A nominee director is an individual or legal entity who occupies this position only formally, but does not take a real part in the management of the offshore company. He is not the real owner of the company's shares, he only holds them in favor of their real owner.
The basis of the business relationship of the nominee shareholder - beneficiary is the usual form of Bare (Simple) Trust. The beneficiary has an absolute right to property and the right to the results of disposal of it. It is important to remember that the nominee director of an offshore company, in legal terms, does not de facto own the shares of the beneficiary's company.
His functions also include:
- filling out and signing certain forms (at the stage of company registration);
- submitting annual information about the company to the state registry;
- keeping correspondence with tax authorities.
A beneficiary, a real business owner is the specific person who requests the services of nominee shareholders, directors and secretaries. The beneficiary is the only individual who owns or controls the business, the person in whose interests the business is managed or certain operations are carried out.
An offshore business can successfully function without nominee directors, but most often, offshore companies use them. The reason is that many high-tax countries recognize a foreign company as their resident thanks to the residency of the directors of the company.
As a result of the active fight against money laundering, more and more offshore jurisdictions cease to recognize the institution of nominee directorship. In these places (like Maine, Guernsey and Jersey), the nominee director is fully responsible for the activities of the company and therefore has to intervene more and more in its management.
Relations between the nominee director and the beneficiary are regulated by the agreement on the provision of the nominee service, the director’s refusal letter or the undated resignation document.
The main function of the nominee director is to ensure confidentiality of ownership of an offshore company. When creating an offshore company, you need to convince outsiders that it is not controlled and by its actual owners.
If an offshore company is used for import, it is advisable to use nominee directors to sign contracts. In some jurisdictions, the company must have a local director. The nominee director can also help fulfill this requirement.
There are some rules that should be followed when hiring a nominee director for your offshore company:
- Make sure you provide samples of signatures of all persons managing the bank account.
- Know your directors personally.
- Never sign something that you do not fully understand.
- Insist on providing you with regular financial statements and make sure you understand them. Remember, the nominee director may conduct business transactions when the company goes bankrupt, which you may not know of without checking the bookkeeping. This is a crime, and you, along with the nominee director, will bear full responsibility for the debts of the company.
- Never provide a power of attorney without a special purpose and for a long period.
In the end, we would like to point out several advantages of employing a nominee director in your offshore business:
- confidentiality of the name of the business owner (beneficiary);
- profitability in terms of business development;
- will help satisfy the requirements of the legislation of the jurisdiction of company registration;
- will eliminate problems with tax optimization;
- is convenient for business;
- will improve the image of the company.
