What is Nominee director and shareholder?

[orangeye]

How does a nominee director and shareholder works is it the same as professional director & shareholder?

 

[JohnLocke]

Well, basically it is exact the same thing! You will need to know the difference from Natural and corporate nominee, the first a person that actually can sign for the company the latter is a company taking the role of a nominee which is allowed in Cyprus and most Offshore jurisdictions.

 

[abu]

Can you tell me is the nominee director / shareholder a natural person or a corporation?

 

[wonderwilly]

I've been following some threads on this forum for a long time, I try to understand what it is all about and from your explanation I have difficulties to understand the point of nominees too, can you please elaborate?

 

[JohnLocke]

Can you tell me is the nominee director / shareholder a natural person or a corporation?

We can offer you both! It depends on your needs.

 

[JohnLocke]

I've been following some threads on this forum for a long time, I try to understand what it is all about and from your explanation I have difficulties to understand the point of nominees too, can you please elaborate?

Most often nominees are used to anonymise the company owner (beneficial owner) if signing contracts, or if the jurisdiction lists the ownership of a company on any public register.

 

[wonderwilly]

Now it makes sense, and this is the only purpose of the nominees?

 

[OAEC]

Hi. The purpose of using Nominees can be different, as mentioned above 1 reason can be to keep the real owners hidden from the public. Another reason (and often the most important in Cyprus) is that to be able to benefit from the low corporation tax you have to have a resident director and secretary in Cyprus. This means that if you open a Cyprus company for the reason of tax benefits (10% corporation tax on Profits) you have to have a resident (Cypriot) director and sectretary to be able to qualify according to Cypriot law.


So, many companies offer this service. Without the resident direcotr and secretary the company is considered as an offshore incorporation or IBC and is generlaly not taxed at all (tax advice will need to be taken on a specific level).


Nominees are generally 'in name only' and do not have any authority or powers in the company. They are apoointed as nominees purely to achieve the requirements in place by the Cypriot authorities. When you decide to incorporate you should make sure the provider gives 'deeds of trust', 'Power of Attorney (POA)' or 'nominee agreements'. These documents will detail the power the nominee has and who is actually the owner of the company (Ultimate beneficial owner) and who has the legal liability.


Nominees are generally people or companies (you can appoint a company and a person in Cyprus to be the Director). In both cases they are there for only 1 reason and that is to provide this service, they are not interested in running the company or having any control. They are paid for their service and are happy with this arrangement. It is vital that there are documents that cover the nominee from any legal issues and also cover the client.


I hope this gives some clarification! Please do let me know if any thing is not clear....

 

[suzy]

Now that make sense... thank you.

 

[OAEC]

No worries, glad to be of assistance!

 

[eddison]

Ok, So say I am director of company, which is a Cyprus company. Then this company becomes a nominee director (corporate company) of another company to take advantage of low tax, right?


Now if I live in say U.K. for instance, I am not liable for any tax, unless I am paid dividends by the corporate nominee company, and this is perfectly legal. In order to do this, funds must be transferred to corporate nominee company is all this correct?

 

[JohnLocke]

This is almost correct, you will need a non EU entity to be shareholder and/or director for the company in order to avoid any problems with the tax authorities and the company need to be registered as non resident in Cyprus (if it is a Cyprus company we speak).


In regards to the liability to pay tax in the UK then it is pretty clear that regardless how you structure the offshore company then you will have to pay tax in the UK, that said, only if you can prove that your company is operated and managed abroad and not is owned by you there won't be any tax complications, the latter is most often accomplished by using a natural nominee director and in certain cases also shareholder, the shareholder, can also be a corporation.

 

[orangeye]

The replies were not what I expected such a wealth of great information in this thread a big thanks goes to OAEC and Admin :thumbsUp:

 

[JohnLocke]

I'm glad that all of us were able to help, just shoot if you have additional questions.

 

[wonderwilly]

How can I secure that the nominee director won't run with the company's money?

 

[JohnLocke]

How can I secure that the nominee director won't run with the company's money?

Actually, this is one of the most asked questions around.You will be the only one who has access to the bank account! The bank will send codes and welcome letter etc. directly to you.

 

[orangeye]

Aha, but if you are a director of the company then you can at any time ask the bank to change the codes for accessing the account or not?

 

[eddison]

This is almost correct, you will need a non EU entity to be shareholder and/or director for the company in order to avoid any problems with the tax authorities and the company need to be registered as non resident in Cyprus (if it is a Cyprus company we speak).
In regards to the liability to pay tax in the UK then it is pretty clear that regardless how you structure the offshore company then you will have to pay tax in the UK, that said, only if you can prove that your company is operated and managed abroad and not is owned by you there won't be any tax complications, the latter is most often accomplished by using a natural nominee director and in certain cases also shareholder, the shareholder, can also be a corporation.

Right, Say I wish to pay tax of 10% to Cyprus. and set up a legal company, but I reside in the U.K. You're saying that I would need a non E.U. entity like a Seychelles company to be the nominee director, of a Cyprus company. Then I would be a shareholder? But would I not need a natural director to be nominee? Having a natural director, and shareholder is considered that the cyprus company is operated and owned abroad? Sorry I am just really confused now, I though I had it!! I would be grateful if you could explain this for the complete idiot!


many thanks,


Ed.

 

[torkidarn]

Is it a MUST to have Seychelles company to be nominee in Cyprus company?

 

[JohnLocke]

How can I secure that the nominee director won't run with the company's money?

Please see some of the replies in this thread.. also while you have nominees then you will still have control of the company and the nominees will not perform any task without your written permission!