DEFINITION of Dummy Director
A dummy director is a member of the board of directors who acts and votes on behalf of a non-board member. Although nominally a director, a dummy director is in fact only a figurehead and exercises no real control over the company, nor has any real financial interest in it. I is also known as an accommodation director or nominal director.
BREAKING DOWN Dummy Director
Dummy directors are most commonly used by start-up companies that are going public. To meet regulatory requirements, they establish a board of directors by electing a number of nominee directors to serve temporarily, and act on behalf of management, until permanent directors can be found.
As nominee directors, dummy directors would feel conflicted if they sat on the board for any length of time. This is because all directors have legal fiduciary duties to the corporation that are founded upon good faith, candor, confidentiality and the best interests of the corporation.