What Is a Nominee Director? And How I Can Appoint One to My UK Limited Company?

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When a foreign entrepreneur wants to venture into the UK market and establish a business, they may appoint a UK nominee director to help in navigating legal regulations and governance.

Choosing a UK nominee director for overseas entrepreneurs is a good decision for seamless operations and compliance with legal requirements.

Apart from expanding to a new market, a board director can also appoint a nominee director to step in and serve on their behalf if it is going through a transition period such as acquisition or legal disputes.

In this article, we will explore how you can appoint a nominee director, their responsibilities, and the legal considerations before appointing one.

Who is a nominee director?

A UK nominee director is an individual who is appointed to a company’s board of directors by another person or entity to act on their behalf.

A nominee director has the same legal responsibilities as those of the board directors. The board of directors has to choose a trustworthy nominee director, who understands corporate governance, and someone who can provide an extra layer of confidentiality.

What is the purpose of a nominee director?

A nominee director represents the interests of the appointing party without requiring direct participation as shareholders or directors themselves.

They may bring specialised knowledge to the company’s affairs, providing valuable insights and counsel to the board.

Nominee directors have the same legal responsibilities as other directors but advocate for the views of their nominators.

What are the roles and responsibilities of a nominee director?

Attending board meetings: Nominee directors attend board meetings and provide input on company matters on behalf of their nominators. Especially, if the nominator or shareholders are based in another country and won’t be able to attend a board meeting in the UK. They also serve as company representatives and sign documents on behalf of the business.

Maintain communication: A nominee should establish and maintain open communication between the nominator, board of directors, and shareholders within the organisation.

Protect the nominator’s interests: A UK nominee director is responsible for acting in the best interests of the board of directors or the entity that appointed them. They should carry out their wishes such as financial matters, assessing risks associated with business operations, and monitoring corporate governance practices. If the board makes a decision that isn’t in the best interests of the nominator, the nominee director can vote against it.

Promote transparency: A nominee director can promote transparency by facilitating the exchange of information, updates, and feedback. This will ensure the board of directors and shareholders' interests are communicated clearly.

Influence the company’s decisions: A nominee director is responsible for making informed decisions on behalf of the company. They should also record crucial decisions during the board meeting for accountability and transparency. The records can be used in the future for legal purposes.

Foster business collaboration: A UK nominee director fosters business collaboration by partnering with investors to contribute to the company’s success. Since an overseas business is unfamiliar with the UK market, a nominee director can help the business acquire credible partners who align with the company’s goals and objectives. Through this role, they contribute to a harmonious and well-informed corporate environment.

Oversee financial matters: A nominee director oversees financial matters that help in the business operations. They evaluate the risks associated with business operations and find ways the company can acquire funds in case of expansion or the business is facing financial difficulties.

What are the benefits of appointing a nominee director?

Offer privacy: A nominee director safeguards investors or directors who wish to remain anonymous. When incorporating a UK limited company, the director’s information is always publicly recorded on Companies House. If a director does not want their information out to the public, they can appoint a nominee director whose information will appear on the public records.

Some investors wish to remain anonymous, so appointing a nominee director to protect sensitive information can be beneficial.

Flexibility: Nominee directors allow flexibility in board composition. The board can decide to change the nominee director without operations being disrupted.

Represent shareholder’s interests: A nominee director ensures the shareholder’s interests are catered for by providing the company’s operations aligned with their benefits.

Serves as a communication bridge: A nominee director communicates decisions made within the company by the board of directors to shareholders and the nominator.

Compliance with legal requirements: UK nominee director can help an international company comply with legal requirements.

Contribute to the development of the company: A nominee director makes decisions that align with the company and contribute to the development of the business. They operate the business according to the wishes and expectations of the shareholders and the company’s management.

Establish a local presence: A UK nominee director can ensure your business adapts to the local market and operates smoothly.

Ensures the company's statutory books are up to date: They are responsible for ensuring the company’s statutory books are up to date.

Prepares business plans, budgets, and schedules: A UK nominee comes up with schedules on how to operate the business on behalf of the nominator.

Prepares and files annual financial statements and tax reports: They are responsible for ensuring annual statements and confirmation statements are filed annually and tax reports are accurate.

How to appoint a nominee director for your UK company?

To appoint a nominee director for your UK limited company, you must understand the legal requirements. Every company based in the UK must at least have one director according to the Companies Act 2006. A private limited company must have one director whereas a public limited company must have at least two.

To appoint a new director, a company must comply with the company’s articles of association and notify Companies House within 14 days of the appointment.  

Here are steps to consider when appointing a nominee director:

1. Check your company’s Articles of Association: They state company rules for management and administration including removal and appointment of directors.
2. Hold a board meeting: The board of directors must agree to the appointment of a new director and pass a resolution which should be recorded in the minutes.
3. Hold a company general meeting: A company should hold a general meeting if they want to appoint a new director outside the board. Shareholders must be given 14 days’ notice of the meeting and must agree to the appointment.
4. Complete the AP01 Form: The company must complete the AP01 form that requires details of the new director such as their name, address, occupation, and date of birth.
5. Notify Companies House: The company must notify the Companies House 14 days before appointing the new director. The company must also update the statutory register of directors and notify relevant parties.
6. Update the company’s register of directors: The company should update its statutory register of directors and include all information about the new director.
7. Remove the previous director if necessary: If the previous director needs to be removed, the company must follow the correct legal procedures.

A company does not need to appoint a nominee director but for a seamless operation when expanding your business in the UK, you may need to appoint one. A UK nominee director must have the necessary skills and knowledge to fulfill their duties.

You can specify the powers of the nominee director in your company’s articles of association. To ensure compliance with the Companies Act 2006, ensure you follow the process of appointing a new director which is checking the articles of association, holding a board meeting, holding a company general meeting, completing the AP01 form, notifying Companies House, and updating the company’s register of directors.

Icon Offices can assist you with your director appointments without any hassle and at an affordable rate. For more information contact us at [email protected].