Sometimes, for tax or other reasons a person does not wish to be seen as associated with a company, or be seen as a beneficiary of a company, Nominee Director Service is the answer.
A nominee director is someone who in fact is renting his or her name to you.
Nominee Director signs the Memorandum and Articles of Association to form your entity.
The nominee will sign a General Power of Attorney document, which gives you full power to manage your company.
The nominee will give you his signed and undated letter of resignation document, which gives you the peace of mind that he can't act against you.
The above information is general and is intended as a summary only.
Clients should seek further clarification if required before deciding if they wish to engage nominee directors.
We expressly reserve the right to provide this service to anyone for any reason.
Board of Directors - Responsibility, Role and Structure. Mention the phrase board of directors to the average investor, and they are likely to conjure up images of nicely dressed men and women standing around a mahogany table, smiling congenially. This is entirely understandable; many annual reports prominently feature glossy photographs of just such a scene. Now, ask the investor to describe the primary responsibility of the board of directors and very few will be able to give you a definitive answer.
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The board is made up of individual men and women (the directors) who are elected by the shareholders for multiple-year terms. Many companies operate on a rotating system so that only a fraction of the directors are up for election each year; this makes it much more difficult for a complete board change to take place due to a hostile takeover. In most cases, directors either, 1.) Have a vested interest in the company, 2.) Work in the upper management of the company, or 3.) Are independent from the company but are known for their business abilities.
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The number of directors can vary substantially between companies. Walt Disney, for example, has sixteen directors, each of whom are elected at the same time for one year terms. Tiffany & Company, on the other hand, has only eight directors on its board. In the United States, at least fifty percent of the directors must meet the requirements of independence, meaning they are not associated with or employed by the company. In theory, independent directors will not be subject to pressure, and therefore are more likely to act in the shareholders' interests when those interests run counter to those of entrenched management.
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The board of directors responsibilities include the establishment of the audit and compensation committees. The audit committee is responsible for ensuring that the company's financial statements and reports are accurate and use fair and reasonable estimates. The board members select, hire, and work with an outside auditing firm. The firm is the entity that actually does the auditing.
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With this package we will provide a private individual, who is a citizen of the EU, as the nominee director for your company.
We will also provide a dully signed general power of attorney empowering you to run the business, and manage the company's activities, and you will take full legal and financial responsibility for the running of the company.
This package also includes a pre-signed, undated letter of resignation from the nominee director. *If signatures or verification of documents is required, additional charges will apply.
With this package we will provide a private individual, who is a citizen of the EU, as the nominee director for your company.
We will also provide a dully signed, notarised and apostilled power of attorney empowering you to run the business, and manage the company's activities, and you will take full legal and financial responsibility for the running of the company.
This package also includes a pre-signed, undated letter of resignation from the nominee director. *If signatures or verification of documents is required, additional charges will apply.
With this package we will provide a private individual, who is a citizen of the UK, as the nominee director for your company.
We will also provide a notarised and apostilled power of attorney empowering you to run the business, and manage the company's activities, and you will take full legal and financial responsibility for the running of the company.
This package also includes a pre-signed, undated letter of resignation from the nominee director. *If signatures or verification of documents is required, additional charges will apply.
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Directors Responsibilities
. As a director, the law says it is up to you must keep control of the company and to seek assistance if necessary. Directors of limited liability companies are personally liable for the debts of a company if trading continues after there is no longer any reasonable prospect of avoiding insolvency. Directors must make an early decision on whether the business should cease to trade. Failure to do so may result in the directors having to contribute personally to the company's losses and be heavily investigated by the Department of Industry (DTI).
Under UK law, if a company is trading insolvent, a director may be liable for wrongful trading. If the director knew or should have known that the company could not avoid becoming insolvent but continues to trade then he or she must cease to trade immediately and take steps to liquidate the company. The director of a company which is facing financial difficulty should ensure that there is a reasonable prospect that the company will avoid insolvent liquidation before being party to any decision to trade on.
