A Nominee is a person who holds assets on behalf of another person but who does not have any beneficial interest in the assets. A nominee can also be described as an agent and is nominated in that capacity for the interest of the appointer (principal). The necessity for the appointment of nominees arises for diverse reasons some of which includes legal requirements, the protection of the details and privacy of the principal, as a business strategy, inability of the principal to be physically present, utilising the expertise of the nominee, etc.
Nominee services in Nigeria came into existence to bridge the gap and provide reliable and qualified individuals to hold assets for the benefit of the principal. Apart from holding assets or act on behalf of the appointor, nominees also help to shield the details of the actual shareholders or directors from the prey eyes of the public, since the list of directors and shareholders of all companies are readily provided for the public by the company registry.
Various types of nominees can be appointed depending on the acts the nominee is appointed to undertake and the power to be vested in the nominee. The two most common types of nominees will be
- Nominee director
A nominee director is a director duly appointed to act on behalf of the actual director of a company and whose authority to act is derived from a contract or power of attorney duly executed by the appointor. The power of attorney or contract clearly outlines the acts which the nominee director can undertake and the extent of the nominee’s powers. These acts may include opening a corporate bank account on behalf of the company, signing documents, executing contracts and agreements on behalf of the company, attending board and company meetings, ensuring regulatory compliance, filing returns at the Corporate Affairs (CAC).
A person who appoints a nominee director to act for him or her is recognized under the Nigerian company as a shadow director.
- Nominee shareholder
A nominee can be appointed by the beneficial owner of shares in a company to carry out the duties of a shareholder on his behalf subject to the terms contained in the declaration of trust appointing the nominee shareholder. These duties include attending meetings, voting in meetings, accepting notices and other correspondence from the company on the beneficial shareholder’s behalf, etc.
The nominee service avails shareholders with qualified and trustworthy individuals who can act on their behalf and efficiently perform the duties assigned to them by the appointing principal. Nominee services in Nigeria is an area that has not been expressly provided for by statute. However, it is generally recognised and accepted.
The Companies and Allied Matters Act, 2020 (CAMA), which is the principal legislation governing the administration of companies in Nigeria, has envisaged and made provision for the appointment of agents to carry out certain duties of a director and shareholder of a company on their behalf. Section 110(1)(b) of CAMA empowers a company to appoint an agent to prepare the register of members on behalf of the company and to keep the same in the agent’s custody or premises. Furthermore, Section 254(1) of the CAMA states thus:
“Any member of a company entitled to attend and vote at a meeting of the company is entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointed to attend and vote instead of a member has the same right as the member to speak at the meeting, and unless the articles provide, this section shall not apply in the case of a company not having a share capital.”
Conclusively, before the appointment of a nominee, there must be a solid trust agreement executed between the nominee and the principal to protect the interest of the parties and set out the duties of the nominee as well as the extent of the powers conferred on the nominee.