When setting up a new business overseas, Government regulations require limited liability companies to hire a resident director who may either be a citizen or a foreign national holding a valid residency permit. While the proprietary companies are required to have at least one director who must be a resident of the country where a new business has to be established, public companies must have at least three directors of which two must necessarily be the residents of the same country.
Appointing a resident director offers multitude of benefits and allows the directors to focus on what matters the most as the former takes care of diverse business operations, including the following and more:
- Handling the financial aspects of business.
- Reviewing company’s structure.
- Confirming whether a company fully adheres to rules and regulations of governmental instrumentality that it operates under.
- If and when required, understanding why a director has been replaced or has resigned. It includes analysing the reasons for resignation or replacement in detail.
Why is a resident director still needed?
In today’s communication era, the need for hiring a resident director is more than merely having a point of contact. When a company has at least one person, who holds a position of responsibility in a country, the government has greater recourse in case a company or its management do something wrong. This is why it’s important that the resident directors you appoint are seasoned professionals with clear understanding of local company law. At the same time, companies hiring resident directors must provide them with adequate information to perform their roles as needed by local laws.
Benefits of hiring a resident director
In addition to the responsibilities mentioned above, there are other roles performed by a resident director, allowing the businesses to enjoy the benefits of availing resident directors services.
Cost effective solution
When businesses start a new venture overseas, or in other case, plan to expand, it becomes extremely essential for them to minimise their expenses while establishing their brand and increasing their client base. This is when appointing a resident director fills the bill. Being a knowledgeable professional, an experienced resident director can help you keep your expenses low, and at the same time ascertain that you retain effective managerial control over your business.
Adhere to local laws
Needless to say, it is important for every company to comply with local laws while in operation. Given that professional a resident director is well versed with legal aspects related to a business, he or she can help ensure that your company adheres to local government laws that it is operating under. Moreover, hiring a resident director will keep you compliant with residency requirement at all times.
Maintain your privacy
Quite often, small and large clients do not want their names to appear on a company’s corporate register, particularly when these registers are to be viewed via a basic company search. The services offered by nominee directors can help safeguard your reputation, current employment, other business interests, and family and associates.
Who should you appoint as your resident director?
It is worth understanding that not everyone can be a resident director. You need to hire someone who is experienced and can help you avoid problems. He or she should be able to alert you to legal requirements that your business must adhere to. If the director you hire cannot help you with the same, you might have to seek external legal advice, which can cost your business an arm and a leg. Moreover, by the time you find the right external help, you might have already run into problems, which can be costly too.
A good resident director holds both business and legal experience. He or she understands your current company structure and future business needs as well as plans. Complete understanding of this allows him or her to deliver the right services that will aid in business growth and at the same time help your company to comply with local laws.