COUNTRY

Malaysia

NOMINEE DIRECTOR IN MALAYSIA

It is a mandatory requirement for all Malaysia companies to appoint at least one Malaysia resident director. To ensure the company is in good standing, it is common for foreigners to establish a company with a nominee director in Malaysia serving as the local director.

Relin Consultants can assist you with Malaysia company registration and provide you with nominee director services.

RESPONSIBILITIES OF NOMINEE DIRECTOR MALAYSIA

Once an individual is appointed as a Malaysia Company’s director, irrespective of whether he is a nominee director or an active director. The individual will be legally bounded by the Malaysian Companies Act 2016. Hence, he/she will have fiduciary duties towards the company and the shareholders of the Malaysia Company.

Failure to fulfill the fiduciary duties might subject the person to criminal penalties or removal from the company as the director. All Malaysian company is required to have at least one director.

A foreigner (non-Malaysian resident) cannot be appointed as a sole director. A public company is required to have a minimum of two directors. Relin Consultants can provide nominee director service for your Malaysian Company.

Definition of a director

A director is defined as any person that is occupying the position of “director” of a corporation irrespective of whatever name is called, and it includes a person in accordance with whose directions or instructions the majority of the directors of a corporation are accustomed to act and an alternate or substitute director.

DUTIES OF A NOMINEE DIRECTOR IN MALAYSIA

Act in the best interest and good faith of the company

A company director must exercise their power in the best interest and good faith of the Company. This means that the director must at all times exercise decisions based on the long-term consequences of the company. The director must also ensure the interests/and relationships of the company stakeholders are well maintained and taken care of.

The director must also ensure that the company and its employees do not violate the Companies Act, the company’s constitution, or any other legal or official regulations.

Business Judgement Rule

As mentioned above, when making a business judgment, the director must act in a manner that is not in their self-interest but instead based on the best interest of the company.

Reliance on Information provided by others

The director of the company can/may rely on the information provided by other stakeholders when performing his duty as the director. This means he/she relies on the information provided by an employee of the company (who has experience/knowledge on the subject matters) or another director.

A director can also choose to rely on externally appointed experts or professionals. Some companies also form a committee with a group of individuals with different backgrounds to provide the director as and when required. A director of the Malaysian Company cannot assume that his responsibilities are discharged just because he relied on an expert. He/she is still required to

Responsibility for the action of the delegate

If a director chooses to delegate any of his/her power on the board to another director, employee, external expert, or a committee as per the company act by the company’s constitution via the board resolution or members resolutions, the director could then discharge his duty if there is a reasonable assurance to support that the delegatee will be able to exercise power and his duty competently and reliably.

Responsibility for implementing a system of internal control

If the Malaysian Company is a Public Limited Company or a subsidiary of a listed company. The director will also ensure that the company has implemented a reliable internal control system.  This is to ensure that the company’s assets are safeguarded, and also the company can operate in a manner without causing damage to stakeholders.


TYPES OF DIRECTORS IN MALAYSIA

Executive Director:

An executive director is a person who manages the company and is actively involved in the operations of the company on a day-to-day basis.

Non-Executive Director:

A non-executive director usually will be an expert in his industry. The person will not be actively involved in the operations. However, they will provide guidance and consultation on certain matters relating to managing the company.

Nominee Director:

A nominee director is most commonly appointed to meet the statutory requirements. (i.e. resident director requirements). He/she will not be involved in the operations of the company unless he is also appointed as an employee. It is quite common for an employee of the company to take up the nominee director role as well.

Shadow Director:

A shadow director is technically a person who has not been appointed as the director but can control the board of directors’ actions. The majority of the directors act on his direction. An example will be a family-owned business where the directors are siblings, and the shadow director could be one of the parents.

Alternate Director:

An alternate director is a substitute or a temporary director nominated to act on behalf of the existing director to perform a certain task. (i.e, attend meetings etc). Most companies do not practice hiring an alternate director unless the company’s constitution permits it.

Other Characteristics Of A Local Nominee Director In Malaysia That You Should Know Of?

  • According to the code of conduct, a nominee director bears the same obligations as other directors with various titles. A nominee director is generally also the company’s De jure director.
  • In short, the nominee director represents his appointer’s specific interests and concerns on the board of directors.
  • The nominee is also known as a non-executive director on a company’s board of directors or as a local person who lends his or her name to a non-foreigner trustee on the board of a company.
  • A nominee director does not own any stock in the firm.
  • A nominee director does not meddle with the company’s business activities.
  • A nominee director is not the company bank account’s bank signatory, so you can be assured that your company’s finances are secured.
  • A nominee director exclusively represents the interests of the person who nominated him.
  • When a conflict of interest emerges between the nominator’s and the company’s interests, a nominated director must avoid it by his fiduciary obligation.

ADVANTAGES OF HIRING A NOMINEE DIRECTOR IN MALAYSIA

Cost efficiency

International investors setting up an Sdn Bhd in Malaysia will usually prefer to be appointed as one of the executive directors of the new company. Hence they will not require a Malaysian executive in the initial stage. Appointing a nominee director will be extremely cost-efficient as compared to employing a full-time individual who can take up the role.

Expertise

Individuals who take up the nominee director roles in Malaysia are usually employees of a professional firm such as Relin Consultants. By appointing a nominee director, the company will be able to rely on the expertise of the nominee director on various matters.

