On the risk of nominees

[JohnnyDoe]

I just want to present one of the many rulings that highlight the risk of using nominees in a corporate structure. This one is by the Privy Council. There are many others. The bottom line is: don’t try to be a smart a*s.

Ciban Management Corporation (Appellant) v Citco (BVI) Ltd and another (Respondents) (British Virgin Islands)​

Brief recap for those who don’t want to read the ruling: because the UBO empowered someone else to act and failed to revoke that authority, he could not later claim the decisions of the nominee were unauthorized.

Ps. For some unknown reason, I have been censored by the champion of free speech and liberalism, and I am not allowed to express my opinion in another thread about such setups:

 

[Mercury]

Ps. For some unknown reason, I have been censored by the champion of free speech and liberalism, and I am not allowed to express my opinion in another thread about such setups:

Money talks.

 

[JohnnyDoe]

I should also remind, and sorry for being pedantic but some people ignore corporate law 101, the “form governs authority” principle.

The Turquand rule, as defined in Royal British Bank v Turquand (1856), provides that formally appointed directors or agents are presumed to have authority, even if internal rules (e.g. a nominee agreement) were breached behind the scenes. Therefore, if someone holds a formal role, their actions bind the company, even if the real UBO disagrees or informal instructions said otherwise.