Nominee Service and Anonymous Owners

I often get calls from people wanting to incorporate in Nevada because they’ve been told that Nevada allows anonymity for business owners, usually through what’s called a nominee service.

Because this is a HUGE risk for businesses, I need to clear this up.

Nevada does not provide anonymity for business owners. When you form an entity, you are required to disclose the names of the manager or members if an LLC or officers if a corporation.  This information is published on the Nevada Secretary of State’s website.

Some companies will provide what’s called “nominee service” where the company lists itself as the manager/member/officer to provide the actual business owners with privacy.  Notably, no law firm that I can find will provide this service.

Appointing a nominee is DANGEROUS.  Here’s why:

There is a concept in the law called “apparent authority” which means a company can be bound by the acts of an agent if the person on the other side of the transaction reasonably believed the agent had the authority to act on the business’s behalf.

When you appoint a nominee, they are listed in the public record as, at a minimum, a manager of your company.  This means the nominee could sign a contract on behalf of the company and that contract could be enforced because one could reasonably believe that the nominee was authorized to enter into the transaction.  It doesn’t matter whether the nominee actually had authority; what matters is what an outside person looking at the situation might think.

Therefore, if you’re researching the benefits of an “anonymous LLC” or a nominee service, keep in mind the concept of apparent authority. Realize that if you appoint a nominee, you put your business at risk for anything that nominee might decide to do as an agent of your business.