Definition
Nominee Director
A nominee director is appointed to a board to represent the interests of a specific stakeholder, such as an investor, lender or the government.
Venture and PE investors typically negotiate the right to appoint a nominee director as part of the term sheet, giving them a board seat to monitor and influence the company. Lenders and institutions may also place nominees. The nominee represents the appointing party's interests while still owing fiduciary duties to the company as a whole.
Under the Companies Act, a nominee director is treated like any other director for duties and liabilities. Their presence is a key governance and control feature in startup and PE-backed companies.
Related terms
- Term SheetA term sheet is the non-binding document that sets out the key terms of a proposed startup investment before definitive agreements are drafted.
- Board of DirectorsThe board of directors is the group elected by shareholders to oversee a company's management and set its strategic direction.
- Executive vs Non-Executive DirectorAn executive director is part of day-to-day management, while a non-executive director sits on the board without an operational role.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.