Offshore Company with Nominee Director

Offshore Company with Nominee Director

Privacy has become a very real concern in 2022 as a myriad of data leaks continue. Subsequently, there are significantly more reasons now to form an Offshore Company with Nominee Director in place.
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Privacy has become a very real concern in 2022 as a myriad of data leaks continue to compromise the offshore company sector. Additionally, there is now a very real risk of full disclosure in some jurisdictions as the OECD continues to keep the pressure on the tax havens to start publicly searchable registries. Subsequently, there are significantly more reasons now to form an Offshore Company with Nominee Director in place.

Offshore Company with Nominee Director

What is a Nominee Director

Nominee directors have lots of names including professional directors, resident directors, and others. However, distinct from professional directors, nominee directors typically only provide services in name only. What this means is they will not advise you or guide the business and are really only in place to satisfy the legal requirements of having a director. In short, they are effectively a rubber stamp, or signature, for your offshore company.

However, just because they are effectively rubber stamps, don’t expect them to sign everything that you put in front of them. They must consider the risk profile of the business you are in as well their personal tolerances. Their ongoing livelihood is connected to your tax and AML compliance so they will often only sign contracts and documents that they understand and are happy with.

Regardless, Nominee Directors can be very useful indeed especially if you need to shield the company’s operations from outside visibility. In fact, many superyachts and private jets are owned through offshore companies with nominee directors in place. The wealthy are particularly privacy-conscious, and nominees provide some excellent coverage so that it is often difficult to work out who actually owns the yacht or jet plane.

Nominee Directors have become an essential component of offshore companies

Offshore Company with Nominee Director How Does it Work

Typically, when you form your offshore company, your agent will offer you the option of including a nominee director as part of the package. If your agent is based in that country or offshore jurisdiction it will often be them providing the service. Otherwise, you will find they will normally use the services of a professional nominee in that country.

Subsequently, the nominee director acts, in all cases, as the legal company director and officer on your behalf. In practice, they will normally provide you with a signed power of attorney which allows you to personally go out and open bank accounts on behalf of the company and transact any other business under their name.

In some cases, you may require contracts and documents to be signed and you can expect a fee to be charged for each signature/stamp. Additionally, it is likely that they will closely review anything that isn’t a standard corporate document. Be aware that their agreement is not always automatic.

However, in most cases, I have found nominee directors to be exceedingly pliable in what they are prepared to undertake on your behalf. As long as their fee schedules are agreed upon in advance, you can often have them do more than just simply act as a rubber stamp for an offshore company.

Offshore Companies can now provide privacy protections through nominees

Can They Rip Me Off

This is an important question and one that I often receive from new perspective offshore clients. The answer is a definitive no…..but yes. In short, they have legal control over that company but, as part of the process, I normally have them sign an undated letter of resignation. In the event, that they attempted to do something against your will, you would be able to remove them from office immediately.

Additionally, given that the bank accounts are normally set up by the founder, the nominee is often not even aware of what assets are kept or where the bank accounts even are. This is another reason why it is important to bank in a different jurisdiction to your company.

Ultimately, stories of nominee directors stealing assets and ripping off unsuspecting company owners are incredibly rare within the offshore industry. I have never come across a single instance of that happening and, if it was common, stories would be rife. I have no doubts that there are occasionally difficult directors to deal with…but that does not rise to the level of a scam. As long as you separate control of the company assets, and the nominee, then you will likely be fine.

Fraud is rare in the offshore finance sector

What Does it Cost and Where to Get One

Getting an Offshore Company with Nominee Director Doesn’t Have to Be Expensive!

The cost really depends upon which jurisdiction or country you have decided to establish your offshore company in. Normally, the cost of a nominee director is included within the first year’s establishment fees. In subsequent years you would normally pay an annual amount between US$500 and $1,000 to maintain that relationship. This would be the case for most of the Caribbean countries and, at the other end of the scale, New Zealand could cost you as much as NZD$5,000 a year to obtain a resident director.

In most cases, your corporate service provider will offer you the nominee but, if they do not provide that service, simply contact local lawyers as they commonly act for clients in this way. However, be aware that they may prefer to establish the company for you, rather than have you use an agent, and this may increase the overall costs you can expect to pay.

Offshore Nominee Directors are Not As Costly as You Might Think

Should You Use an Offshore Company with Nominee Director

In short, the answer is a resounding YES as it largely removes your name from most documents that your new offshore company may require. Without a nominee director in place, your name is likely to appear as a signatory every time you need to execute a contract or business agreement. This largely defeats the privacy purposes of having an offshore corporate structure.

Subsequently, I would generally recommend having a nominee director, and potentially a nominee shareholder, in place for your corporation. Otherwise, you are simply giving up some of the major benefits that this sort of entity can provide. Sure, it does complicate the bank account opening processes slightly, but this is easily overcome with some planning and asking the director for notarized copies of their identity documents.

Ultimately, going offshore should be all about retaining privacy rather than solely seeking tax minimization. So, take the time to set up your offshore companies properly, with nominees, and you will reap the benefits of the additional privacy in the long run.

For help in setting up an offshore structure, please talk to our consulting arm at:

https://ocbfconsulting.com

More Articles That May Interest You

Where is the Best Place to Set Up an Offshore Company

Which Offshore Bank is the Best for Beginners?

Do Offshore Companies Pay Taxes

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