Nominee Director and Shareholder Service

Nominee director and shareholder service

• Tetra Consultants offers nominee director and shareholder services in all jurisdictions. Our team ensures that your business is protected by providing “fit and proper” personnel with proven track records. Our nominee services are passive and will not be involved in your everyday business.
• Regardless of whether you are using nominee services to fulfil local mandatory requirements or anonymity in corporate structure, Tetra Consultants is ready to assist.
• Contact us to find out more about nominee director and shareholder services. Our team of experts will revert within the next 24 hours.

What is a nominee director?

• A nominee director is a third party that is appointed as the company’s director in the Company Register via a nominee director agreement. Unless requested specifically, most nominee director services are passive in nature. This means that despite being appointed as an office member of the company, a nominee director is prohibited from making decisions or performing duties at his sole discretion. He is only allowed to act based on instructions given by the Ultimate Beneficial Owner (UBO) of the company.
• In the event you require the nominee director to assist with your company operations such as corporate bank account openings or signing of documents, Tetra Consultants will recommend you to do so via a Power of Attorney. This is to ensure that the nominee director is legally bound and only able to carry out actions stipulated within the Power of Attorney.
• A nominee director does not hold any shares in the company and will not be involved in your everyday operations. Despite the above, it is always recommended to choose a trustworthy, qualified and proven individual to take up the role.

What is a nominee shareholder?

• A nominee shareholder is a third party that is appointed as the company’s shareholder in the Company Register via a trust agreement. You can either be a minority nominee shareholder or a majority nominee shareholder. Even though a nominee shareholder holds the company shares, he does not have any power nor voting rights within the company.
• Nominee shareholders are less common than nominee directors is most jurisdictions and companies. Most businesses only choose to appoint a nominee shareholder to remain anonymous as it provides complete confidentiality on who the Ultimate Beneficial Owner (UBO) is.
• By appointing a nominee shareholder, you are still legally required to declare the identity of UBO to government authorities and international banks.
• In some countries, you are required to appoint local shareholders for certain business activities. In these cases, business owners choose to appoint nominee shareholders in order to meet these mandatory requirements.
• For example in Indonesia, you are required to check whether your business activity falls under the Negative Investment List. Based on your intended business activity, the Negative Investment List will depict the percentage of local shareholding.
• In addition to choosing a qualified individual with proven track records for this role, Tetra Consultants also recommends you to ensure that the trust agreements are comprehensive and protective of your company’s interest.

Are nominee directors legal?

• This is one of the most sought after question whenever the term “nominee director” is mentioned. Nominee director service is generally legal in most jurisdictions as long as it is engaged for a legitimate reason such as meeting local requirements or anonymity.
• The regulations for nominee directors are constantly being updated. An increasing number of jurisdictions are requiring the nominee directors to be accountable for the actions of the registered company. For example, if a UK limited company is being investigated for wrongdoings such as tax evasion or money laundering, the nominee director will be legally liable. This increases the litigation and reputational risk of nominee directors.
• In order to mitigate risks for any parties, both the company and nominee director must act in the best interests of each other. To better serve our international clients, Tetra Consultants ensures that the company is working with fit and proper individuals with proven track records.

Benefits of using nominee director service

• There are two main benefits of using nominee director service. The first and most popular reason is anonymity. By having a nominee director, the UBO will not be registered in the Register of Directors and this allows him to be hidden from competitors.
• The second benefit is to meet the Companies Act of some governments. It is compulsory to have a local resident director when you are registering in jurisdictions such as Singapore, Australia and New Zealand. This is for the government to ensure that there is a local point of contact when the company faces deadlines such as annual tax or accounting filing.
• For example if you are planning to register a company in Australia and have no local candidates to act as your director, it may be wise for you to engage a qualified professional nominee director in Australia. Tetra Consultants’ nominee service package includes drafting nominee director agreements, trust agreements, and appointment of director with Companies Registry.
• Lastly, a local nominee director will increase your probability of opening corporate bank account with a reputable local bank. The local nominee director will attend the face-to-face interview with the bank and go through the full identification procedure on your behalf.

Who can be a nominee?

• In most jurisdictions, a nominee director or shareholder is required to be at least 18 years of age and deemed as “fit and proper”. In countries such as Singapore or Australia, the nominee director has to be resident in the country for at least 183 calendar days per year.

Risks of using nominee structures

• There are definitely risks involved when you are dealing with nominee structure.
• The first risk is the potential breach of confidentiality. For example if the director is required to sign corporate documents such as annual financial statements, he will have access to your company’s financial health.
• A nominee may also falsely claim entitlement to the shares in the company or make false claims to be the beneficial owner. In addition, there is a possibility of the individual interfering with business decisions and acting without the UBO’s consent.
• To mitigate these risks completely, Tetra Consultants’ nominees are qualified individuals with proven track records such as accountants or lawyers. We ensure that all parties adhere to the signed agreements and put each other in the best interest.

Process of appointing a nominee

• Tetra Consultants is happy to provide our international clients nominee director and shareholder service.
• The first step will be to fully understand the reason behind you requiring this service. Tetra Consultants may require more information such as:
  • Prior working experience of UBO
  • Company’s intended corporate structure
  • Business activity
  • Expected annual turnover
• Once the initial KYC due diligence checks are completed, Tetra Consultants legal team will start drafting the trust agreements as per the terms and conditions discussed. Thereafter, all parties are required to sign the legal document before we can proceed.
• Simultaneously, Tetra Consultants will provide basic KYC information of our nominee to you. This includes his passport, proof of address, CV and other documents. This is to ensure that all parties are transparent and do not pose any risks to one another.
• Once the trust agreement is signed, Tetra Consultants will proceed to appoint the nominee director or shareholder with the Companies Register. Depending on the jurisdiction, this process may take between 1 business day to 2 weeks.
• Once the local Companies Register approves the appointment, Tetra Consultants will send you the updated Register of Directors and Register of Members as evidence that the appointment has been successful.
• Throughout the course of the engagement, you can expect the nominee director to fulfil the duties stated in the agreement, ranging from signing corporate documents, assisting with corporate bank account opening or overseeing the filing of annual returns.

Contact us to find out more about nominee director and shareholder services. Our team of experts will revert within the next 24 hours.