The main reasons behind insolvency are poor management and financial constraints. Although they have overtaken loss of market this time, it remains one of the top three reasons. 1. Older or larger companies tend to be easier to rescue. 2. The main reasons behind insolvency are once again primarily poor management and financial constraints. This is much more prevalent in smaller companies, indeed the larger the company, the better the chance of survival and of receiving remedial treatment and of paying creditors. Market loss is common, but is generally rarer than other management and financial reasons. 4. Specific investigation of the strong pound and the Asian crisis showed that these were major contributory factors in causing insolvency. Whilst not considered significant as primary reasons, these may well have been the final straw for many companies, particularly in manufacturing, retailing and transport and communication.
Choose one of the following packages that will best serve you:
DUTIES AND LIABILITIES OF DIRECTORS OF PRIVATE COMPANIES
The aim of this note is to provide a basic explanation of the main responsibilities and liabilities of directors of UK private limited companies. The information in this note is not exhaustive and not sufficiently detailed to apply to the circumstances of any particular situation. Although a company is a legal person in its own right and as such can own property and enter into contracts with others, it can only make decisions through those that own or control it. The day to day management of a company is usually entrusted to its directors. As a general rule if a person acts as a director, the law treats him or her as a director (a "shadow director") even if he or she is not called a director and has not been formally appointed as a director. A director is an officer of the company but not automatically an employee. Where a director is also a full-time employee he or she is often referred to as an "executive director". A "non-executive director" is usually part-time and is often appointed for his or her specialist knowledge and experience and/or to provide the board of directors with an impartial opinion.
A director of a company may in certain circumstances be made liable for the debts of the company of which he is a director. This might result in the director being personally required to pay some or all of the company's creditors. Directors can be found guilty of wrongful trading if he or she carries on business when the director knows that it will not be possible for the company to avoid an insolvent liquidation. It is a defence for a director if he can demonstrate that when he became aware of the likelihood of an insolvent liquidation he took all possible steps to minimise the loss to creditors. However, resigning as a director does not necessarily absolve the director from responsibility.
In order to minimise the risk of being accused of wrongful trading, a director should make sure that: potential problems relating to the solvency of the company have been discussed with the other directors; an accurate record of any discussions has been kept; the company has adequate up to date financial information. If a director finds himself a director of a company that has become insolvent he should take immediate professional advice. Under Insolvency Legislation, disqualification orders can be made against company directors. The responsible insolvency practitioner is required to report to the Department of Trade and Industry on the conduct of all company directors involved in an insolvent liquidation. A disqualified person is prohibited from taking part in the management of any company. The plague of personal liability appears to be spreading.
Directors are being targeted by disgruntled shareholders, regulators, auditors and other claimants. The cost of defending these claims aside from the eventual damages award is often beyond the pocket of all but the wealthiest individuals. Recent changes to the Companies Act 1985 have removed the uncertainty over whether insurance cover taken out by companies to meet such claims is void. Such cover is referred to as Directors and Officers (or D&O) Insurance and increasingly companies are taking out such policies. Directors should take note.
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Coddan is one of the foremost and most economical providers of company formation and company registration services in the UK. We offer you Company Formation in England & Wales Scotland and Northern Ireland. To start with corporation tax rates are much lower than income tax rates. Finally, registering a company with your spouse allows you to split your income which almost always results in a lower tax bill. We incorporate over 95% of our companies within 6 hours. Electronic submission of information means that we can register a company with the required director, secretary, registered office and shareholders.
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Many institutions will often require that directors enter into personal guarantees in order to secure a loan to a company. Whilst such guarantees are in place the director will be personally responsible to the extent specified in the guarantee. The person who acts as a directory of a company whilst the subject of a disqualification order becomes personally liable for any debts incurred by the company during the period in which he was illegally acting as a director. The kind of situation where the company has gone into liquidation and before that time the director knew, or ought to have concluded, that there was no reasonable prospect that the company would avoid such liquidation. In such circumstances the director may be required to contribute to the assets of the company in the process of liquidation. The area of fraudulent activity covers not only current directors but also any person who was a director in the 12 months prior to the winding-up of a company.
