Are you doing business in the UK through a UK company but resident overseas?
Could a Legally-Qualified, UK-Resident Nominee Director smooth your path to earning £pounds? you?
If you live outside the UK, but do business here (e.g. export/ import, cross-border services), you may be thinking of forming, or already have, a UK-registered company, to make transactions and regulation simpler following Brexit. At all times from its formation, a UK-registered private limited company must have (at least) one director (a public limited company must have at least two directors). The director’s details will appear on the public register, and he or she will be responsible for carrying out all the legal duties to the company and complying with legislation including regular reporting requirements. Shareholders appoint and can remove directors.
As the business owner, if you are not UK resident, you may not yourself wish to be an appointed director. You may not want your details to be publicly available. You may not wish to be subject to legal responsibilities of directorship. You may simply be aiming to keep control of day-to-day business, while UK legal compliance is taken care of. If that sounds like your situation, when properly selected and used, what is often called a ‘nominee director’ can help. A ‘nominee director’ is a person who agrees to be named as the – or a – director and accept that legal role, while the owners make management decisions and instruct the director accordingly.
There is no residence requirement for directors of UK companies. There are, however, practical and business advantages to having a UK-resident director if you the owner are overseas. Dealing with practical issues around contracts, premises, banking etc can be much more straightforward if the publicly-named director, authorised to act on behalf of the company, is British and when necessary can attend personally. A British director of good standing can also aid credibility for the UK business.
The exact role of the nominee director needs to be carefully agreed by contract between the shareholders and the director, but may include dealing with UK regulatory requirements (with advisors, e.g. UK accountants, as appropriate). The nominee does not take an active role in the business decision-making, but on instruction from the shareholders may enter into agreements on the company’s behalf.
So you may prefer not to be yourself a legally-appointed director of your UK company, and/or you may want to have a UK-resident director to represent your business in the UK system. How do you find someone you trust with the role?
In general, no specific qualifications are needed to be a UK company director. Many people (even business people) misunderstand the director role in law. If the legally-appointed ‘nominee’ does not have sufficient experience or understanding of their obligations, there can ultimately be risks for the shareholders who appointed them and instructed them. This was shown in the case of Central Bank of Ecuador v Conticorp SA, where a nominee director breached his duty in agreeing to improper transactions and the parent company that had appointed and instructed him was also held liable for ‘dishonestly procuring and assisting’ the breach. Confidence that the nominee director will be loyal, act with due skill and care, and properly manage compliance and conflicts of interest, is vital. The nominee if so agreed may also be representing the company as its public ‘face’ in the UK, for which he or she must be trustworthy and have professional status.
Could a nominee director help you?
Contact us to find the right solution, and perhaps the right person, for your UK directorship.
The contents of this article do not constitute legal advice and are provided for general information purposes only.
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Expertise: Corporate & Commercial Law
Janice is a Solicitor and a recognised expert in company law and corporate governance with over 25 years of experience. She was previously an Associate Professor at the University of Warwick, specialising in company law and corporate governance, also serving as an elected member of a local authority and a charity Trustee. Particular areas of specialism have included developing companies seeking to commercialise innovative science and technology and new corporate structures to deliver public services. Janice is passionate about using good governance and corporate compliance to drive improved performance for clients.