFNL and the nominee enters into the investment agreement with the company and, where appropriate, any shareholder agreement with the other shareholders.
All the economic benefits arising from the shares (i.e. any money received if the shares are sold or listed, any EIS or SEIS tax reliefs, etc.) are passed to the VentureFounders investors.
The nominee company’s role and responsibilities and the rights of a VentureFounders investor against the nominee company are set out in a legally-binding agreement (the ‘Investment Agreement’) between the nominee company and each VentureFounders investor. A new investment agreement is entered into each time an investor makes an investment.
Should a vote be required that requires your attention under the terms of the investment agreement, VentureFounders will facilitate this through the platform.
ADVANTAGES OF THE NOMINEE STRUCTURE
The main advantage of a nominee structure is that it allows VentureFounders to protect the rights of its investors and effectively enforce any shareholder rights on behalf of its investors.
As the nominee company represents all VentureFounders investors, it has more leverage than any one investor would have acting alone. This is important when VentureFounders negotiates the terms attached to the investment on behalf of its investors.
NOT ALL NOMINEE STRUCTURES ARE THE SAME
Nominee structures can differ greatly between the different equity investment platforms. Some offer investors a lot less protection than others. For example, not all nominees will negotiate and enter into an investment agreement on behalf of their investors. It is important that you carefully research platforms before you invest to understand the different nominee structures that are available.
We believe that the proactive approach taken by our nominee company at the beginning and throughout the lifetime of the investment differentiates VentureFounders from a number of other equity investment platforms operating nominee structures.
WHAT HAPPENS IF VENTUREFOUNDERS CEASES TO TRADE?
Should VentureFounders cease trading, the shares held by VFNL will be transferred back to the investor, the beneficial owner, who will then become a direct shareholder in the company.