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Nominee director in private company

Swati Sharma (TRAINEE) (328 Points)

02 November 2017

When 2 body corporate are promoters in incorporating a new Pvt Limited Company say Co. "ABC". Both the Body corporate are appointing one Director from Each side in the new co ABC. So Shall I designate them as Nominee Director in Co. ABC while filling Spice form??

Sor Shall just mention as Director

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6 Replies

Madhwesh K (272 Points)
Replied 02 November 2017

they are "nominee" of shareholders from "business perspective" ... they are not "nominee directors" from "company law" perspective...

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Madhwesh K (272 Points)
Replied 02 November 2017

hence pls select only "director"

RAVI SAINI (Company Secretary) (84 Points)
Replied 03 November 2017

Is there any shareholder's aggrement entered between both the entities to nominate directors on the board of the new entity by the existing one? if Yes, than you can designate them as Nominee Director in ABC company.

Feni Shah (Founder of Feni Shah & Associates and Visiting Faculty) (53 Points)
Replied 04 November 2017

Just Director

Swati Sharma (TRAINEE) (328 Points)
Replied 06 November 2017

Yes there is JV Agreement entered between both the entities to nominate directors on the board of the new entity by the existing one.

But what is the diffrerence if I designated them as Nominee Director and Just Director

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Madhwesh K (272 Points)
Replied 06 November 2017

Swati.. under companies act 2013, the term "nominee director" is used only for the purpose of excluding such director from position of independent director.. ie., the context in which "nominee director" is used is with respect to independent director.. since private company is not covered under provisions of independent director, it really doesn't make difference to private company whether it designates a person as director as director or nominee director.. irrespective of such designation, his legal position remains same in that private company..

so, since private company is not covered under independent director's provisions and consequently concept of nominee director doesn't apply to it, it is advisable to use "director" only.. in the context of private company "nominee of shareholders" is a commercial position and not a legal one..