What’s a Nominee Director and Why Would I Need One?

If you are just starting out in the business world or you aren’t overly familiar with company law, many of the terms used may cause confusion. You may have heard the words “nominee” and “director” used from time to time, but you may not know what they mean. Do not fear, there is quite a simple explanation!

bullet What’s a Nominee Director?

Nominee Director

Every company (well most regular kinds) have a board of directors. This is typically a group of individuals who are responsible for supervising the functions and activities of the company. Exactly what their roles are is defined by the company law in the jurisdiction the company is registered in as well as documents used to create the company such as the Memorandum and Articles of Association.

This board will take decisions on matters relating to the company. This is usually done via voting. The board will also pick the Chief Executive Officer of a company as well as replacement members of the board. They are accountable to shareholders and may or may not hold shares themselves.

Got it? Good.

A Nominee Director is one who is appointed by a director to take their place on the board. The Nominee Director takes on the full role and responsibility of a director but is all the time representing the person who has nominated or appointed them. In other words, they are a direct stand-in for the director of a company.

bullet So, how is that different from a regular director?

A Nominee Director isn’t elected or appointed to the board by board members, rather they are selected by the nominator. Their name will appear as a director on all company documents instead of the person that nominated them. Secondly, the Nominee Director does as they are instructed by the nominator, whereas an actual director is free to act as they choose. Their input is limited to what they are instructed to do as they are essentially only there in the name and not actually a director.

bullet What does a Nominee Director do?

The Nominee Director has a number of roles, namely acting on behalf and in accordance with the directions of the person or entity who has put them in that position. They have the power to do almost anything within the company, the same as a regular director. However, they are bound by a number of fiduciary duties.

These include acting in good faith. with honesty and keeping the company’s best interests at the fore. They must also ensure they have no conflict of interest and can maintain strict confidentiality at all times. The Nominee Director must also pledge not to exploit power and position, and to exercise professionalism and diligence always.

bullet Why would my company need a Nominee Director?

There are several reasons why having a Nominee Director is a good idea:

bullet Residence requirements

In some jurisdictions, you are required to have at least one resident director on the board of a company. In a situation like this, a Nominee Director is a smart choice as it allows you to keep control of the company while ensuring you meet the obligations of the country where you’re based.

bullet Privacy

Having a Nominee Director means your name will not appear on any company registry, official documents, or public or privately searchable records. This provides you with a high level of privacy and confidentiality when conducting your business.

bullet Increased security

By appointing a Nominee Director you can protect yourself from possible social, political, legal, business, economic, or other issues.

Appointing a Nominee Director is completely legal, totally legitimate, and has many benefits.

bullet How do I get one?

So first you need to find a person of trust who you are happy to appoint as a Nominee Director. This will usually be a corporate service provider, lawyer, accountant, or another professional who offers this as a service.

Depending on which jurisdiction your company is or will be based in, who can qualify as a Nominee Director and what they need to do can vary. The best thing to do is run the idea past your trusted provider and to get their view. Chances are they can provide you with everything you need, in line with the laws and regulations that apply to you.

The most important part of the process is ensuring you trust them and that there is full transparency at every stage. Don’t entrust your company to just anyone, make sure you team up with an experienced, honest professional. If you have any additional questions, don’t hesitate to contact Fast Offshore.

Contact Us

Follow us on Social Media!