If you’re thinking about appointing a nominee director or preparing to assume the role yourself, make sure to consider these key duties.
Attend Board Meetings
A shareholder or stakeholder may appoint a nominee if circumstances prevent them from actively engaging in the day-to-day running of the company. This may be because they live in another country or have other commitments that prevent them from being able to attend board meetings. As such, the nominee director must attend board meetings and provide input on various company matters on behalf of their nominators.
Fulfill the Wishes of the Nominator
Another key role of a nominator is to act on the nominator’s behalf. Unlike independent directors, nominee directors cannot make any decisions independently but should ensure the company is run in a way that is consistent with the nominator’s wishes.
This brings us to the question — what is an independent director? This is a member of a board of directors who is not an employee of the company and doesn’t have a material relationship with the company. Independent directors are typically chosen for their expertise, experience, and judgment and expected to provide objective oversight of the company.
Influence the Company’s Decisions
Nominee directors don’t hold executive powers, so they’re not responsible for the day-to-day running of the business. Nevertheless, they should understand their duty of care.
What is duty of care? Duty of care requires nominee directors to act in good faith and make informed decisions in service of their organizations.
After the meeting, the company secretary should use a Board of Directors’ Resolution Template to record the crucial decisions and actions made during the board meeting. It not only ensures transparency and accountability, but also provides a record directors can refer to in the future or for legal purposes.
Protect the Nominator’s Interests
Another important role of a nominee director is to act in the best interests of the person or entity who appointed them, and to carry out the wishes of the person or entity to the best of their abilities. For instance, they can be a valuable asset to investors, as they can help to protect their investments.
If the board makes a decision that isn’t in the best interests of the nominator, the nominee director can vote against it. This protects the nominator’s interests and ensures their voices are heard.
Ensure the Company is Run in a Certain Way
By appointing a nominee director, shareholders and investors can have a direct say in the management of the company, which can help to protect their investment.
Business owners and stakeholders can also appoint nominee directors to counsel or resolve disputes between shareholders. By appointing a neutral third party to act as a nominee director, shareholders can have confidence the executive directors will run the company in an unbiased manner.