Does holding shares on behalf of shareholders have legal effect?

Legal analysis: Entrusted shareholding generally has legal effect. According to the provisions of the Interpretation of Company Law (III), the actual investor of a limited liability company enters into a contract with the nominal investor, stipulating that the actual investor contributes and enjoys the investment rights and interests, and the nominal investor is the nominal shareholder. If there is a dispute between the actual investor and the nominal shareholder on the validity of the contract, the people's court shall determine that the contract is valid.

Legal basis: Civil Code of People's Republic of China (PRC).

Article 144 A civil juristic act performed by a person without capacity for civil conduct is invalid.

Article 146 A civil juristic act by the actor and the counterpart with false intention is invalid. The validity of a concealed civil juristic act with false intention shall be handled in accordance with relevant laws and regulations.

Article 148 If a party causes the other party to commit a civil juristic act against its true meaning by fraudulent means, the aggrieved party has the right to request the people's court or an arbitration institution to cancel it.

Article 153 A civil juristic act that violates the mandatory provisions of laws and administrative regulations is invalid. However, unless mandatory provisions do not invalidate civil legal acts. A civil legal act that violates public order and good customs is invalid.