Can a Nominee Director Open a Bank Account or Sign Contracts for My Company?
TL;DR (Summary Box)
A nominee director is mainly appointed to meet local directorship requirements and does not automatically have the authority to open corporate bank accounts or sign contracts. They can only do so if the company grants specific, documented authority—usually through a board resolution or power of attorney. To avoid risks, always define the nominee director’s responsibilities and limitations in writing.
Quick Answer
A nominee director’s legal powers are typically limited to fulfilling statutory compliance. Without explicit authorization, they cannot manage company finances, open a corporate bank account, or bind the company legally through contract signing.
Introduction
If you’re setting up a company overseas—especially in jurisdictions that require a local director—you may come across the term nominee director.
While this arrangement is common, it often leads to confusion:
- Can a nominee director open a bank account for my company?
- Can a nominee director sign contracts on behalf of the company?
- What authority does a nominee director have in daily operations?
In this guide, we’ll break down nominee director responsibilities, clarify their signing authority, and explain the safest way to structure their role to protect your business.
What Is a Nominee Director?
A nominee director is a person appointed to act as the registered director of a company, usually to meet legal requirements for having a local resident director.
Key points about the nominee director role in a company:
- They are listed as a director in government records.
- Their main duty is to ensure the company complies with local corporate laws.
- They often do not participate in operational or strategic decisions unless agreed upon.
- Their responsibilities and powers are typically defined in a Nominee Director Agreement.
Nominee Director Responsibilities: The Basics
Typical nominee director responsibilities include:
- Ensuring the company meets statutory filing requirements.
- Attending board meetings if necessary.
- Signing off on compliance documents as required by law.
- Acting as a point of contact for government authorities.
What they usually don’t do (unless authorized):
- Manage company finances.
- Negotiate or sign commercial contracts.
- Hire or terminate employees.
- Make operational decisions.
Can a Nominee Director Open a Bank Account?
Short answer: Not by default.
A nominee director can only open a corporate bank account if:
- They are given formal written authorization (e.g., a board resolution).
- The bank’s compliance department approves their access after due diligence.
Most banks require:
- Proof of the director’s operational authority.
- Identification and verification of beneficial owners.
- Company constitutional documents granting signing rights.
💡 Tip: If you don’t want your nominee director to manage finances, ensure the bank mandate excludes them from having account access.
Can a Nominee Director Sign Contracts?
Again, only if authorized.
To sign contracts on behalf of the company, a nominee director must have:
- A specific board resolution granting authority to sign a certain type of contract.
- Legal documentation outlining their signing authority.
Without this, any contract they sign may not be enforceable—or worse, may legally bind your company in ways you didn’t approve.
Nominee Director Legal Powers Explained
By law, a director has fiduciary duties and can legally bind the company. However, in the case of a nominee director, their practical powers are often restricted.
Legal powers may include:
- Representing the company in official matters.
- Ensuring statutory compliance.
- Attending and voting at board meetings.
But without written delegation, they cannot:
- Access company funds.
- Commit the company to financial obligations.
- Manage day-to-day operations.
Risks of Granting Full Signing Authority
While giving your nominee director signing authority may seem convenient, it comes with risks:
- Unwanted Contracts – They could sign agreements you didn’t approve.
- Financial Liability – They may withdraw or misuse company funds.
- Legal Exposure – They could bind your company to obligations that are hard to reverse.
💡 Solution: Clearly limit authority in your corporate documents and bank mandates.
Best Practices: Limiting and Documenting Authority
If you need a nominee director to perform certain actions (e.g., signing compliance documents), you should:
- Use a Nominee Director Agreement – Define what they can and cannot do.
- Pass Specific Board Resolutions – Grant temporary authority for a defined task.
- Avoid Blanket Powers of Attorney – Unless absolutely necessary.
- Separate Financial Access – Assign banking rights only to operational directors.
- Regularly Review Authority – Ensure no unnecessary powers remain active.
Scope of Authority: What You Should Clarify
Always put in writing:
- Whether they can open a bank account.
- Whether they can sign commercial contracts.
- Whether they have the authority to hire, fire, or manage finances.
- Whether they can represent the company in legal proceedings.
This will protect both you and the nominee director from misunderstandings.
Nominee Director’s Power to Bind the Company Legally
Legally, any registered director can bind a company unless restricted. That’s why your corporate governance documents (and nominee agreements) should explicitly define:
- Which actions require shareholder approval?
- Which actions require co-signing from another director?
- Which actions are the nominee director prohibited from performing?
Summary: Key Takeaways
- Without written authority, a nominee director cannot open a corporate bank account or sign contracts.
- Always define nominee director responsibilities clearly.
- Use board resolutions for temporary or specific powers.
- Limit financial and contractual authority to operational directors.
- Regularly review and update corporate governance documents.
By keeping these safeguards in place, you ensure your nominee director serves their intended role—compliance—without exposing your company to unnecessary risks.
FAQs
- What is a nominee director?
A person appointed to meet local directorship requirements, usually without involvement in day-to-day management. - Can a nominee director open a bank account for my company?
Only if authorized by a board resolution and accepted by the bank. - Can a nominee director sign contracts?
Yes, but only with explicit written authority from the company. - Does a nominee director have full control over the company?
No. Their role is usually limited to statutory compliance unless expanded by agreement. - What are the legal powers of a nominee director?
They can fulfill compliance duties and attend board meetings, but usually can’t manage finances or operations without approval. - Are there risks if a nominee director has signing authority?
Yes—such as unwanted contracts, financial exposure, and legal risks. - How can I give limited authority to a nominee director?
Through a nominee director agreement and specific board resolutions. - Can a nominee director be held liable for company actions?
Yes. They have legal responsibilities under corporate law. - Do banks allow nominee directors to open accounts?
Only if their authority is documented and approved. - Should I use a nominee director for banking or contracts?
Generally, no—it’s safer to limit them to compliance tasks and appoint operational directors for these roles.