Professional firms providing such nominee directors will also take additional precautionary measures and ensure that the client company is in good standing to safeguard the employee and the client. Hence such an arrangement will be extremely beneficial for a company that does not wish to incur significant overhead costs.

Privacy

In some circumstances, business owners could wish to maintain their anonymity, particularly if they run many businesses or want to avoid being directly exposed to the public. The real owner’s identity can be protected by a nominee director.

Continuity

Having a local nominee director ensures continuity in the management of the firm, enabling continued operations and decision-making in Malaysia if the real owner of the company doesn’t reside there.
Minimizing cultural barriers: Any communication gaps that could occur as a result of linguistic and cultural differences can be minimized by a nominee director who is familiar with the regional business practices and language.

Compliance with the law

According to Malaysian law, every company must have at least one director who regularly resides there. Employing a nominee director who resides in Malaysia guarantees compliance with this requirement if the actual owner of the company is not a Malaysian citizen.


Who Is Qualified To Be A Nominee Director In Malaysia?

As per the Malaysian companies act, a limited liability company (“Sdn Bhd”) must at least appoint one director who has his principal place of residence in Malaysia and ordinarily resides in Malaysia. Two resident directors are required if the company is a public limited company.

Any individual with the age of at least 18 years old and is not disqualified under Section 198 of the Companies Act 2016 can be appointed as the company director.

The individual must also be an ordinary resident of Malaysia at the time of appointment and throughout his directorship.

Who Is Prohibited From Being A Company Director In Malaysia?

As per the Malaysian Companies Act. If a person is undischarged bankrupt, convicted of an offense relating to fraud, dishonesty, or bribery, or disqualified by the court, he cannot be allowed to act as a director of the company either directly/indirectly. A person who violates this requirement and accepts an appointment as a director will be liable to a jail term of up to five years and fines amounting to up to RM 1 million.

Why Should I Hire A Nominee Director In Malaysia?

  • According to the Malaysia Businesses Act, all companies must have at least one director who has his major or exclusive place of abode in Malaysia.
  • Companies in Malaysia that are owned by foreigners designate their nominee director as a local director of the firm as well. Accountability for legal duties might be part of a local nominee director’s services.
  • If you are a foreigner, you might want to hire a local nominee director to act as the company representative on all compliance matters, such as submitting a Malaysia annual return to SSM or filing Malaysia corporate tax returns to LHDN. Although most of the population in Malaysia can speak English, most government officials and departments prefer to speak in Malay. Hence your local nominee director can step in to assist with communication.
  • You can appoint a nominee as a non-executive director with no financial, operational, or management obligations for the firm.

What Is The Mandatory Documentation For The Appointment Of A Nominee Director?

The required documents for the appointment of a nominee director in Malaysia can be seen below.

  • Due diligence documents of the director and beneficial owner of the Malaysia company.
  • A nominee director agreement Malaysia
  • Form 45B and Form 49
  • The company resolution for the appointment and consent to act as director

If our client engages Relin Consultants company secretary services, our team of company secretaries will prepare the forms and resolutions mentioned above on behalf of our clients.

How Can I Appoint A Nominee Director For My Company?

Relin Consultants can provide you with a qualified nominee director to fulfill your company’s resident director requirements if you cannot find any suitable acquaintances for the same. The individual nominated for the role will be an existing employee of our firm.

What Are The Procedures, If Relin Consultants For Malaysia Company Incorporation With A Nominee Director

Our MY company secretary team will forward a list of documents required from our client. This will include the director and beneficial shareholders’ documents.

Our secretarial team will proceed to draft an agreement per Malaysian law to be signed by the client and the individual being appointed as the nominee director. We will also prepare the resolutions, Form 45 and Form 49, and all other documents needed for the company’s incorporation in Malaysia.

Once the documents are signed and approved, our team will proceed to register the company with SSM.

What Are The Procedures, If Relin Consultants Nominee Director Service In Malaysia

Our consultants will forward a list of documents required and the agreement to the nominated company secretary firm of the client. The documents required will include the KYC documents of the client.

The nominated company secretary firm to prepare all the required documents, including Form 45 and Form 49.

Once the documents are signed and approved, the nominated company secretary can proceed to register the company.

The appointment of a director can be completed in 3 business days.

MALAYSIA NOMINEE DIRECTOR FEE

The nominee director fee in Malaysia varies depending on a company’s business activity and risk profile.

Do reach out to us at enquiry@relinconsultants.com if you require a fee quote for your Malaysia company. We do not collect a security deposit.

Do note that it is a mandatory requirement for companies providing nominee director services to conduct a detailed revised and assessment of the potential client. Hence our team will require the personal documents of the beneficial shareholder and executive director of the company to proceed.

FAQs

Once appointed, can a nominee director be removed from the company?

Yes, but they may only be removed by the person or group who appointed them in the first place.

Is it mandatory for a nominee director to possess shares in my company?

No, a nominee director cannot possess a share in the company. He/She will act as a representative with limited authority.

What are the qualifications for a nominee director?

  1. Must be a Malaysian citizen or Malaysian resident. 

2. They cannot be convicted in court, cannot be imprisoned before, and cannot be declared bankrupt. 

3. Must be at least 18 years of age. 

4. Not disqualified under the Malaysian companies act.

Is the nominee director independent?

The nominee director, like any other director, must follow the regulations of the private limited business. As a result, they do not operate autonomously and must maintain managerial secrecy.

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