Nominee agreements are a common practice in Malaysia, and are used for a variety of legal and financial purposes. In this article, we will explore the concept of nominee agreements in Malaysia, and their implications for different stakeholders.

What is a nominee agreement?

A nominee agreement is a legal agreement between two parties, where one party (the nominee) holds assets or shares on behalf of the other party (the beneficiary). The nominee is the legal owner of the asset, but the beneficiary retains the economic benefits and control over the asset. Nominee agreements are often used by individuals or companies to protect their assets, minimize taxes, or maintain confidentiality.

Nominee agreements in Malaysia

In Malaysia, nominee agreements are commonly used in the context of corporate ownership. For example, a company that wants to remain anonymous or protect its assets may appoint a nominee director or shareholder. The nominee will hold the shares or directorship position on behalf of the company, while the real owner remains anonymous.

Nominee agreements are also used in asset protection and estate planning. For instance, an individual may appoint a family member or trusted friend as a nominee to hold their shares or property. The nominee acts as a custodian of the assets and transfers them to the beneficiary upon the death of the owner.

Legal implications of nominee agreements in Malaysia

Nominee agreements in Malaysia must comply with the Companies Act 2016, which sets out the rules and regulations for the appointment and removal of directors and shareholders. Nominee directors have the same duties and responsibilities as any other directors, and can be held liable for any breaches of their duties.

Nominee agreements must also comply with the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), which requires service providers to verify the identity of their clients. Therefore, service providers who offer nominee services must conduct proper due diligence and maintain adequate records to comply with AMLA.

Conclusion

Nominee agreements are a useful tool for individuals and companies to protect their assets, minimize taxes, and maintain confidentiality. However, nominee agreements must comply with the Companies Act 2016 and AMLA, and proper due diligence must be conducted to comply with legal requirements. It is important to seek legal advice before entering into a nominee agreement to ensure that all parties understand their rights and obligations.