stocks and shares?

Question

If I purchase shares on behalf of a child that is a non resident of the UK for him to own at the age of 16, will he be able to collect those shares as he is not allowed to have a bank account for the shares to be transferred.

thanks.
francisco M

Answer 1

In the UK a child can't own shares. You can add the child as the second name on the share register, but you will be the first name and legally you will own the shares. The first point you will be allowed to transfer the shares into the child's name will be their 18th birthday.

Also, shares are held in a broker account - not a bank account. You will need to have an account with a broker to own the shares, which means that under money laundering laws you will have to provide the broker with confirmation of your address and identity. The child will have to have a functioning broker account before the shares can be transferred to him/her.

Finally, paper share certificates are no longer issued in the UK. Your name will be electronically entered on the company share register and your broker will send you an account statement once every 3 months to confirm that you still own the shares.

Answer 2

Shares are not held in a bank account, they are either held as actual certificates (one's for a child might say "Alfie E Nokes for the benefit of Litle Nigel Postlethwaite" on them), or more probably they would be held "in Street Name", which means they'd be in a drawer somewhere with a brokerage houses name on them. Since the child is a non-resident minor, your social security number would be recorded on the shares, and you would be liable for any taxes due of capital gains.