For decades, serving as a nominee director in Zambia carried an unspoken convenience. A professional sat on a board, signed resolutions, and attended meetings, all while taking instructions from an undisclosed principal. The arrangement was common, widely accepted, and largely invisible. That era ended on 30 December 2025. The Companies (Amendment) Act No. 23 of 2025 has swept away the shadows that once protected nominee arrangements, replacing opacity with mandatory disclosure, personal accountability, and severe penalties for non-compliance.

The amendment introduces one of Africa’s most detailed beneficial ownership transparency frameworks, fundamentally transforming the obligations of nominee shareholders and directors. Under the new law, every nominee director must now disclose their status, their nominator’s identity, and the full terms of their appointment, with filings required within just fourteen days. More significantly, the law reinforces an established but often overlooked principle: nominee directors owe the same fiduciary duties to the company as any other director, and they cannot contract out of those obligations.

This guide examines the transformed legal landscape for nominee directors in Zambia. It explains the new disclosure requirements, analyses the core fiduciary duties that remain unchanged, explores the practical challenges of managing conflicts between nominator instructions and company interests, and provides a clear compliance roadmap for directors navigating this high-stakes balancing act.

What the 2025 Amendment Changed: Disclosure Above All

The Companies (Amendment) Act No. 23 of 2025 received presidential assent on 23 December 2025 and became effective on 30 December 2025, giving companies almost no transition period. The amendment’s most immediate impact on nominee directors is the introduction of mandatory, detailed disclosure.

Previously, nominee arrangements could remain off the public record. A director could act on behalf of another party without any formal declaration beyond the director’s own name on the register. The amendment closes this loophole entirely. Nominee shareholders and directors must now disclose their status, their nominator’s identity, and the terms of their appointment. These disclosures must be filed with the Patents and Companies Registration Agency (PACRA) within fourteen days of the arrangement commencing or changing.

The amendment also broadened the definition of “beneficial owner” to include any natural person holding at least five percent of a company’s shares, exercising ultimate effective control, or receiving substantial economic benefits from a legal person through any arrangement. This expansive definition captures previously opaque ownership structures including nominee arrangements, trust structures, and indirect control mechanisms. For nominee directors, this means that the person behind the nomination is now a matter of public record, accessible to law enforcement and, under certain conditions, to the public.

The Patents and Companies Registration Agency has simultaneously launched a three-year reform programme to overhaul Zambia’s beneficial ownership registers, moving from a system that merely records filings to a dynamic platform that enhances transparency and strengthens corporate governance. By the end of 2025, beneficial ownership reporting stood at only forty-four percent, highlighting the scale of the compliance challenge facing Zambian companies. The new regime makes accurate, up-to-date beneficial ownership information mandatory at incorporation, in annual returns, and upon PACRA request.

What Remained Unchanged: The Core Fiduciary Duties

While the amendment transformed disclosure requirements, it did not alter the fundamental fiduciary duties that all directors owe to their companies. These duties are codified in sections 105, 106, and 107 of the Companies Act No. 10 of 2017 and apply equally to nominee directors, executive directors, and non-executive directors.

The duty to act in the best interests of the company is paramount. Under section 106 of the Companies Act, directors have fiduciary duties to the company that include acting in the company’s best interests and with good faith. This duty overrides any obligation a nominee director might feel toward their nominator. The company is the principal, and the director’s allegiance must be to the company alone.

The duty to act honestly and in good faith requires directors to exercise independent judgment, free from improper influence. For a nominee director, this means that even when appointed by a specific shareholder or stakeholder, the director cannot simply follow instructions that might harm the company. The director must evaluate each decision on its merits and vote according to what best serves the company’s interests.

The duty of reasonable care, skill, and diligence demands that directors apply the competence expected of a person carrying out the functions of a director. Ignorance is not a defence. A nominee director who signs off on transactions without proper review, who fails to attend board meetings, or who rubber-stamps decisions made by others can be held personally liable for resulting losses.

The duty to avoid conflicts of interest requires directors to recuse themselves from decisions where their personal interests or the interests of associated parties conflict with those of the company. For nominee directors, this duty is particularly challenging because the nominator’s interests often diverge from the company’s interests. In such situations, the law is clear: the company’s interests must prevail.

The Conflict Conundrum: Serving Two Masters

The fundamental tension at the heart of nominee directorship is the conflict between representing the nominator’s interests and fulfilling fiduciary duties to the company. This is not a new problem, but the 2025 amendment has made it far more consequential by exposing the relationship to public scrutiny and regulatory enforcement.

Directors, including nominee directors, owe the same fiduciary duties to the company and must exercise independent judgment in the best interests of the company. They should avoid conflicts of interest and act in the best interest of subsidiaries when serving on their boards. This principle applies regardless of the nominator’s instructions or expectations. A nominee director is not permitted to disregard the interests of the company to which they are a director, even when acting under a contractual obligation to their nominator.

The common law position, consistently upheld in jurisdictions that share Zambia’s English common law heritage, is that even though nominee directors may be representing the interests of their nominators, they remain legally obliged to serve and prioritise the interests of the company. A nominee director cannot contractually override their fiduciary obligations. Any agreement that purports to bind a nominee director to follow instructions that conflict with the company’s best interests is void as contrary to public policy.

This creates a genuine dilemma. A nominee director appointed by a private equity fund to protect its investment must still vote in the best interests of the portfolio company, even if that means rejecting a distribution that the fund would prefer. A nominee director representing a minority shareholder must still approve a transaction that benefits the company overall, even if the minority shareholder objects. The law does not permit the nominee to resolve this conflict by simply following orders.

