The act or practice in which a company, usually a brokerage, holds legal ownership of a security while beneficial ownership is held by someone else, usually a client. Nominee holding facilitates trade; that is, the brokerage can sell the security directly rather than needing to seek the client's permission for each transaction. The client receives all dividends and other benefits of ownership. This has become more common as securities have become increasingly digitized.
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nominee holdingthe SHARES in a JOINT-STOCK COMPANY that are held under the names of a token shareholder on behalf of their ultimate owners. Nominee holdings are used where a person or institution wishes to keep secret the extent of their shareholding in a company, often as a prelude to a TAKEOVER initiative.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005