When a business owner decides to branch out to offshore formation, they may wish to keep their personal information private. Appointing a nominee director allows them to maintain their privacy while still keeping control of the company. This means you are still responsible for the day to day business practices, as well as all the bank accounts associated with your business. This is accomplished through power of attorney, which you have, but the nominee director does not. They are also required to sign an undated resignation letter that you can present to the board at any time if you wish for them to leave.
In offshore formation, nominee directors are simply a representative of you, but they do not wield any power within the company. Their name appears on all the business documents, but that is the extent of their association with your business. The nominee is often known by such nicknames as the straw man or the front man, the latter being a more familiar phrase. When deciding on a nominee director, you should be sure to choose someone you can trust. Their name will be associated with your company for a long time, and their reputation will also reflect back on the company.
If a business owner is well known in their own country for being associated with one industry, and they want to branch out to another industry in an offshore formation, they may wish to appoint a nominee director. This move will help prevent customers from developing preconceived notions about the new company. For example, the owner of a cosmetics company may wish to start a sporting goods company. Since these industries are so different, people may wonder what they really know about sporting goods after they have been selling makeup. A nominee director would prevent these questions from being asked and give the company a better chance of survival.
If you wish to find a nominee director who lives in the same country as your offshore formation, you can often find people in the country in question who are willing to let you use their name. This also allows you to form local ties to the country you have expanded to, and it builds trust with the local populace. The appointed nominee director will be responsible for presenting their identification in place of yours when asked to, so it is important to get to know the person as much as possible prior to their official appointment in order to build trust.
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