Several businesses are in need of nominee directors with the capability of fulfilling local legal or regulatory requirements, particularly when a business is operating in another country. One of the primary reasons for the appointment of a nominee director is the satisfaction of a local residency requirement. For example, Singapore needs at least one resident director either by citizenship or permanent residence, or holding the right type of visa in residence. These are the reasons why many foreign investors or business owners who do not have these residencies in the country make a nominee directorship.
Other reasons businesses appoint a nominee director are for privacy and confidentiality. High-profile persons or foreign investors might be interested in discretion in their business dealings or not being openly associated with the company. They would then appoint a nominee director, who keeps them confidential since he will appear on all official and public documents, but the actual control of the company remains with the beneficial owner.
The nominee director also extends administrative convenience. If the foreign business is unfamiliar with the regulatory environment of a country, the nominee director will be in a position to assist in local compliance matters such as filing annual returns, maintaining statutory records, and ensuring that the company operates within the framework of local laws.
Even though he is a representative, a nominee director by One IBC has legal obligations to act in the best interest of the company and not just for the nominator alone. Hence, companies use nominee directors to satisfy statutory requirements while maintaining control to ensure confidentiality and to cope more effectively with difficult regulatory environments.