Beneficiary (the spelling beneficiary is also found) is the actual beneficiary, recipient of payment or profit, as well as other advantages and benefits under the contract. It can be both an individual and a legal entity.
Beneficiary concept
Beneficiary - the recipient of the profit, this term can have several semantic meanings depending on the field of activity.
If we are talking about an insurance business, then the beneficiary is the recipient of the compensation specified in the insurance policy. If the person specified in the agreement does not live to see the end of its validity period, then another person may become the beneficiary. With regard to property insurance, any owner becomes it if the property is insured in his favor by another person.
In inheritance law, the beneficiary is the heir by the will.
A beneficiary is also a person who receives income from his property, for example, by receiving rent when renting out a property.
The concept of the beneficiary is also applicable to the owners of shares who have transferred them into trust in order to obtain maximum profit. Beneficiaries-holders of shares have the right to transfer ownership, resolve issues about the company's activities, vote at a shareholders' meeting, as well as participate in the selection of the company's management.
In the case of a trust, the beneficiary is the person who receives financial benefits from the administration of the assets of the trust.
The term beneficiary is widely used in offshore business. In this case, it is the real owner of the business, who is also called the “ultimate beneficiary”. It usually differs from the nominal owner, which is indicated in the incorporation documents. That is, de facto the beneficiary is the owner of the business with all management rights and receives income from the activities of the company, but de jure the ownership right is assigned to other persons. The presence of a nominee leadership is justified by maintaining confidentiality in relation to the ultimate beneficiary.
Beneficiaries in banking
In banking, the concept of a beneficiary is used in transactions with bank letters of credit, collection, guarantees and certificates.
When issuing a bank letter of credit, the beneficiary is the person in whose name it is opened, the owner of the documentary credit.
As part of a banking collection transaction, the beneficiary is the recipient of the money after the banking operations, which confirm the receipt of the property by the buyer as part of the transaction.
With regard to a bank certificate, the beneficiary is the recipient of funds on it after its expiration. Since the certificates are not named, it is not necessarily the person who opened the bank certificate.
The beneficiary of the bank guarantee is the lender, who must receive the funds under the agreement.