If a director has concealed or fraudlently removed company property, concealed debts or falsified, concealed, destroyed or made any fraudlent omission from company records, then that director is personally liable. Even if the director has not been directly involved but knows this acivity has been going on, then that director can still be liable. Under the Companies Act the directors and officers of the company are quired to maintain certain up to date records at Companies House. Failure to do so can leave the director liable to a fine in default.
Live Help » Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours our business center will be closed. When you click on the button you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is absolutely free! There are no hidden fees. We offer the service as a courtesy to our website visitors. Dear visitors, while having a chat session with a customer, we are frequently requested to give a piece of advice on tax planning or business structuring. We would like to inform you that it is against our principles to provide online advice pertaining to these issues. The points that may be covered during a session include service description, package or service price, navigation at our website, ways of making an order, methods of payment etc. Yet, if you wish us to provide you with advice on tax or business structuring, you should be aware that this service is chargeable.
COMPANY DIRECTORS' DUTIES, RESPONSIBILITIES AND LIABILITIES
Background. A company is in law a legal person, separate from its shareholders. However, a company can think and make decisions only through real people, that is the directors of the company and the shareholders in general meeting. The directors and shareholders are often the same people, but they have distinct roles. The management of the business of the company is usually the responsibility of the board of directors who act on behalf of the company and represent the company to third parties. Directors are officers of the company but are not always employees, although they may have service agreements with the company or otherwise work for it as employees.
Different categories of "director". There are various types of directors:
An Executive Director is also an employee of the company, for example the managing director to whom the board of directors delegates its management powers; A Non-executive Director is not an employee and usually serves only part time in this role. He may have particular expertise and knowledge in relation to the specific industry in which the company is engaged. He will be required to take impartial decisions, particularly where the other directors have personal interests, such as their remuneration; A Shadow Director is a person in accordance with whose directions or instructions the board of directors is accustomed to act. He is not appointed as a director but he is treated as such by company law for certain purposes, such as requiring him to disclose his interest in a contract with the company, or for wrongful trading in the event of insolvency; An Alternate Director can be nominated to represent or substitute for one of the directors at board meetings in accordance with the company’s articles of association; A Nominee Director may be appointed at the request of the holder of a particular interest in the company, such as its bankers; A de facto Director is a person who acts as a director without having been validly appointed and, for example, has the authority to make significant strategic and management decisions.
All directors have the same duties, responsibilities and liabilities. A person who is not a director might be given a title such as Director of ….. to reflect his status or special responsibilities. As a Non-statutory Director he is not entitled to attend board meetings but he will have some authority to bind the company.
Responsibilities. Legislation imposes various obligations on companies, which require the directors to ensure that the company complies with certain minimum requirements, and provides penalties for breach of statutory duties. This includes the Companies Acts 1985-1989, the Insolvency Act 1986, and the Financial Services Act 1986, and other legislation such as legislation relating to workplace health and safety, employment, tax and environmental matters. The responsibilities under the Companies Acts 1985-1989 include:
Keeping proper books of accounts and preparing annual accounts and directors’ report for presentation to the company’s shareholders; Filing accounts and returns annually with the Registrar of Companies and making tax returns to the Inland Revenue; Filing at the Companies Registry copies of special and extraordinary resolutions of the shareholders and of certain ordinary resolutions; Informing the Registrar of Companies of the appointment or retirement of any director or the company secretary or of any change in the situation of the company's registered office and of many other events including allotments of shares; Appointing auditors; Calling and holding Annual General Meetings each year, at which the annual accounts are presented; and Making sure that the company acts strictly in accordance with the powers and rules set out in its memorandum and articles of association.
Liabilities. A director may also incur personal liability under legislation relating to the company, since some legislation provides that not only is the company liable but also any director who knowingly authorised and/or allowed the default by the company.
For example, if the company is insolvent, the directors who allow the company to continue trading when there is no reasonable prospect that it will avoid going into insolvent liquidation (wrongful trading) may be required to contribute to the company’s assets. The directors may also be required to contribute to an insolvent company’s assets if they knowingly allow the company to carry on business with the intent to defraud creditors or for any fraudulent purpose (fraudulent trading).
