Governance appointments are requested in the same tone as administrative services, and they are not administrative services. A director owes duties to the company and may be personally liable for failures in its management. A trustee holds legal title to assets and is accountable to beneficiaries for how that title is exercised. Neither position is diminished by an understanding between the parties that the appointee will follow instructions.
The word most often used in these conversations is nominee, and it carries an implication the law does not generally support. Describing a director as a nominee does not alter the duties the office imposes, and a court or a regulator examining the conduct of the company will look at what the director did, not at what the appointment was called.
What a directorship actually carries
A director is required to act within the company’s constitution, to promote its interests, to exercise independent judgement, and to apply reasonable care, skill and diligence. The duty of independent judgement is the one that matters most here, because it is directly inconsistent with an arrangement under which the director simply executes the instructions of a shareholder. A director who does so has not avoided the duty; they have breached it.
The exposures that follow are practical. Where a company continues to trade in circumstances where it should not, where filings are not made, where taxes are not accounted for, or where the company is used for a purpose the director did not examine, personal liability may attach, and it attaches to the person holding the office. Disqualification and regulatory consequences are additional. That the director was told they would not be involved is not a defence to any of it.
An appointment describes what a person is responsible for, not what they have agreed to do.
Trusteeship, and why it is heavier still
A trustee’s position is more onerous than a director’s in several respects. The trustee holds the assets, is accountable to beneficiaries whose interests may conflict with each other and with the settlor’s wishes, and is subject to duties of loyalty and prudence enforced by the beneficiaries themselves. A letter of wishes is not an instruction, and a trustee who treats it as one has failed to exercise the discretion the trust conferred.
The consequence is that a trusteeship cannot sensibly be accepted as a passive role. It requires the trustee to understand the assets, to review them, to consider the beneficiaries’ circumstances and to keep records of having done so. Where a family wants an arrangement in which someone holds title and does nothing, what they are describing is not a trust that will withstand examination, and the appropriate response is to say so rather than to accept the appointment.
The basis on which the firm accepts appointments
The firm accepts governance appointments only where they are lawful in the jurisdiction concerned, permitted by its licence, and separately agreed in writing. That is a statement of the minimum conditions rather than of willingness in any particular case, and appointments are considered individually against the structure, the activity and the client acceptance position, on the understanding that the person appointed will actually perform the role.
Where an appointment is accepted, it is accompanied by what the role requires: proper information flow, board meetings that are held rather than papered, decisions taken by the appointee on the material before them, and records kept accordingly. Where a client’s expectation is that the appointee will hold the office and take no part in the company’s affairs, the firm declines, because that arrangement exposes the appointee to liability for conduct they have agreed not to examine, and offers the client a protection that does not exist.
This note is general in application and does not constitute legal, tax or regulatory advice. It describes practice observed across institutions and should not be relied upon in relation to any particular appointment.