How to protect your assets with a nominee director?

[Hermana]

Please can you tell me all the ways you use to protect your assets from a nominee director?

 

[troubled soul]

If you do not trust your Nominee, Do not use him/her


Thanks

 

[Hermana]

There are plenty of people in this group who use the nominee serivces of a provicder I am looking for ways they use to protect themselves.

 

[Sols]

This has been discussed a few times recently, for example:

Nominee director protection

Hi everyone, My question is simple, what are the benefits to hiring a nominee director in Cyprus? More importantly, I would like to know how do you protect yourself and your interests? As far as I know (and have asked & received answers), this person can cause serious damage (for example, sell...

www.offshorecorptalk.com

How dangerous is having Nominee Director for Cypriot company?

Thinking of setting up Cypriot Ltd for developing software. It seems I'd have to use Nominee Director services to make company tax resident in Cyprus. I'm going to be a real 100% UBO and the direct owner of shares though. 1. Am I able to sign agreements on behalf of company without signature...

www.offshorecorptalk.com

 

[kkein]

Is there any risk to have a nominee if UBO is the only with access to banking?
I suppose the director could buy stuff and let the company receive the invoices, right?
What if the company is limited liability by shares then, and there are also nominee shareholders?
Would UBO risk anything in that case if he simply will not release access to the bank?

 

[Sols]

Is there any risk to have a nominee if UBO is the only with access to banking?

That kind of defeats the purpose of having a nominee. If you appoint nominees but still have access to the bank account, you then have direct control over the company, which is really blurring the lines of passive UBO/investor and directors. A tax authorities would definitely use that against you.

 

[James Turner]

Aside from @Sols reference to the way in which a Nominee is used, which is a very valid point, to answer the initial query, the use of a Nominee Director is generally very low risk, especially where the UBO does retain banking control. In essence anyone supplying a Nominee Director to you will in the vast majority of cases also supply 1. a contract dealing with the service of providing a nominee; 2. undated resignation documentation, enabling you to resign the Nominee at will without their future consent; 3. Issue a Power of Attorney in your favour; 4. Will most often not be a bank signatory. As such the impact that a Nominee can have on you from a risk point of view is very low.

 

[kkein]

That kind of defeats the purpose of having a nominee. If you appoint nominees but still have access to the bank account, you then have direct control over the company, which is really blurring the lines of passive UBO/investor and directors. A tax authorities would definitely use that against you.

Thanks for the interesting insight. Does it happen often that the tax authority digs deeper into companies with nominees to check who has access to company accounts? (because access can be shared, too, afaik)

 

[Sols]

Thanks for the interesting insight. Does it happen often that the tax authority digs deeper into companies with nominees to check who has access to company accounts? (because access can be shared, too, afaik)

Yes, it happens.

 

[kkein]

Yes, it happens.

Thanks for the feedback, and the suggestion!
I suppose it's better to add the director to the account before the tax office starts looking into the tax return
Hopefully it's ok if UBO is owner. I feel taxman can't complain too much about that?

 

[Risehigh]

Thanks for the feedback, and the suggestion!
I suppose it's better to add the director to the account before the tax office starts looking into the tax return
Hopefully it's ok if UBO is owner. I feel taxman can't complain too much about that?

Following this, would be interested to know also

 

[Sols]

I suppose it's better to add the director to the account before the tax office starts looking into the tax return
Hopefully it's ok if UBO is owner. I feel taxman can't complain too much about that?

UBO means Ultimate Beneficial Owner, so yes, that's implied.

The risk with nominee structures is if someone takes a hostile view at the setup. I see structures like this go by unquestioned and unnoticed for years. As long as you pay taxes due on the dividends you receive, the risks appear low that the company itself is put into question. But if someone were to start poking around, an argument could be made that the nominee directors are just acting on your instructions and you have effective control over the company. At that point, you either accept their ruling and take them to court (and maybe win?).