A director may also be personally liable for the company’s debts, if he has either undertaken personal liability (such as giving a written guarantee) or has allowed another person to believe that he was acting on his own behalf rather than on behalf of the company. A director who is in breach of his fiduciary duties to the company, or who exceeds his authority, may also be liable to the company and may have to pay damages or to account for any profits made.
Some of the more serious offences may result in a term of imprisonment and/or an unlimited fine.
A disqualification order may be made against a director if his conduct as a director renders him unfit to be concerned in the management of companies, for example where there is evidence of wrongful or fraudulent trading, or where the company has failed to keep proper accounts or there have been persistent breaches of the Companies Acts. A director who is made bankrupt is automatically disqualified from acting as a director without leave of the Court.
Protection of Directors. The duties, responsibilities and potential liabilities of directors are onerous and the role should not be accepted lightly. Regular board meetings, properly minuted, are essential, as is the discipline of keeping up to date with the paperwork and necessary returns to the Registrar of Companies.
The law does not permit a company to exempt a director from, or to indemnify him against, any liability he may have in respect of any negligence, default, breach of duty or breach of trust in relation to the company. However, the company may be permitted to indemnify him against costs, etc. incurred by him in certain circumstances, for example if a court rules that he is acquitted of a claim or where he was found to be in default but not dishonest or unreasonable.
Directors’ and Officers’ Liability Insurance may be available to protect directors against personal liability except in circumstances where such protection is prohibited, for example in cases of wilful neglect, wilful default, dishonesty or a crime, breach of certain statutory prohibitions not involving a crime (such as unlawful distributions or wrongful trading), criminal fines and costs of litigation where an indemnity is not permitted. It is legal for the company to take out such insurance and pay the premiums, although these are now likely to be substantial, and the policies may be subject to specific exclusions.
If a company and/or its directors have any doubts about the legality of any matter, then legal advice should be sought sooner than later.
RESPONSIBILITIES AND LIABILITIES OF DIRECTORS IN RELATION TO THE PUBLICATION OF A PRIVATE PLACING MEMORANDUM
Introduction. The purpose of this note is to give a broad outline of the civil and criminal liabilities in relation to the publication of a Private Placing Memorandum ("Memorandum"). If an authorised person approves the Memorandum then under the SFA rules the authorised person must: apply appropriate expertise; and be able to show that it believes on reasonable grounds that the Memorandum is fair and not misleading. No attempt is made to cover those common law or statutory duties or potential liabilities of directors which arise solely by reason of such persons being directors of a company. If the directors require advice in relation to these duties and responsibilities or would like further information on any of the matters raised in this memorandum we would be pleased to advise further. This note is a general summary. Matters which may be relevant to a potential investor in the company should be discussed with the company's advisers as soon as practicable.
AREAS OF CIVIL LIABILITY
Negligent misstatement. An aggrieved shareholder who can show that: the maker of a misstatement owed him a duty of care and failed to meet the required standard of care in making the statement; he placed reliance upon the statement; and suffered loss which was reasonably foreseeable, will be able to recover damages from the maker of the misstatement and will possibly be able to rescind the agreement for the acquisition of shares in question.
Misrepresentation Act 1967. An aggrieved shareholder who can show that: he has subscribed for shares in reliance upon a misstatement and he has suffered loss which was reasonably foreseeable, may be able to rescind the agreement for the acquisition of shares. In addition, where the misrepresentation has been made in circumstances where, had it been made by the Company fraudulently, the Company making the misrepresentation would have been liable to pay damages to the person relying on the representation, then the Company will be liable to pay damages unless the Company can show that it had reasonable grounds to believe and did believe up to the time that the agreement was made that the representation was true. A shareholder may be able to obtain relief under this provision even where this misstatement was made innocently. The court has discretion to award damages in lieu of rescission where it considers it equitable to do so.
Rescission. The object of proceedings based upon rescission of contracts induced by misrepresentation is: to obtain a judicial declaration that the relevant agreement has always been, and still is, voidable by reason of the misrepresentation; the annulment of the agreement by the court; and additional relief to restore the parties to the exact position they were in before the agreement was entered into.
