Who is a Nominal Director?

The sphere of offshore companies is full of jargon that might mislead a novice. An example of such a jargon term is “Nominal Director”.

In fact, no legal concept of “Nominal Director” exists. There is a nominee, who might represent someone. Any person that acts as a “Nominal Director” is actually a Director who bears the overall responsibility under the Company Law of a country where the company is registered in. To be precise, I have to admit that this is valid only for companies registered in jurisdictions where common law is applied.

A document signed between a Beneficiary and a “Nominal Director” of any offshore company is an Indemnity Letter, which is as smart as to stipulate any legal means to indemnify any nominee costs he or she bore while being a “Nominal Director”.

To prove the above, I can give an example from my own experience: long ago, we met an Attorney in Cyprus who happened to become a Nominal Director for a Cyprus offshore company, which was selling customs and excise goods in Europe, mainly cigarettes and alcohol. Later on, the Beneficiaries vanished into thin air, leaving the poor nominee accountable for all actions and consequences. By the time we met, he had lost over EUR50,000 in litigation fees, whilst the trials around the offshore company were at their peak not only in Cyprus, but in other countries as well.