What is a nominee director?

A nominee director is a person who is usually registered on paper as a director of a company without actually being involved in the management or decision-making of the company. This practice is often used in countries where foreigners are subject to restrictions when it comes to company ownership or management. The nominee director often serves as a legal representative and allows foreign investors to register businesses or own property without acting directly in the company.

Functions and duties of a nominee director

The primary function of a nominee director is to fulfil the legal requirements for the management of a company. Common duties include:

• Representing the company in official documents and contracts.
• Eliminating potential legal risks for the actual owners.
• Assisting with compliance with local laws and regulations.

Advantages of using a nominee director

The use of a nominee director offers numerous advantages, especially for foreign investors:

• Legal compliance: nominee directors help to comply with Dubai legal requirements and facilitate company registration.
• Privacy protection: The actual owners remain in the background, providing additional security.
• Flexibility: Nominee directors can be selected as required depending on investment strategy and market conditions.

Disadvantages of a nominee director

Despite the advantages, there are also some risks and disadvantages:

• Dependence: the actual owners are dependent on the integrity and behaviour of the nominee director.
• Loss of trust: In the event of problems or disagreements, the trust of partners or customers may suffer if the deposited structure becomes known.

Choosing the right nominee director

It is crucial to select a trustworthy and experienced nominee director. A thorough review of the person’s or company’s credentials and experience, as well as seeking legal advice, is essential to ensure that all legal and business requirements are met.

Legal aspects

In Dubai, the position of nominee director is subject to certain legal frameworks defined by the Dubai Land Department and the Real Estate Regulatory Agency (RERA). Investors should inform themselves about the applicable regulations in order to avoid legal problems.

Illustrative example on the topic: Nominee director

Imagine an investor from Germany wants to set up a property company in Dubai to invest in the booming property market. As local legislation does not allow foreigners to act as the sole director of a company, the investor decides to hire a nominee director. This nominee director, a local legal expert, is officially registered as a director in the commercial register, but remains completely in the background. The investor retains control over the business and all decisions, while the nominee director merely acts as a placeholder who fulfils the legal requirements.

Summary

A nominee director plays an important role in the corporate structure of many foreign investors in Dubai. It not only enables compliance with local laws, but also provides flexibility and protection. However, investors should carefully consider the risks and legal aspects before engaging a nominee director.

Further information on relevant topics can be found here: Property Valuation and Title Deed.