What is a nominee director?

If you are starting or own a UK company or are a business owner already, then you may want to consider having a single or multiple nominee directors.

A nominee director’s details are filed at Companies House to protect and provide anonymity for the main directors of the company, whilst the main directors retain complete control. It provides anonymity for the company’s beneficial owner, allowing anonymous company ownership.

What is a nominee director: more details

The term nominee director refers to a person appointed by a company or on the business owner’s behalf to act as a director but with no authority over the company or its business dealings. They can be an individual or company whose responsibilities are to act as a director on behalf of the nominator.

The owners of the business retain control of the company carrying on its day to day business activities and operate the company’s bank account and finances etc. Nominees merely act as the named person or company on paper and don’t take the place or control of the company from you or other directors. The UK nominee director services permit an organisation to preserve the identity of a company secretary or share-holder off the public record.

The role of a nominee director

The director that is nominated would not be in control of the company, they would simply be appointed as a director so that your name is not shown on public records.

What duties does a nominee director undertake?

A nominee is subject to the same duties and responsibilities as any other director under the Companies Act 2006. However, a nominee director’s primary responsibility and duty is to fulfil the wishes of the nominator (usually the company owners or shareholders) and operate in the best interests of the company.

They are required to act on the business owner’s behalf and cannot take any independent decisions. If they do take independent decisions this would be a breach of contract agreement and the nominee director may face legal action.

It is up to you how many duties or responsibilities your nominee has; you may wish them to merely act on your behalf and apprea on public record or you may assign them other duties such as:

• Attend board meetings
• Fulfil your wishes as nominator
• Help the company to make business decisions
• Advise using their experience and knowledge
• Protect the nominator’s interests

Do nominee directors have legal responsibilities or duties for the company?

Yes, a nominee has the same duties as any other director. Nominee directors are persons who are selected as director in name alone and who either offer full power of attorney to the user to control the company or who embark on the directives of beneficial owners.

The nominee director will also have the same legal responsibilities as any other director. However, they will be acting in the interests of the person or entity who appointed them.

UK law is clear that there is no such thing as a nominee director and the UK law does not recognise nominee directors as any different from other directors. Therefore, all directors (including nominee directors) have the same duties as directors as any other director and these cannot be abdicated by the individual.

Who can be a nominee shareholder?

Nominee shareholders are appointed by beneficiaries and are entered into the company’s register of names. A nominee shareholder can be:

• An individual or
• An incorporated body

A nominee director should be:

• a natural person
• over 16 years of age at least

A nominee director should not be:

• bankrupt
• disqualified for the role of a director in the past
• the company’s auditor

Requirement of having nominee directors

All registered companies in the UK require at least one director. A nominee director is hired by a business owner to play a role on their behalf in business, taking the company director role and managing their responsibilities at board level on behalf of the nominator. However, you don’t have to have a nominee for your company. Whether you choose to have one or more nominees for your company is entirely up to you.

Why use a nominee director to form a UK company?

All companies in the UK must appoint at least one individual as a company director, the person must be at least 16 years of age and they can reside anywhere in the world. The details of the director(s) are shown on public record in the UK.

Nominee director for UK company

When you form a company in the UK, privacy may be a key factor for you and your business. Appointing a nominee can help you achieve a certain level of privacy within your company as your name will be kept confidential and away from public record at Companies House.

Reasons to have a nominee director

Before deciding whether to use a nominee as a director in your company, it is important to fully understand what a nominee director is and how it could benefit your company.

It is a requirement of the Companies Act that all companies registered in the UK make an annual return giving details of the names and addresses of its directors, the name and address of the company secretary and the names and addresses of its shareholders. This information is held on file at Companies House and can be viewed by anybody on payment of a search fee.

There can be a variety of reasons why a company may choose to use nominee directors these include:

Protect your privacy

When you appoint a nominee, your name will not be publicly listed as a director of the company, instead the nominee directors name will be listed on the official register. This therefore enables individuals to keep their business dealings confidential. If you are a UK non-resident and do not want your name to be publicly listed as a director of the company at Companies House in the UK, then a nominee director would serve this purpose.

Help you to comply with UK legislation

If you are inexperienced in running a UK business or at being a company director or unfamiliar with limited companies’ legislation in the UK because you are an overseas business owner, then appointing an experienced UK nominee director could give you access to experience and knowledge of local law, financial regulation, UK regulations and the UK local market and sector experience. This experience can prove invaluable insights to help your company succeed and make better decisions.

Save time

Having a nominee as a director could save you time if you don’t have time for some of your director duties yourself.

How can I find a nominee?

Find a nominee director yourself

You could find a nominee director yourself if you know a suitable person, but you will require some legal knowledge before you appoint nominee directors to ensure you have the necessary legal agreement and contracts in place.

Utilise the services of Corporate Service Providers (CSP)

Third parties will provide nominee director services or find a suitable nominee for your business. You can engage the services of a Corporate Service Provider (CSP).

A CSP that provides exclusive nominee director services can make the entire appointing process easier and convenient.

Documents you require to appoint a nominee director

There are several legal documents you should put in place when appointing a nominee director for your business.