The practical consequence is that nominee directors must develop sophisticated conflict management strategies. They must identify potential conflicts before they arise, disclose them fully to the board, and where necessary, recuse themselves from specific decisions. They cannot wait for a conflict to become a crisis. Proactive disclosure is not merely good governance; it is a legal necessity.

Personal Liability: The Price of Failure

The 2025 amendment substantially increases the personal liability exposure of directors who fail to comply with their obligations. Under the amended Act, directors face parallel criminal and administrative sanctions, including multi-million penalty unit fines, turnover-based penalties of up to ten percent of annual turnover, and imprisonment of up to ten years for serious breaches.

Personal liability can arise in several ways. A director who knowingly participates in a breach of the Companies Act may be held personally liable for any loss, damages, or costs sustained by the company as a result of such breach. This includes losses arising from regulatory fines, legal costs, and reputational damage. A director who fails to ensure that the company maintains accurate beneficial ownership records faces separate penalties under the Act, and those penalties can be imposed directly on the director personally, not just on the company.

The risk of deregistration has also increased substantially. PACRA’s enforcement powers have been expanded, allowing the Registrar to conduct verification exercises, order updates within thirty days, impose administrative penalties, publicly flag non-compliance, and de-register companies for sustained breaches. De-registration is now a routine enforcement tool, not an exception. For a nominee director, the deregistration of a company on whose board they serve is not merely an inconvenience; it is a career-defining event that signals to future employers and nominators that the director failed in their core compliance obligations.

Practical Compliance Steps for Nominee Directors

Navigating the new legal landscape requires immediate, concrete action from every nominee director serving on a Zambian company board. The following steps are essential.

First, review all existing nominee arrangements. Identify every directorship where you are acting on behalf of another party. Document the identity of the nominator, the nature of the relationship, and any written agreements governing your appointment. If any arrangement is not formally documented, create a written agreement that clearly defines the scope of your authority and the limits of your obligations to the nominator.

Second, file the required disclosures with PACRA within the fourteen-day deadline. The amendment requires nominee shareholders and directors to disclose their status, their nominator, and the terms of appointment. Failure to file within the prescribed timeframe exposes both the company and the individual director to sanctions. The filings must be accurate and complete. Incomplete or inaccurate disclosures are themselves a compliance breach.

Third, ensure that the company’s beneficial ownership register is accurate and up to date. The register must include every natural person with a five percent or greater beneficial interest, traced through all intermediate legal entities. If you are a nominee director, your nominator must appear on this register. If the register is incomplete, you have a duty as a director to ensure it is corrected.

Fourth, review the company’s directors and officers liability insurance. The increased penalties under the amended Act mean that personal exposure is greater than ever. Ensure that the company’s insurance policy adequately covers nominee directors and that the policy has not been voided by any non-disclosure of nominee arrangements.

Fifth, establish clear protocols for managing conflicts of interest. The board should adopt a formal conflicts policy that requires directors to disclose any potential conflict before a decision is made, to recuse themselves from relevant discussions and votes, and to have recusals recorded in the board minutes. As a nominee director, you should proactively disclose your nominator’s identity and interests to the board at the outset of your appointment.

Sixth, document every decision. Board minutes should record not only what was decided but also the basis for the decision. If you are a nominee director facing a potential conflict, the minutes should show that you disclosed the conflict, that you recused yourself if appropriate, and that the decision was made by independent directors based on the company’s best interests.

Why This Matters: Beyond Compliance

The 2025 amendments to the Companies Act are not merely a compliance exercise. They represent a fundamental shift in how Zambia approaches corporate governance, transparency, and accountability. The country has aligned its legal framework with international anti-money laundering and counter-terrorism financing standards, and the Patents and Companies Registration Agency is building a Next Generation Business and Beneficial Ownership Register that will enhance data accuracy, improve inter-agency collaboration, and support Zambia’s broader efforts to combat corruption.

For nominee directors, this shift presents both a challenge and an opportunity. The challenge is the increased compliance burden and the heightened risk of personal liability. The opportunity is the chance to demonstrate professional integrity and governance excellence in a landscape where transparency is increasingly valued. Directors who embrace the new regime, who proactively disclose their arrangements, and who navigate conflicts with skill and honesty will be in high demand. Those who resist, who hide behind outdated practices, or who treat the new requirements as mere paperwork will find themselves exposed.

Conclusion: The Balancing Act Continues

The role of the nominee director has not been abolished by the 2025 amendment. Legitimate nominee arrangements remain lawful and useful for investors, family trusts, and institutional shareholders who need representation on company boards. What has changed is the visibility of those arrangements and the accountability attached to them.

The balancing act at the heart of nominee directorship continues. Nominee directors must still serve two masters, but the law has made clear which master’s interests prevail. The company’s interests come first, always. The duty to act in the best interests of the company overrides any obligation to a nominator. Conflicts must be disclosed and managed, not hidden. Personal liability for failure is real and substantial.

For nominee directors willing to embrace these new realities, the path forward is clear. Disclose your arrangements fully. File the required forms on time. Document your decisions carefully. Recuse yourself when conflicts arise. Serve the company’s interests above all others. The balancing act is demanding, but it is not impossible. With proper attention to compliance, careful management of conflicts, and a clear understanding of fiduciary duties, nominee directors can continue to play a valuable role in Zambia’s corporate landscape while protecting themselves from the substantial risks that the new law imposes.

The transition to the new regime is urgent. The Companies (Amendment) Act No. 23 of 2025 is already in force. PACRA is actively modernising its registers and expanding its enforcement capacity. The era of undisclosed nominee arrangements is over. The only question that remains for each nominee director is whether they will act now to bring their arrangements into compliance or wait until enforcement action forces the issue.