At WB Group, we support clients with Cayman structuring across formation, governance, and ongoing compliance, including acting as nominee directors where required to meet Cayman regulatory expectations or economic substance requirement. If you’d like to learn more, we’d be pleased to arrange a conversation.
In offshore structuring, the term nominee director gets thrown around a lot. But in the Cayman Islands, it doesn’t mean what many think. Unlike jurisdictions where nominee roles can be mere formalities, Cayman law imposes strict fiduciary duties on all directors, regardless of how they’re appointed.
Under Cayman law, there is no recognised legal concept of a ‘nominee director.’ All directors, regardless of whether they are internal staff, external providers, or investor-appointed, are subject to full fiduciary duties. These include duties of care, loyalty, and acting in good faith in the best interests of the company.
Directors have a duty to act independently, exercise reasonable care, avoid conflicts of interest, and promote the success of the company as a whole. These duties are owed to the company itself, not to any individual shareholder or appointing party. A director cannot simply act on the instructions of a beneficial owner or shareholder without independently considering the company’s interests.
Even if someone colloquially refers to a Cayman director as a “nominee,” that individual is still legally bound to exercise independent judgment. Deliberately subordinating a director’s judgment to that of an external party, through powers of attorney, side letters, or informal instruction, may result in breach of fiduciary duty, regulatory sanctions, or personal liability..
Contrast this with Panama, where nominee directors are more widely used and accepted. Panama’s corporate law has historically facilitated the appointment of nominee directors as a service. This is often provided by law firms or corporate service providers, which appear on public records but act in accordance with private agreements (e.g., powers of attorney or side letters) that delegate control to beneficial owners.
While still legally directors, these individuals often serve a more administrative role. However, global transparency initiatives have begun to challenge the sustainability of these practices.
Other jurisdictions like the British Virgin Islands (BVI) or Belize also allow widespread use of nominee structures, within the constraints of evolving global standards such as the OECD’s transparency mandates and domestic laws like the BOSS Act in BVI.
The key takeaway is that while the language of nominee directors may be universal in offshore finance, the legal reality is jurisdiction specific. In the Cayman Islands, the regulatory and legal framework makes clear that directors cannot act as mere figureheads. Fiduciary responsibility is paramount, and all directors, regardless of how they are described, must act independently and in the best interests of the company.
This distinction is one of Cayman’s key advantages: it fosters stronger corporate governance, investor protection, and regulatory credibility compared to many peer jurisdictions.
For practitioners and clients alike, understanding this distinction is crucial when navigating offshore structures. Labels can be misleading, but liabilities are very real.
At WB Group, we help clients build Cayman structures that meet the expectations of investors, regulators, and tax authorities. Whether you’re structuring a fund, foundation, or holding vehicle, we advise on governance models that are not only compliant, but commercially effective.