Provided that: the aggrieved shareholder has not affirmed the agreement and does not delay unreasonably after discovering a material misrepresentation; it is broadly possible to put the parties in the position which they were in prior to the agreement; and the rights of innocent third parties will not be affected a shareholder who has relied on a material misrepresentation in agreeing to acquire shares may be entitled to bring an action for rescission. Where the above criteria are satisfied, rescission is available irrespective of the nature of the misrepresentation and has the effect of invalidating the agreement. If the agreement is rescinded, the name of the relevant investor must be removed from the register of members and the subscription monies repaid.
Deceit. If any director makes a statement in the prospectus either knowing it is untrue, not believing it to be true, or reckless as to whether it is true or not, he may be liable in an action for deceit brought by an investor/shareholder who has suffered loss as a result of relying on that statement.
Breach of contract. If a person can show that a misstatement has become a term of a contract for the acquisition of shares, as opposed to a pre-contractual statement inducing a person to enter into the agreement, then damages may be recoverable from the Company for breach of contract.
CRIMINAL LIABILITIES
The following offences should be considered:
Section 397(1) and (2) of the Financial Services and Markets Act ("FiSMA") S.397 applies to a person who: makes a statement, promise or forecast which he knows to be misleading, false or deceptive in a material particular. Dishonestly conceals any material facts whether in connection with a statement, promise or forecast made by him or otherwise; or recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive in a material particular. Such a person is "guilty of an offence if he makes the statement, promise or forecast or conceals the facts for the purpose of inducing, or is reckless as to whether it may induce, another person (whether or not the person to whom the statement, promise or forecast is made): to enter or offer to enter into, or to refrain from entering or offering to enter into, a relevant agreement; or to exercise, or refrain from exercising, any rights conferred by a relevant investment."
This offence is punishable with imprisonment and/or a fine. The wording is wide enough to include misstatements in the memorandum, and specifically refers to forecasts and the dishonest concealment of material facts. Section 397(3) of FiSMA. Any person who "does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any relevant investments is guilty of an offence if he does so for the purpose of creating that impression and of thereby inducing another person to acquire, dispose of, subscribe for or underwrite those investments or to refrain from doing so or to exercise, or refrain from exercising, any rights conferred by those investments."
Section 21 of FiSMA. It is an offence for any person (unless authorised under FiSMA) in the course of business, to communicate (which is interpreted to include causing a communication to be made) an invitation or inducement to engage in investment activity, unless the content of the communication is approved for the purposes of section 21 of FiSMA by an authorised person. The term "invitation" is reasonably clear but the term "inducement" is more difficult to interpret. It is understood the parliamentary draftsmen intended a reasonably narrow interpretation but it is possible the courts may interpret it broadly. There are numerous exemptions such as to certified high net worth investors and certified sophisticated investors but the exemptions have to be properly certificated and appropriate notices have to accompany any communication to investors.
Breach of Section 21 has both criminal and civil consequences. It is a criminal offence to contravene Section 21 and any person who does so may be liable to imprisonment for up to two years or to a fine or both. The civil consequences may render an investment agreement unenforceable and entitle the other party to the agreement to recover any money paid under the agreement together with any loss sustained (Section 30) (unless the court is satisfied that it is just and equitable to enforce the agreement, having regard to whether the person seeking to enforce the agreement reasonably believed that he was not making an unlawful communication or, if he did not make the communication, whether he knew that the agreement was entered into in consequence of an unlawful communication).
Section 21 may be particularly relevant to marketing activities prior to the issue of the Memorandum.
Section 15 of The Theft Act 1968. It is an offence dishonestly to obtain another person's property/cash by deception with the intention of permanently depriving the other of it. The offence includes obtaining property/cash by making a false statement and representing it as being true whilst knowing that it is or may be false.
Section 19 of The Theft Act 1968. It is an offence for an officer or person purporting to act as an officer of a company to publish or concur in publishing a written statement or account which to his knowledge is or may be misleading, false or deceptive in any material particular if he does so with the intent to deceive the company's members or creditors about its affairs.
