A nominee director is an individual appointed to serve on the board of directors of a company on behalf of another person or entity. The nominee director’s primary role is to represent the interests of the appointing party rather than actively participating in the management or decision-making processes of the company.
Nominee directors are commonly used in situations where:
Confidentiality: The appointing party wishes to maintain confidentiality regarding their ownership or control of the company. By appointing a nominee director, they can obscure their involvement in the company’s affairs.
Legal Compliance: Some jurisdictions require companies to have local directors or directors who are residents of the country where the company is registered. Nominee directors may be appointed to fulfil these legal requirements without requiring the appointing party to reside in or have a physical presence in the jurisdiction.
Investment Structures: In complex investment structures or holding companies, nominee directors may be appointed to represent the interests of various stakeholders, investors, or shareholders.
It’s important to note that while nominee directors may serve a legitimate purpose, they must act with their fiduciary duties and legal obligations.