If you are starting your company, you might have come across the term ‘Nominee Director.’ Before appointing a nominee director for your company, there are a few elemental points you should familiarize yourself with. This article will give you complete information on appointing nominee directors, the documents you need to provide ahead of the appointment, and more.
We will start the discussion by letting you know that appointing a nominee director is optional and will most likely happen during the initial stages of registering your company.
Do you need a Nominee Director?
Whether you need a nominee director or not depends entirely on you. You will, however, be required to provide a director’s name to be included in the list of board of directors. Choosing a nominee director is entirely optional. However, a nominee director will give your company the advantage of anonymity when conducting business-related activities.
There are essentially two principal reasons why you would need a nominee director.
You do not Wish to Have your Name Listed on the Public Registry
The Companies House maintains all the records of registered companies along with the names of directors. However, if you don’t want to have your name listed on the public register, you can appoint a nominee director to act as the ‘face’ of the company. Despite that, you’ll still be the sole beneficiary owner of the company with complete control of the business.
You Wish to Avoid Paying Excessive, Unnecessary Taxes
If you are a foreign national investing in the UK or an overseas business owner, you can choose to have a local nominee director who can help you save money on taxation.
Nominee Director – Job Requirements
Although appointing a nominee director is optional, it is still legitimate. Setting a nominee director is quite similar to selecting a real director. A nominee director:
- Should be a natural person
- Should be over 16 years of age at least
- Should not be bankrupt
- They shouldn’t have been disqualified for the role of a director in the past
- Should not be the company’s auditor
A nominee director can act only on behalf of the beneficiary owner and is not legally permitted to take business decisions without consulting with the director. Any deviations from this can attract legal charges, and it will be seen as a breach of contract.
How to Get a Nominee Director For your Company
There are two ways in which you can get a nominee director for your company. You can choose:
To do it Yourself
You can look for a nominee director by yourself. However, you should know that it is time-consuming and not always fruitful. Moreover, the legal documents and contract agreements can be overwhelming for a novice. You can try the ‘do-it-yourself’ option only if you have prior experience in appointing directors.
The Services of Corporate Service Providers (CSP)
The second option is to engage the services of Corporate Service Providers (CSP). CSP makes the entire appointing process easier and convenient. You would be required to provide precise information on your requirements.
Information you Should Provide the Service Provider
The service provider will appoint a nominee director for your company if you provide the following information.
- Reasons for appointing a nominee director
- Identity and address proof of the beneficiary owner or business owner
- Information about the nature of your business
Documents you Need to Appoint a Nominee Director
These are some of the legal documents you’d need to make the appointment legal. You’d also require these documents if you run into legal trouble with the nominee director.
1. A Signed Agreement Between Both the Parties
The signed agreement should ideally have complete information of both the owner and the nominee. The information should include the names of both parties, addresses, identification numbers, and more. The name and details of the appointed nominee will appear on the public registry, and you will remain anonymous.
2. Nominee and Beneficiary Owner’s Agreement
The nominee agreement will stipulate that the said person does not have control over the company’s workings and that the owner retains complete control. Both parties should sign this agreement.
The beneficiary owner’s agreement essentially protects the rights and interests of the owner. This legal document will come in handy if proof of ownership is required to be proved in the future.
3. Updated Signed Resignation Letter from the Nominee
The nominee director should hand over a signed and undated resignation letter before taking charge. If you wish to cease the services of the nominee or he decides to resign from the company, powers will be completely transferred back to you.
4. Power of Attorney
A general power of attorney document is mandatory as the director must perform duties such as signing agreements, opening bank accounts, and more. Since only the nominee’s name will appear on the public registry, the owner would require a general power of attorney to ascertain his control over the company.
These are some of the most critical points to note when appointing a nominee for your company. While searching for the right nominee director could be a daunting task for many business owners, seeking the help of experienced CSP can make the entire process easier and legally compliant.