Nominee director

A company director appointed by a person or group to represent the interests of that person or group. A nominee director may be appointed (by contract, or by resolution at a company meeting) on behalf of:

• Major shareholder/s
• Creditor/s
• Interest group
• Employee/s

A nominee director has continuing loyalty to the appointor or other interest in the company, and it is generally understood that the nominee director will represent the interest of their appointor at the board level.

However, this can create a conflict of interests for the nominee director, between the duties to their appointor and the duties to the company. It is accepted that like all directors, nominee directors are entitled to all company information needed to perform their duties, except where it is clear that they will misuse that information. Where a conflict between these interests arises, the nominee director must be careful to balance these (putting the interests of the company at which they are a nominee director first) without breaching obligations and director’s duties contained in the Corporations Act. The director’s duties under the Act cannot be varied, and taking instructions from an appointor would constitute a breach, and not a valid defence.