To Nominee or NOT to Nominee

[Dave]

Hello!

I plan to open a St Vincent/Marshal Islands company to sell online research platform (membership access). The incorporator is offering to add the nominee director from South Africa (not sure why a lot of the incorporators are using people from there).

The only way I can use nominee director is to sign physical contracts (they do not charge anything for signature but the DHL costs would amount to 180 USD per contract). He might also shield me from liability when someone thinks we have infringed on their copyright (we never did).

Do you think if we just use online terms and conditions and ask the clients to agree them upfront – I can avoid hiring this nominee? I could just sign up with all the banks and payment processors using my own docs as the director (which would still be shown at registration as I am the UBO)? I see that all firms need full sets of the documents on the director and UBO (each set costs like 180 Certification+60 DHL shipping from South Africa).

Or is having a separate director makes the firm look less closely managed (less like a one man shop – I will still have employees)?

Apart from that the bank/Bitcoin exchange I already agreed with can take me on – but with a nominee they will also ask him to provide all the docs (can nominee director have a say or potentially block bank operations?)

So to Nominee or NOT to Nominee? Which is easier and secure?

Dave

 

[mnschwarz]

Don't rely on nominees to shield you from liability. There is no way a nominee is going to take the wrap for something you've done. They will hand you over along with evidence of the nominee relationship in a heartbeat to protect themselves and their business. A nominee is generally used for privacy. Yes there are additional costs as you cannot bind the company. You need to request your nominees to do all of this for you. Them signing for free is a nice bonus - don't get that too often. You may also need to pay them extra to open the bank account, or be a signatory on an account or perform some tasks depending on the setup. Get the full list of fees before deciding.

As for banks with nominees, you can decide how to do that also. If you are the only account holder, you may be listed as the UBO, reported to your home country & thus lose some of that privacy etc. It depends on your structure and the bank you're dealing with though. I would certainly not put only the nominee down no matter how much you trust them. You could however make it joint requiring both your and the nominees signatures. This may prevent you being seen as the UBO (assuming you didn't hold the company shares).

The real question is, how important is privacy to you?

 

[Dave]

The things is this incorporation does not provide email and phone number of the director - BUT THEIR OWN NUMBER/EMAIL.....They also say they do not provide RESIGNATION LETTERS - they tell me just call us and we will fire the director - that sounds a little bit shady - what do you think? Or is it a standard practice with the nominees - they also do not provide general power of attorney - only limited to specific bank opening.,...

 

[mnschwarz]

I always got undated/signed resignation letters from my nominees. In all honesty, I think the real power is in the management services agreement which should outline that they are only to act on your instructions etc etc. The undated resignation letters are probably just to make clients feel more comfortable. But I do feel more comfortable so I want them hah.

Not issuing a POA I would question. If it is just that they recommend against it for your benefit (POA could indicate you are running the company negating some benefit of nominees), then fair enough and it is a good point. But if they outright refuse I think I'd go elsewhere. They are nominees to act on your behalf. If you insist on a POA they shouldn't refuse and if they do that already, I'd be worried about what else they refuse in future.

 

[Dave]

Thank you for you invaluable help - this document - management services agreement - is it usually offered by most agents?

 

[mnschwarz]

Thank you for you invaluable help - this document - management services agreement - is it usually offered by most agents?

It may have a different name but it should be yes. It is as much for you as it is for the nominee. It's basically the contract for their services. Outlines the annual charges, fees for tasks, waiver of liability and so forth.

 

[Dave]

Thank you for the clarification - actually they can always use this contract to prove that they were only acting on my behalf? So in hot waters this will not help?

 

[Midas Gordiusson]

@mnschwarz What's your take on nominee banking (not corporate director) services? Especially w/OCI.

 

[mnschwarz]

Thank you for the clarification - actually they can always use this contract to prove that they were only acting on my behalf? So in hot waters this will not help?

Exactly. Nominees are not to protect you from illegal activities. They are for privacy. A nominee is not going to get themselves in trouble for a few hundred bucks a year.

 

[mnschwarz]

@Midas Gordiusson I haven't moved ahead with a new bank account yet. I've been waiting for Afrasia to begin accepting new applications again but might have to try elsewhere as it's taking a while. I have accounts that were opened before using nominees in the meantime though.

Using nominees for banking have an extra additional cost. I believe it's an extra few hundred a year and then a smaller fee for each requested signature or transaction. It would depend on the bank you go with I'd say. I would list the nominee only if I could specify the bank is not to authorise anything without a second (my) signature. And if I had full online access to perform all tasks without having to contact the nominee each time. And of course if this meant I would not be see as the UBO

Due to my structure however I am not legally the UBO and haven't had to list my personal details with some other accounts so far. If I can do the same with the bank account there's no real point to using the nominee. Even if it is me that is reported under CRS, my residency makes it a non-issue so I probably won't bother.

 

[jryan54]

The things is this incorporation does not provide email and phone number of the director - BUT THEIR OWN NUMBER/EMAIL.....They also say they do not provide RESIGNATION LETTERS - they tell me just call us and we will fire the director - that sounds a little bit shady - what do you think? Or is it a standard practice with the nominees - they also do not provide general power of attorney - only limited to specific bank opening.,...

I wouldnt be touching that without at least an undated/signed letter of resignation.

 

[Dave]

Thank you

@Midas Gordiusson I haven't moved ahead with a new bank account yet. I've been waiting for Afrasia to begin accepting new applications again but might have to try elsewhere as it's taking a while. I have accounts that were opened before using nominees in the meantime though.

Using nominees for banking have an extra additional cost. I believe it's an extra few hundred a year and then a smaller fee for each requested signature or transaction. It would depend on the bank you go with I'd say. I would list the nominee only if I could specify the bank is not to authorise anything without a second (my) signature. And if I had full online access to perform all tasks without having to contact the nominee each time. And of course if this meant I would not be see as the UBO

Due to my structure however I am not legally the UBO and haven't had to list my personal details with some other accounts so far. If I can do the same with the bank account there's no real point to using the nominee. Even if it is me that is reported under CRS, my residency makes it a non-issue so I probably won't bother.

Are you using trust setup?

 

[Dave]

I wouldnt be touching that without at least an undated/signed letter of resignation.

Thank you.....do you think there might be some problems with this provider in the future?

 

[suzy]

personally I would not boguhter with nominees if not really required! I would open my Company with darks and open an EMI account simply for the fact that it is cheaper and faster to administrate!