DIRECTORS' RIGHTS TO BE INDEMNIFIED
Civil Liability (Contribution) Act 1978. A person who is liable to pay damages may be entitled under the Civil Liability (Contribution) Act 1978 to contribution from others who are liable in relation to the same damage provided that person has not agreed to indemnify the other. Articles of Association and Section 310 of the Companies Act 1985. The articles of association may entitle every director or other officer of the Company to be indemnified against liabilities incurred in carrying out his duties or otherwise in relation to his office, subject to the provisions of the Companies Act 1985. Section 310 of the Companies Act 1985 (as amended) provides that a company may only indemnify any of its officers against liabilities incurred either in defending civil or criminal proceedings in which judgment is given in favour of the officer in question or in which the officer is acquitted or in relation to certain applications by the officer to court under the Companies Act 1985 where relief is granted by the court.
Insurance. The restrictions imposed by the Companies Act 1985 do not prevent a company from taking out insurance for its officers against liabilities incurred for negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company. Certain insurers offer insurance against certain of these liabilities, subject to limitations. It is not lawful for a company to purchase insurance to cover liability arising out of fraudulent or dishonest conduct.
VERIFICATION
Reducing the risks to the Company and its directors. As the Company and each of its directors are potentially liable if the Memorandum is inaccurate, it is in the interests of the Company and its directors to ensure that all reasonable steps are taken to reduce the risk of any claim arising. This is achieved in part by the process of verification in relation to the contents of the document.
Verification. Verification takes the form of written questions put to the directors which aim to establish that each statement in the Memorandum which may be relevant to a potential investor is true or, in the case of a statement of belief, that it is held on reasonable grounds and that a statement is not misleading in the light of the inference which a potential investor may reasonably draw from it. Each statement of fact should, where possible, be supported by evidence of the accuracy of the statement in question and each statement of belief should be supported by evidence that the belief is held on reasonable grounds. Evidence should consist of authoritative sources such as documents or extracts either from the Company's own records or, where appropriate, outside sources. The questions, answers and supporting evidence will be documented in the form of "verification notes" to provide prima facie evidence that the Company and its directors exercised due care in the preparation of the Memorandum.
Delegation. As it is often not practicable for all of the directors to be involved in every stage of verification, it is common for responsibility to be delegated to a number of individual directors who are considered to be best placed to provide detailed answers to the verification questions and supporting evidence of the statements made in the Memorandum. However, it is essential that each director is satisfied that the persons to whom the task is delegated are competent to answer the verification questions, that it is reasonable for him to rely on those persons in respect of the information which those persons are asked to verify and that those persons have verified the information in question. Each director should appreciate that it is not possible to delegate legal responsibility and that he will remain liable for the Memorandum even if he has relied upon another to verify part of the Memorandum and notwithstanding that he may not have been involved in all stages of drafting the Memorandum.
Timing. Verification will commence when the draft Memorandum is in a relatively advanced form. Alterations to the draft Memorandum will be verified and the verification notes will be amended to reflect these changes. The verification notes will be circulated among the directors to enable them to provide additional comment. After any comments have been received, the final form of verification notes will be approved at a meeting of the directors at which the directors will (among other things) accept ultimate responsibility by signing the verification notes and approve the Memorandum.
Effect. Verification will provide a permanent record of the steps which the Company and its directors have taken to ensure that the Memorandum complies with the legal obligations imposed upon each of them. It will provide the directors and the Company with a degree of protection against an allegation of recklessness or negligence and will assist the directors in establishing the accuracy of the Memorandum. However, the verification process will not necessarily ensure that the responsibilities of the directors have been discharged to the requisite standard. It is therefore essential that before the Memorandum and verification notes are approved, each director carefully considers the content of the Memorandum and the verification notes to ensure that he is satisfied that the Memorandum complies with the above requirements.
DISQUALIFICATION
A disqualification order issued by a court may ban an individual not only from acting as a director of a company but also from acting as a liquidator, receiver or manager of a company's property and from having any connection with the setting up or management of a company without the permission of the courts, for up to 15 years. A person who breaches such an order commits a criminal offence punishable by imprisonment or fine or both and may be made personally liable for any debts of the company in respect of which he or she acts.
A director's disqualification may arise from misconduct, unfitness, participation in wrongful trading and/or other grounds.
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An Executive Director is also an employee of the company, for example the managing director to whom the board of directors delegates its management powers;