At CSPzone, we’ve spent years helping businesses like yours navigate the complexities of nominee services. We know this field inside out, and we’ve seen the questions and concerns that clients often have:
“What if the nominee director takes decisions without my knowledge?”
“How do I ensure that my control over the company is not compromised?”
Relax - we’re here to clear up the confusion and guide you step-by-step through what goes into an agreement with a nominee director. By the end of this article, you’ll know exactly how to protect your interests and keep everything running smoothly with the help of an ideal agreement between your and nominee director / nominee director service provider i.e CSPzone.
Let’s get started!
What Is a Nominee Director? Why Do You Need One?
Before we dive into the agreement, let’s clarify: a nominee director is someone you hire to act as the face of your company in a specific jurisdiction (like Dubai). They’re often required for regulatory reasons, especially for foreign investors.
Here’s an example:
Imagine you’re opening a business in Dubai but don’t meet the local residency requirements. To comply with the law, you hire a nominee director who acts as the official director of the company on paper. However, the real control stays with you.
Why Is a Strong Agreement Important?
A well-drafted agreement ensures that:
1. The nominee director acts only under your instructions.
2. They can’t misuse their position.
3. You remain the ultimate decision-maker.
4. Think of it like this: If the nominee director is a chess piece, you’re the one playing the game. The agreement ensures they move only where you direct them.
Key Points to Include in the Agreement
1. Definitions: Laying the Groundwork
This section ensures there’s no confusion about terms.
a. Nominee Director and Shareholder: This is the person acting on your behalf.
b. Ultimate Beneficial Owner (UBO): That’s you - the real owner of the company.
c. Power of Attorney (POA): A document giving you legal control over the company’s operations.
Example:
You (the UBO) run an e-commerce business in Dubai. CSPzone provides a nominee director who represents your company in front of authorities. The Power of Attorney - POA ensures you still make all key decisions, like signing contracts or managing finances.
2. Services Provided
The agreement must clearly list the services the nominee will provide. For example, at CSPzone, we typically offer:
a. Acting as a Nominee Director.
b. Acting as a Nominee Shareholder.
c. We also include the annual service fees, so there’s no ambiguity.
Example:
If the nominee director fee is AED 10,000 per year, this is explicitly mentioned. You’ll also know upfront that any government charges (like registration fees) are your responsibility.
3. Duties of the Nominee
The agreement must clearly specify what the nominee can and cannot do.
1. What They Will Do:
a. Submit required documents for company registration.
b. Provide necessary paperwork to banks or authorities (e.g., passport copies, signature samples).
c. Sign documents - but only when you request it in writing.
2. What They Won’t Do:
a. Access or manage your company’s bank accounts.
b. Authorize financial transactions or liabilities.
c. Issue cheques or take out loans.
Example:
Say you need the nominee to sign an agreement with a supplier. They’ll only do so after receiving your written request. They won’t make decisions about the agreement’s terms - that’s your job.
4. Powers Granted to You (the Client)
This section ensures that while the nominee acts as the director, you maintain full control through a Power of Attorney (POA).
The POA allows you to:
a. Operate the company (e.g., manage staff, sign contracts).
b. Change or remove the nominee director if needed.
c. Sell or liquidate the company.
Example:
If you decide to sell your business, the POA ensures the nominee director can’t block the sale.
5. Confidentiality: Keeping Things Private
The agreement must clarify that both parties must agree to keep sensitive information private:
a. The nominee and CSPzone won’t disclose details about your business.
b. You won’t reveal the nominee’s identity unless required by law.
Example:
If a competitor asks who your nominee director is, neither CSPzone nor you are obligated to share that information.
6. Terms and Conditions: Who Does What
Your Responsibilities:
a. Pay government fees and travel expenses if needed.
b. Renew nominee services on time.
c. Cover liquidation charges if the company is dissolved.
Our Responsibilities:
Provide a qualified nominee with a clean reputation.
Replace the nominee promptly if you request it.
Example:
If the nominee director resigns, CSPzone will provide a replacement without causing delays to your operations.
7. Limitation of Liability
This protects both you and nominee provider like CSPzone:
a. CSPzone isn’t liable for disputes unless caused by negligence or misconduct.
b. You agree to indemnify us against claims arising from your business activities.
Example:
If a supplier files a complaint against your company, CSPzone and the nominee won’t be held responsible unless it’s proven they acted improperly.
8. Payment Instructions
All payments should go to CSPzone’s designated account.
Example:
If someone claiming to be CSPzone asks you to pay elsewhere, notify us immediately to prevent fraud.
9. Termination: Ending the Agreement
Either party can terminate the agreement with 30 days’ written notice. Upon termination:
a. The nominee will transfer all shares back to you.
b. Any outstanding fees must be cleared.
Example:
If you decide to close your Dubai operations, the nominee will step down, and you’ll regain full ownership of the company.
10. Governing Law and Dispute Resolution
The agreement follows UAE laws.
Disputes are resolved amicably or through arbitration at the Dubai International Arbitration Centre (DIAC).
Example:
If there’s a disagreement about fees, both sides will first try to settle it informally before taking legal steps.
At CSPzone, we believe in empowering our clients with clarity and control. A strong nominee director agreement is your safety net - it ensures your business complies with local laws while keeping you firmly in charge.
Need help drafting your agreement? Let CSPzone handle it! We’ve got the experience, expertise, and commitment to make your business journey in Dubai seamless and secure. Reach out today - we’re here to help!
