Regular proactive dialogue with the client and other board directors Review and signing of all contracts to be entered into by the company, cooperation
with the client’s lawyers, tax advisers and other professionals Review and approval of the company’s financial statements, related communication
with the client’s internal and/or external auditors, government authorities, etc. Review of proposed changes to statutory documentation, including the company’s
memorandum and articles of association, prior to the company’s adoption of such changes If the company is an investment fund, review of its offering document and other
materials prior to adoption of such documents Taxes
Tomáš Vinkler Managing Director VISTRA CZECH REPUBLIC AND SLOVAKIA tomas.vinkler@vistra.com
Top sectors
www.vistra.com
M&A
Summary Nominee services are not a magic bullet that eliminates all concerns and problems associated with a new investment. However, if used in the right way and with the right partner, they can save a lot of time and financial resources and add an extra dimension of comfort and corporate governance.
as required by the company’s investment strategy and activities
Human resources
One-off transaction and other reasons – Clients involved in an M&A transaction using a special-purpose vehicle frequently use outsourced directors who know how these transactions work, know other local service providers like lawyers, tax advisers, etc. and are happy to assist the client for a relatively short period of time, for which it would be even more difficult to find a director of decent quality.
Attendance at regular board meetings in person or by conference call as frequently
Permitting and construction
Limited presence in the country – This is typical for inward investors who do not need many people locally and manage their investments in multiple countries from their headquarters abroad. Having a local director with a proven track record who knows local legislation and the business community, can recommend local experts in other service areas and is used to daily operational matters such as how banks, the tax office and other governmental authorities operate saves the client time and resources and is more effective than having an expatriate dealing with these issues in multiple jurisdictions at once.
Employees do not want to do it – As mentioned earlier, directorship services represent certain risks for the directors. A professional provider has many checks and controls together with insurance and since it is a product for these providers, the procedures and processes are well designed and maintained, which makes it safer for the nominee than for someone without this support, as well as more efficient for the client. Without such a setup, the risks for an employee who serves as director, among other things, are not insignificant.
Among other things, the agenda of a director comprises but is not limited to the following:
Properties
Independence and responsibility – Having an independent trust firm with professional indemnity insurance and director and officers liability insurance appropriate to the size of its clients and which can also handle back-office management (accounting, payroll, compliance, etc.) is much more effective than using one’s own employee, who not only has to deal with directorship tasks in addition to his/her primary duties, but may also go on holiday, become ill, leave the company unexpectedly or pursue his/her own interests.
Language barrier – The director must read and sign many corporate documents, many of which can only be in the local language; having a native speaker of the given language is an advantage.
The areas in which a director typically plays an active role vary and the director should be generally aware of all key happenings in the company. Even if it is typically the client who makes business decisions, sets the corporate strategy and instructs the director on execution, the director should check if the tasks are compliant with local legislation and oversee their proper execution.
R&D
Local management and control – If the client has its headquarters abroad, appointing a foreigner as the director of a local company might lead to speculation with respect to where the real management and control are being executed. This risk is mitigated by appointing a professional local director who lives in the same country in which the company is registered.
Cost – It is cheaper to outsource to an experienced local director than to move one’s own full-time employee with the required seniority and experience to a foreign country to serve as a director.
What directors do
Finance
Why and when to use a nominee director Why use a nominee director when many companies use their own staff? Why not use your own people when finding the right provider is not always an easy task? To answer these questions, some commonly cited reasons for choosing this service are provided below.
Level of experience – Sometimes clients have a few employees on the local market, but none with sufficient seniority or experience. Clients then often choose to outsource the directorship service rather than use their own employee who lacks relevant experience and would be distracted from his/her primary work by directorship duties.
First steps
body trustworthy in such a position. Reputable trust firms serve as a sort of guarantor in this relationship, as they have adequate procedures in place ensuring that their directors will act strictly on the client’s instructions only. This means that the client decides what contract to enter into and the director, in cooperation with the client’s lawyers, tax advisers and other professionals, executes the client’s wishes. It is for this reason that clients usually reach out to trust firms for this type of nominee service.
The Czech Republic
Nominee services