In Malaysia, nominee directors and shareholders are often appointed by foreign investors or businesses for company incorporation and regulatory compliance. While this setup offers convenience, it also comes with legal risks, disclosure requirements, and potential misuse if not properly managed.
Understanding your rights, obligations, and safeguards when using a nominee arrangement is crucial to protect your business interests.
At Amaze Advisory, we provide nominee director and shareholder services while ensuring full transparency and legal compliance for your company.
What is a Nominee Director and Shareholder?
Nominee Director
A nominee director is an individual appointed to fulfill statutory director requirements but does not have control over the company’s operations. The actual business owner (beneficial owner) retains decision-making power through a set of nominee agreements.
Nominee Shareholder
A nominee shareholder holds shares on behalf of the actual owner to maintain privacy and confidentiality as well as compliance with certain regulations. The real owner’s interests are protected through a set of agreements including trust deed or declaration of trust.
Why appoint a nominee director or shareholder?
- Foreign business compliance – All Private Limited (Sendirian Berhad/Sdn Bhd) companies require a local director for registration.
- Confidentiality – Protect the privacy of actual business owners.
- Regulatory convenience – Ensure compliance with Malaysian laws and business requirements.
Regulatory Disclosure Requirements for Nominee Directors & Shareholders
To prevent illegal activities such as money laundering and tax evasion, Malaysia has strict regulations requiring the disclosure of beneficial ownership.
1. Compliance with Companies Act 2016
Under the Companies Act 2016, companies must:
- Declare Beneficial Ownership:
The real owner must be disclosed to SSM (Companies Commission of Malaysia). - Maintain Transparency:
Any nominee arrangement must be documented in company records. - Fulfill Director’s Fiduciary Duties:
A nominee director must act in the company’s best interest, not just follow the instructions of the beneficial owner.
2. Beneficial Ownership Reporting to SSM
Since 2020, all Malaysian companies must:
- Submit Beneficial Ownership (BO) Information to SSM.
- Update BO details when changes occur.
- Ensure nominees do not act as proxies for illegal activities.
Risks of Using a Nominee Director or Shareholder
| Risk | How it Affects You | How to Mitigate |
|---|---|---|
| Loss of Control | Nominee may act against your interests | Use a legally binding nominee agreement |
| Regulatory Non-Compliance | Failure to disclose BO may result in fines | Ensure SSM reporting compliance |
| Breach of Fiduciary Duty | Nominee may make unauthorized decisions | Appoint a trusted corporate nominee |
| Legal Liabilities | Nominee director is liable for company misconduct | Work with reputable nominee providers |
Want a reliable nominee arrangement? Amaze Advisory provides secure and legally compliant nominee services!
Ways to Safeguard Your Business Interests When Using a Nominee
If you appoint a nominee director or shareholder, here’s how you can protect your ownership and control:
1. Use a Legally Binding Nominee Agreement
- Clearly define the nominee’s role, limitations, and responsibilities.
- Specify that the beneficial owner retains full control over business decisions.
- Ensure the agreement complies with Malaysian corporate laws.
Amaze Advisory provides legally structured nominee agreements to safeguard your interests!
2. Secure a Trust Deed or Declaration of Trust for Nominee Shareholders
A Trust Deed or Declaration of Trust (DOT) confirms that the nominee holds shares on behalf of the beneficial owner.
- Prevents unauthorized sale or transfer of shares.
- Provides legal proof of ownership in case of disputes.
- Protects business confidentiality while ensuring compliance.
Need help drafting a trust deed? Amaze Advisory ensures your ownership rights are fully protected.
3. Maintain Ultimate Decision-Making Control
- Assign power of attorney to the beneficial owner for key business decisions.
- Require the nominee director to seek written approval before major actions.
- Use joint bank signatories to prevent unauthorized financial transactions.
Want full control of your business? Amaze Advisory helps you structure nominee arrangements with full legal protection!
4. Appoint a Professional & Trusted Nominee Service Provider
Working with a reputable nominee service provider ensures:
- Full legal compliance with SSM and tax authorities.
- Confidentiality & transparency in business ownership.
- No risk of nominee acting against your interests.
Amaze Advisory offers professional nominee director and shareholder services, ensuring a secure and legally compliant setup!
Common Challenges & How Amaze Advisory Can Help
| Challenge | Solution by Amaze Advisory |
|---|---|
| Ensuring full legal compliance | We handle beneficial ownership disclosure & nominee agreements |
| Preventing unauthorized actions | We provide structured nominee arrangements with legal safeguards |
| Maintaining business confidentiality | We offer secure and confidential nominee services |
| Navigating regulatory complexities | Our experts ensure smooth compliance with Malaysian laws |
Conclusion
Appointing a nominee director or shareholder in Malaysia is a common practice for foreign investors and business owners, but proper legal safeguards must be in place. Regulatory compliance, beneficial ownership disclosure, and risk mitigation are essential to protecting your business interests.
At Amaze Advisory, we provide trusted, legally compliant, and secure nominee director and shareholder services, ensuring you maintain full control and ownership of your business.
Get Started with Amaze Advisory Today!
Phone: +6013-284 7678 / +6013-323 7678
Website: www.amazeadvisory.com
