Agreement of Nominee: A Guide for Business Owners
When setting up a corporation, business owners often appoint a nominee director or nominee shareholder to perform certain duties on their behalf. A nominee is essentially an individual or entity whose name appears on official documents, but who holds no decision-making power or authority over the business. The agreement of nominee is a legal document that outlines the terms of the appointment and the roles and responsibilities of the nominee.
Understanding the Importance of an Agreement of Nominee
An agreement of nominee is important for many reasons. It helps establish clear guidelines that govern the relationship between the business owner and the nominee. This document can also help protect the business owner`s interests and ensure that their wishes are carried out in the event of any disputes or legal issues that may arise.
The agreement of nominee is critical for maintaining the anonymity of the business owner. The use of a nominee allows the business owner to keep their name off official documents and protect their privacy. By having a legal agreement in place, the business owner can ensure that the nominee will not abuse their position or disclose any confidential information.
Understanding the Roles and Responsibilities of a Nominee
A nominee director is often appointed to comply with legal requirements, such as having a local director in jurisdictions where foreign companies are not allowed to hold directorship positions. The nominee, in this case, will have no decision-making power and will act only as a representative of the business owner.
A nominee shareholder, on the other hand, is appointed to hold shares on behalf of the business owner. The nominee will receive dividends and voting rights, but will have no decision-making power or ownership of the shares. The agreement of nominee is important to ensure that the shares are held for the benefit of the business owner and that the nominee does not abuse their position or sell the shares without the owner`s consent.
Drafting an Agreement of Nominee
When drafting an agreement of nominee, it is important to define the roles and responsibilities of the nominee and ensure that they are in line with the wishes of the business owner. The agreement should also outline the circumstances under which the nominee can be removed or replaced.
It is essential to ensure that the nominee is aware of their responsibilities and that they sign the agreement willingly. Both the business owner and the nominee should seek legal advice before signing the agreement to ensure that their interests are protected.
Conclusion
An agreement of nominee is a crucial legal document for protecting the interests of business owners who appoint nominees. It helps establish clear guidelines that govern the relationship between the business owner and the nominee, protects the privacy of the business owner, and ensures that the nominee carries out their duties in accordance with the wishes of the owner. It is important to seek legal advice when drafting an agreement of nominee to ensure that it is legally sound and protects both parties` interests.