In the context of registering limited companies, a deed of indemnity might represent an agreement for a nominee director, secretary or shareholder to act for a particular company. The document is drawn up between the persons supplying the nominees and the individuals who wish to use their services.
The deed of indemnity agreement will seek to exclude the liability of the nominees for the future acts of the persons who will be responsible for running the company.
In these cases, the deed of indemnity is signed by the purchasers of the nominee services and witnessed by a solicitor or other professional person.
Most company formation agents offer a nominee secretary in addition to their incorporation services and products. Some may also provide nominee director and shareholder facilities to the general public. This allows companies to be incorporated with whichever nominees the purchaser requires and thus means that their name would not appear on the records at Companies House at any stage of the company formation.
Before setting up a company and purchasing nominees with a particular formation agent, it is useful to clarify the whole process: What the nominees will and will not engage in? What the purchaser will be required to sign? The purchaser should ask that any representations made to be given in writing and signed by an authorised person.
Understanding a Deed of Indemnity Nominee Agreement
A person who is asked to sign a deed of indemnity should obviously read the document and clarify any provisions which they believe are unclear. In exceptional circumstances, the company registration agent may revise their standard agreement, either to cover a specific risk which has come to light during discussions with the purchaser or to remove a clause which the person forming the company is unhappy with.
From the point of view of the person using nominees, the limited liability which might exist as a result of setting up a limited company may afford them protection in some cases. They will still however be subject to the same standards which would exist if they were the actual named director, secretary or shareholder of the company. That is; they would still have to undertake their duties as if they were named as one of these officers on the Companies House register.