Malaysia has strict norms for company incorporation, including mandatory requirements for directors, a company secretary, and shareholders. Without fulfilling these requirements, a company cannot obtain a legal status.
However, meeting a resident director requirement can be difficult for foreign business owners. That’s where the role of nominee director comes in. Appointing nominee directors helps foreign owners fulfill the legal requirement to have a director on the board. So, how does one find a nominee in the jurisdiction? They can do so by opting for nominee director services in Malaysia.
We are sure you have multiple questions about this service. So, we have created this guide to walk you through the basics of appointing a nominee director, their duties, and the additional benefits you can gain from appointing one.
Who is a Nominee Director in Malaysia?
A nominee director in Malaysia is an individual who is appointed as a director in a firm, typically at the time of its incorporation. It is an essential appointment when the firm is 100% foreign-owned. A nominee director is not an alternate or a substitute director. He or she is a full-time director who typically does not participate in operating activities. However, they must participate in decision-making and fulfill the fiduciary duties set out in Section 217 of the Companies Act (came into effect on January 31, 2017).
Why Should You Hire a Nominee Director in Malaysia?
Setting up a company in Malaysia requires the business owner to mandatorily appoint directors. A private company in Malaysia must have 1 director, whereas a public company must have 2 directors.
Moreover, under Section 196 of the Companies Act, 2016, the director must ordinarily reside in or have a principal place of residence in Malaysia. Thus, as a non-resident owner, you must appoint a nominee director to fulfill the above requirements.
What are the Duties of a Malaysian Nominee Director?
The Companies Act of Malaysia assigns numerous duties to a director. Here’s a quick overview:
Act in the Best Interest of the Company
Section 217 of the Act clearly states that a nominee director must uphold the company’s best interests. Moreover, the Section clarifies that, in the event of a dispute with the nominator (ultimate business owner), the director must make a decision that benefits the company, or face penalties.
Duty to Exercise Independent Judgment
Section 213(2) of the Act requires a nominee director to exercise independent judgment. They must review every document and understand its impact on the company before signing or giving approval.
Reliance on Information by Others
Section 215 of the Act allows the director to seek advice from professionals and experts while making decisions. Moreover, they must refer to opinions or reports, such as financial statements, for relevant decisions.
Duty to Notify
Section 58 of the Act requires a nominee director to notify the company of any change in their personal details, such as their address and contact number, within 14 days. Providers of nominee director services in Malaysia are typically well-versed in the fiduciary duties of a director and ensure the appointed director meets them.
What are the Benefits of Availing Nominee Director Services in Malaysia?
Appointing nominee director services in Malaysia simplifies the requirements for firms set up by non-residents. Here are the key advantages that you can avail:
Statutory Compliance
Under the Companies Act 2016, a company must have at least one director who is an ordinary resident of Malaysia (two or more, depending on the structure). Availing of a nominee director service in Malaysia can help you fulfill this requirement.
Professionalism
While nominees hold the legal role, they usually operate under a strict Power of Attorney (POA), allowing the ultimate beneficial owner to retain control while the nominee handles statutory compliance, filing annual returns, and maintaining good standing. However, certain banks may still require a nominee director to sign banking documents.
Thorough Background Check
Using professional nominee director services in Malaysia ensures the director is fit and proper and has no criminal or bankruptcy record.
Administrative Efficiency
Providers of nominee director services in Malaysia handle mandatory paperwork, annual filings, and interactions with local authorities. Thereby, preventing late penalties and operational delays.
How to Avail Nominee Director Services in Malaysia?
You can follow the steps below to avail the services:
Step 1: Select a Service Provider
You must select an apt provider of nominee director services in Malaysia. Go through the reviews, services covered, and cost before finalizing. Business Setup Worldwide can also help you with appointing a Malaysian nominee director.
Step 2: Request a Quote
Once you have selected the provider, request a quote for all the services that you require.
Step 3: Appoint as First Director
As per the Companies Act, the first director is the one whose name is filed in the incorporation papers. Moreover, the first director should be a resident of Malaysia. Thus, you must appoint a nominee director as the first director of your company to fulfill the residency requirement.
How Can Business Setup Worldwide (BSW) Help?
For successful company formation in Malaysia, you must fulfill mandatory requirements such as the appointment of directors. Finding the right director who is also a resident of the country. That’s where appointing nominee director services is vital to company formation. Business Setup Worldwide can help you appoint the right person who meets your requirements and stands up to the mark with your business vision. Contact us now to sign up for this service!
