Entrepreneurs, due to various circumstances, are not always able or willing to advertise their business in another country. Non-resident businessmen often need confidentiality. Due to the fact that it is not forbidden to hide the real identity of the owner and director of a company in Georgia and offshore zones, businessmen from the EU and the CIS often resort to nominal service. This not only helps to hide information about the real owner of the business but also allows the director with local citizenship to take advantage of government programs and profitably optimize taxation. In this article, we will analyze the concept of nominee service and its features in Georgia.
The concepts of nominee service and nominee director
Nominee Service is a way to protect the owner’s business and privacy. By hiring a nominee director – a person who will only perform administrative functions, but will appear in the documentation as a manager, you can hide information about the real owner of the company. If the agreement is concluded taking into account the requirements of the country in which the registration takes place, then this procedure is considered completely legal.
Why you might need a nominee service:
Not all countries allow non-residents to act as company directors. For example, in Switzerland, Ireland and some offshore zones, only a resident of the country can hold a management position in a company.
A nominee service will allow you to test new lines of business without fear of losing your name after the failure of a particular model. You do not want to enter information about yourself in the public register.
A nominee director is a person who performs administrative functions and is recorded in the constituent documents but has the right to act only after written or oral instructions/instructions from the beneficiary. According to the agreement, the nominee director is exempted from all kinds of claims from the state and creditors.
Nominee service, as a way of hiding the real identity of the owner, has existed for a very long time and is actively used in many countries and offshore jurisdictions.
In countries such as Georgia, the United Kingdom, and Hong Kong, registers of directors and shareholders are public. Anyone who has a justification can get to know who owns a particular company. This fact is not to everyone’s taste, because the real name, address, and type of activity of the company are indicated in the register. Therefore, the nominee service helps to avoid the disclosure of such personal information.
Nominee service in Georgia
In Georgia, both a foreigner and a citizen of the country, including the same person, can be a nominal director and founder.
What a nominee director / founder can do:
- Register a legal entity;
- Open a corporate account;
- Negotiate with state institutions of Georgia.
Agreement with a nominee director in Georgia
To use the nominee service, you need to conclude an agreement. Responsibility, validity period, and all additional conditions are determined by the agreement of the parties.
The terms of confidentiality are prescribed in the agreement. The nominee director is prohibited from informing third parties:
- on the accounting policy of the company;
- about employees and management;
- disclose counterparties;
- to devote to the details of the business plan and activities of the company.
Duties of the nominee director, which are spelled out in the contract:
- Act as the head of a legal entity;
- Act only in the interests of the company;
- Solve administrative, legal and tax problems;
- Search for employees and monitor the implementation of tasks;
- Keep abreast of any changes to personal data;
- Maintain bookkeeping and store primary documentation;
- Report regularly.
The nominee director has no right to transfer the obligations assigned to him to third parties.
Has no right to act without orders from the real owner. Actions also include:
- Conclusion of any agreements and contracts;
- Sending bank transfers (only after written permission).
It should be noted that the scope of nominee service is not directly regulated by the legislation of the r. Georgia and in accordance with the norms, it is the official director of the company, in accordance with the constituent documents, will be responsible for the obligations of the legal entity.
As for the liability of the nominee director for the criminal legislation of Georgia, this area is not regulated by the country’s criminal code. For example, in Russia, the legislation does not provide for the presence of a nominee director as a legal entity. But criminal liability is spelled out for the transfer of personal data (passport) to third parties in order to obtain benefits. In fact, having become a nominee director and having received money for this, you will fall under Article 173 of the Criminal Code. In addition, intermediaries who contributed to obtaining a power of attorney that allows registering a company will be held accountable.
In any case, the sphere of nominee service has always been and remains rather controversial, and any entrepreneur interested in doing business through third parties should take into account the high risks in this area.