Nominee director, shareholder, PSC

[Deleted member 327556]

Hello,

My tax accountant has recently opened a ltd on my behalf and for various reasons we agreed that he would also be the nominee director. He has issued a nominee director document signed by both where he explains that I am the sole beneficiary and that he will act only under my instructions.

I have checked the status of the ltd in the Company House website and I have seen that he also is the shareholder director, the PSC and secretary. I am not an expert in company formations, and I am wondering whether there is a risk for me to lose control of the ltd as he basically is registered for all the director roles, and if so what shall I do to mitigate this risk. Do I need to nominate someone else (e.g. my wife) as shareholder or PSC?

Many thanks,

Ryan

 

[Mr D]

Should you not be the shareholder?

Not sure why you are using someone else as a nominee director, it is the directors who control a business in day to day running while shareholders only vote on certain matters, they don't run things or have day to day control.

 

[Deleted member 327556]

Should you not be the shareholder?

Not sure why you are using someone else as a nominee director, it is the directors who control a business in day to day running while shareholders only vote on certain matters, they don't run things or have day to day control.

Hi Les,

Having a nominee director is a requirement for what I need to do with my ltd, so we agreed that it is the best solution and it is perfectly legal, so basically I need to have one. However, what it is not clear to me is whether my tax accountant should also be the shareholder and PSC. I asked him and he basically said that the nominee director document that he signed is enough to protect my interests and company. Whilst I trust him, I am not sure whether it is correct having him as shareholder and PSC. Any suggestion is welcome.

Many thanks,

Ryan

 

[eteb3]

Does your agreement have him as a nominee shareholder as well as nominee director? "Sole beneficiary" would suggest so.

If not, then it would seem he is the owner of the company, not you. As director he may have agreed to act purely on your instructions, but you can't remove him. And you're not entitled to any dividends or capital distribution! If that's really the case, looks like he's messed up or pulling a fast one. (Sounds like you'd probably have an equitable claim despite, but you really don't want to rely on that.)

If you do want to hold the shares yourself, you will appear on the company's record - sounds like you want to avoid this? But even with a nominee shareholder, it's possible you will be counted as the/a PSC precisely because he will act solely on your instructions: equitable ownership is beyond me, but others on here may know.

EDIT: You sure he's director and secretary? Not much point as far as I can see:
https://www.legislation.gov.uk/ukpga/2006/46/section/280

 

[Mr D]

Hi Les,

Having a nominee director is a requirement for what I need to do with my ltd, so we agreed that it is the best solution and it is perfectly legal, so basically I need to have one. However, what it is not clear to me is whether my tax accountant should also be the shareholder and PSC. I asked him and he basically said that the nominee director document that he signed is enough to protect my interests and company. Whilst I trust him, I am not sure whether it is correct having him as shareholder and PSC. Any suggestion is welcome.

Many thanks,

Ryan

It sounds like he has the power, he runs things, he gets dividends, he decides everything. May follow what you say but if there is disagreement what could you do about it? Not being involved with the business even as a shareholder.

Could be simply paperwork problem. Get it sorted now rather than sometime when you ever want income or control.

 

[Alison Moore]

It sounds a bit weird... It's quite usual for accountants to set up limited companies for their clients. but they then resign once it's all set up and hand over to the directors. I'm not sure why he needs to be a nominee director? I'd quiz this one further and not let it lie until you're happy with the situation as he shouldn't be a shareholder too.

 

[Lisa Thomas]

I agree with Alison - why do the accountants want to be Directors...?

 

[Deleted member 327556]

Thanks for all your comments.

Yes my accountant is both PSC, nominee director and shareholder director. In the document he issued and signed however he stated that he will only act under my instruction as I am the sole beneficiary of the company. I have the authentication code and full access to company house. I agreed with him to have him as nominee director however I am not sure whether he should appear as PSC and shareholder. I can restrict him to be only nominee director but then, who should be shareholder and PSC? For various reasons I do not want to be, so who shall I nominate PSC and shareholder director in order to maintain both anonymity and control of the company? I need to discuss it further with my tax accountant.

 

[eteb3]

I need to discuss it further with my tax accountant.

You do.

I think you could do worse than read up on the real basics of what a company is and the various roles beforehand. Eg, there is no such thing as a 'shareholder director': there are shareholders, and there are directors, and even if the same person occupies both roles, they are not the same thing. (Eg, if a document needs to be signed by a shareholder and by a director, and the same person occupies both roles, the doc must be signed twice by the same person, stating the capacity in which each signature is made.) If you want him to be nominee shareholder and nominee director, I think you will need to make two appointments; or more likely you will make him a nominee shareholder, and as nominee shareholder he will appoint himself nominee director - since the director can only be appointed by the legal shareholders, and you aren't one.

Unlike other posters, I can see why you would want to have this arrangment: this has been a subject of much interest in Parliament and the press, but it preserves your anonymity. Because it obscures the real ownership of the company, it's useful for dodging tax, and so the PSC rules are intended to avoid this. You are the beneficial owner of the company (a legal term meaning the shares are in trust for you), and, as he says, you control the company through your trustee. I think you would be well advised to grill him hard on whether you need to be PSC, and if there's any doubt about that legally, which of you carries the can - if it isn't both of you. You'd have the same problem with anyone else acting as nominee, with the additional problem of settlement legislation if it's your wife.

If he's your nominee, you need to think what you'd do if he ran off with your company. Fine, you can view it on the register, but you'll get the accounts 10 months after year end, by which time the money is all gone. You may have the right of 'tracing', as the assets are held in trust, but that means you have to find them. Is he well-capitalised? Ideally he's one of a 20-person partnership (not LLP or Ltd), each of whom has a £2million mansion without a mortgage. Or else his reputation has to be shining like an angel's - and by the sounds of things, he may not be straight as a die.

All the best with it - just don't get in over your head!

 

[Lisa Thomas]

Can I ask why you don't want to own your own company?

 

[Chris Ashdown]

If you are not a Director, do you have the power to sign any contracts etc as a employee or will the accountant take responsibility for your actions

In most cases a director has the power to commit the company to a contract or may also allow other employees to have this power under the directors authorisation

This all sound very dodgy to me and the accountants not acting in the spirit of the law, bet they are not chartered accountants