A nominee director is a person who acts as a director of a company on behalf of another person or entity, such as a shareholder, a creditor, a parent company, or a trust. The nominee director does not have any real authority or interest in the company, but only acts in accordance with the instructions of the person or entity who appointed them. The nominee director is usually used to protect the identity and privacy of the beneficial owner of the company, or to comply with the local legal requirements for having a resident director in the country where the company operates.
In the UK, there is no legal definition or recognition of a nominee director. A nominee director is subject to the same duties and responsibilities as any other director under the Companies Act 2006, such as acting in good faith, promoting the success of the company, avoiding conflicts of interest, and exercising reasonable care and skill. A nominee director also has to comply with the disclosure and filing requirements of the Companies House, such as registering their personal details, filing annual accounts and confirmation statements, and reporting any changes in the company's information.
The benefits of using a nominee director in the UK include:
- Protecting the identity and privacy of the beneficial owner of the company, especially if they want to avoid unwanted attention from competitors, creditors, regulators, or the public.
- Complying with the local legal requirements for having a resident director in the UK, especially if the beneficial owner is not a UK resident or citizen.
- Enhancing the credibility and reputation of the company, especially if the nominee director is a professional or an expert in their field.
- Facilitating the management and administration of the company, especially if the nominee director has experience and knowledge of the UK market and regulations.
When might a nominee director be used?:
- When a foreign company wants to set up a subsidiary in another country, it may appoint a local resident as a nominee director to comply with the legal requirements of that country. For example, in Singapore, every company must have at least one director who is ordinarily resident in Singapore.
- When a shareholder wants to protect their identity or privacy, they may appoint a nominee director to act on their behalf and represent their interests in the company. For example, a celebrity or a high-net-worth individual may not want their name to appear on the public register of directors.
- When a parent company wants to have control over the operations and decisions of its subsidiary company, it may appoint one or more of its senior executives as nominee directors to the subsidiary's board. For example, a multinational corporation may want to ensure that its global strategy and policies are implemented consistently across its subsidiaries.
A nominee director is a person who acts as a director of a company on behalf of another person or entity. They are usually used to protect the identity and privacy of the beneficial owner of the company, or to comply with the local legal requirements for having a resident director in the UK. However, they also come with certain risks and challenges that need to be carefully considered and managed. Therefore, it is important to find a reliable and reputable nominee director service provider like CG Incorporations who can offer you professional, quality services at a reasonable price.
Published: 10/23/2023 3:00:29 PM