An agreement containing full details about both parties and appointment letter

This agreement should include names, addresses, identification numbers.

Nominee’s agreement

This agreement will clearly lay out the services the nominee will provide to the company. This agreement will be signed by both parties.

Beneficiary owner’s agreement/ declaration of trust

This is a simple form of declaration of trust which only covers shares in a company and the basic declaration of trust provisions.

Letter of resignation signed by the nominee director but without a date

The nominee director can provide a signed and undated resignation letter. This letter will be used if the nominee or the nominator resigns from the company.

Power of attorney

The power of attorney is a document that states that the beneficial owner has full control over the company and that the nominee is appointed in name only. This ensures that the nominee does not have any control over the company.

Alternatives to nominee directors for maintaining privacy

For those seeking to maintain privacy without the risks associated with nominee directors, some alternatives exist:

• 1. Using Trusts
• 2. Family Members as Directors
• 3. Professional Advisors
• 4. Virtual Offices

Nominee director service partner

Here at dns accountants we do not provide nominee directors directly. We use a third party service provider to provide nominee directors to clients. Appointing a nominee director through our service providers helps businesses meet their legal obligations while maintaining the confidentiality of the actual owner’s identity.

Summary

A nominee director UK is appointed by the board of an organisation to embody the interests of his/her nominator. Using a nominee as a director of your company can help you to retain privacy and anonimity as a business owner. Appointing a nominee to act on your behalf can be done yourself or by a third party.

Whilst there are benefits to using a nominee as a director, there are also risks and other things to consider.

Nominee director frequently asked questions (FAQs)

What is a Nominee Director?

A nominee director is an individual or company whose responsibilities are to act as a director on behalf of the nominator. The nominee is listed as the principal officer at Companies House without any involvement in running the business. A nominee director is hired by a business owner to play a role on their behalf in business, taking the director role and managing its legal responsibilities.

Are Nominee Directors legal?

Yes, nominee directors are legal in the UK. They can act as a director appointed by the beneficiary owner or shareholder, provided they comply with the duty. They are hired because of several legal solutions in the company.

Do Nominees have access to our bank accounts?

No, your bank details will only be available to the beneficial owner of the business and will not be shared with anyone without your approval. The bank account details are fully secure and protected with us. There will be a separate nominee director bank account for personal financial transactions.

Do Nominees have control of our company?

No, they don’t have any control over your company. The Nominee director for the company only acts as a director but without getting involved in the management of the business.

As the client, what documents do I receive?

When you use nominee director services, there are few documents you should expect to receive.

• a. For nominee director services: You will get a Director Appointment and Indemnification Agreement that defines the role of the nominee and power of attorney for the ownership to manage the company.
• b. For shareholder services: You will get a declaration of trust to the client.

What documents do I need to provide for Nominee services for UK companies?

There are two documents are mandatory to provide for UK nominee director services:

• a. Proof of address: It could be a utility bill or bank statement not older than three months.
• b. Proof of identity

What is a PSC (Person of Significant Control)?

A Person of Significant Control (PSC) means an individual who holds partial or limited control over a company either directly or indirectly. It is essential to take records of PSCs by UK limited companies and LLPs. The eligibility criteria of PSC are if a person owns more than 25% of the company share and has more than 25% voting rights will be considered a PSC.

What does the term Nominee Director mean?

A nominee director is an individual or company appointed by a business to act as a director but with no authority over work. Their only task is to follow the instructions given by the beneficial owner.

When should I use a Nominee Director?

When you want to hide your name in the public register: The UK register companies are listed on the Companies House official register, including all the details of directors. It is easy to access the information online. By hiring a nominee director, you can hide your details, and you will be the sole beneficial owner of the company with full control. Nominee director can be used in two situations:

You are a non-UK resident and want to minimise your tax liability. As a non-UK resident, if you want to start a company in the UK, you may face tax implications. You may face a double taxation issue that depends on your country of residence. By appointing a UK residence nominee director, you can easily minimise tax liabilities.

What is the difference between nominee director and shareholder director?

Nominee director:

The nominee director acts as a company director on behalf of the other person or entity. The nominee-director agreement is usually made contractually or based on resolutions made during a company conference.

There are a few roles and responsibilities of the Nominee director:

• a. Nominee directors are given more power and responsibility in the company than nominee shareholders.
• b. UK Nominee director services are involved in decision-making and management activities.
• c. They can make invoices, perform other functions and sign contracts as company owners.
• d. They follow the appointer’s instructions and directions.

Nominee shareholders:

The nominee shareholder acts as the apparent shareholder holding company share on behalf of the beneficial owner. They are appointed by those company shareholders who want to remain anonymous and want their names hidden for their shares registered under their name.

There are a few roles and responsibilities of Nominee shareholders:

• 1. Nominee shareholders have fewer responsibilities and power in the company
• 2. Nominee shareholder services are not involved in the decision-making and management of the company.
• 3. They only hold the share for the beneficial owner but don’t have any rights as shareholders.
• 4. No dividend offers to them. Also, they don’t vote on resolutions and meetings.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.