A nominee director is a person who is appointed by a company to act as its director and can be used to provide a layer of anonymity for company owners & to provide a local resident director.

In the context of UK corporate governance, a nominee director is an individual appointed to the board of a company to represent the interests of another person or entity, often the beneficial owner. While nominee arrangements can serve legitimate purposes—such as protecting the privacy of stakeholders or simplifying international ownership structures—they must always comply with UK laws and regulations.

Key Legal Considerations in the UK

Under the Companies Act 2006, all company directors, including nominee directors, have legal duties they must fulfill. These include:

• Acting in good faith and in the company’s best interests – Nominee directors must not blindly follow instructions from their appointer if those instructions conflict with the company’s welfare.
• Exercising independent judgment – Although appointed by a third party, nominee directors must exercise their own discretion and cannot act merely as a proxy.
• Avoiding conflicts of interest – Transparency and proper disclosure are crucial, particularly when the nominator has a vested interest.

Failure to adhere to these duties can result in civil or criminal liability.

Nominee Director and Transparency Requirements

In line with the UK’s transparency agenda, companies are required to maintain a Register of People with Significant Control (PSC). This means that appointing a nominee director does not obscure the identity of the true beneficial owner. If a nominee arrangement is used to disguise ownership or control, it may trigger scrutiny from Companies House, HMRC, or even law enforcement under anti-money laundering regulations.

When is a Nominee Director Legitimate?

Nominee directors can be lawfully used in situations such as:

• Cross-border structuring where a local director is needed for operational ease.
• Privacy protection in publicly available company filings, provided full compliance with PSC requirements.
• Corporate representation where institutional investors or parent companies want board-level oversight.

Risks of Non-Compliance

Using a nominee director to conceal true control or evade legal responsibilities can lead to:

• Penalties for breaching director duties.
• Investigations under the Proceeds of Crime Act 2002 or the Money Laundering Regulations 2017.
• Potential company dissolution or disqualification of directors.

Conclusion

Nominee directors are a legally permissible part of UK corporate structures, but their use must be fully transparent, responsibly managed, and compliant with the law. Businesses considering such appointments should seek professional advice to ensure they meet all regulatory obligations and maintain proper governance standards.