Documents for appointing a nominee ddirector and shareholder in malaysia

Documents For Appointing Nominee Directors and Shareholders

We previously covered the nine most frequently asked questions about appointing nominee directors and shareholders in Malaysia. Unsurprisingly, multiple questions were on the issue of protection – it’s a pretty big deal to let someone represent you publicly!

cartoon to symbolise the perfect nominee director and nominee shareholder

This post addresses those questions via an overview of the supporting legal documents involved and the protections afforded to you as ultimate owner of the company, and of course, the company itself.

It starts with understanding that when you appoint a nominee director or shareholder, you enter into a Proxy Agreement.

What the heck is a Proxy Agreement?

A proxy agreement allows a legal entity to carry out specific functions on behalf of another party. In this context, you’re allowing a nominee to represent you in your capacity as director and shareholder. Of course, nominators usually don’t want their proxy to have total autonomy, which is where the documents below come in.

Nominee Director Agreement

This document sets out the limited rights and duties of the nominee director and states they can only act or sign documents with your explicit permission and at your request and contains provisions on their resignation should you wish to appoint another director or if they breach the terms of the agreement.

Power of Attorney

In short, granting someone the ‘Power of Attorney’ means legally designating them to act for someone else. In this case, the nominee director will sign a document granting you full authority to manage the company, including the company bank account. This document is filed with the High Court of Malaya and the nominee director is bound by it.

Trust Deed

This agreement documents the terms upon which the trustee holds shares on your behalf. It legally binds the trustee to act only on your instructions and to account to you all rights and benefits of the shares such as income and dividends.

Call Option Agreement

This agreement gives you the power to compel the nominee shareholder to sell all trust shares back to you at a pre-determined price (known as the ‘strike price’) for all shares upon certain events, for example, if you are a foreign entrepreneur and have found a permanent local partner.

Secretarial Documents

These documents require approval from the Company Secretary and are used to formally record movement of shares and the appointment of a nominee director. Depending on the terms in your Shareholders’ Agreement, other owners may need to be informed of the move and give their approval. Here they are:

• Pre-signed Director Circular Resolution on Transfer of Shares
• Instruction of Assignment of Dividends to the Beneficial Owner
• Pre-signed Share Transfer Form by the Nominee Shareholder
• Pre-signed Resignation Letter by Nominee Director

We’d like to highlight that the pre-signed resignation latter is undated, which means it can be executed by you at any time to remove the nominee director immediately.

Alright, let’s put all that together in a simple list.

Overview of Protections Afforded

Collectively, the documents detailed above allow you as nominator to:

  1. Maintain all company decision-making (to the extent you desire)
  2. Maintain full control over company finances
  3. Receive any profits generated from all shares transferred
  4. Regain direct ownership of shares transferred at zero cost
  5. ‘Accept’ the nominee director’s resignation at any time and for whatever reason

Sounds like you’re pretty darn protected if you ask us!

Of course, you’ll need someone to prepare these documents, which we’ll take as the cue to shamelessly eagerly offer our services!

Let MISHU Handle Your Nominee Director & Shareholder Appointment

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Whether you’re a foreign entrepreneur looking to expedite incorporation in Malaysia or a local business owner who wants to protect his trade secrets from competitors, MISHU’s team of professionals will help you source the perfect nominee director and manage all paperwork to ensure their appointment is smooth and fully compliant.

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