Being a director “in name only” is not a harmless formality. An entry in a register, a signature on documents and the status of a person controlling a company may require explanations years later and put personal assets at risk.
A case from our practice
A client came to us who had previously agreed, at her employer’s request, to become the formal head of a legal entity. She later faced the risk of claims arising from the company’s activities. It was now her own financial security and her family’s peace of mind at risk, rather than merely someone else’s organisation.
We examined the company’s management history, potential creditor claims and enforcement risks, as well as documents concerning family property and the source of funds. All information in this publication is anonymised, and details protected by advocate–client privilege are not disclosed.
Why the word “nominee” does not absolve a director
Courts and creditors focus on actual powers, signatures, decisions and conduct, rather than informal arrangements. In certain circumstances, the acts or omissions of a controlling person may give rise to claims for damages or subsidiary liability.
Defence therefore begins with a chronology, rather than simply saying “I made no decisions”: who gave instructions, who controlled the accounts, which documents were signed, when the person learned of violations and what steps they then took.
Marital agreements and loans: genuine and transparent transactions only
Lawful family and property planning may include discussing a marital agreement and a loan between spouses. But these documents are effective only when they reflect genuine relationships: money has actually been transferred, its source is evidenced, dates are truthful, terms are clear and material circumstances are disclosed to the notary.
An essential boundary: marital agreements, loans and notarisation must not be used to conceal assets, create fictitious debts or harm creditors. Such transactions may be challenged. Notarisation confirms that a transaction took place; it does not make it immune from challenge.
What to check before agreeing to become a director
- obtain independent legal advice rather than relying on an employer’s promise;
- do not sign blank or unclear documents, or documents for which you are not given a copy;
- understand who actually controls accounts, reporting, contracts and staff;
- retain copies of decisions, powers of attorney, correspondence and documents handed over;
- check the company’s details and formally terminate your powers in good time.
If the risk has already arisen
What is needed is a comprehensive assessment, not a single “protective” document: the corporate history, creditor claims, court and enforcement proceedings, flows of money, the marital property regime and the good faith of everyone involved. The sooner the evidence is assembled, the more lawful defence options remain available.
This material is for information and does not promise an outcome. The legal position depends on the documents and circumstances of the individual case.
Legal basis
Article 61.11 of the Bankruptcy Law: subsidiary liability ↗
Article 61.2 of the Bankruptcy Law: challenging transactions ↗
Article 46 of the Family Code: safeguards for creditors’ rights ↗