Norminee director services

? Quick Answer: What is a nominee director and do you need one?

A nominee director is a Malaysian resident appointed to satisfy the legal requirement that every Sdn Bhd must have at least one director who ordinarily resides in Malaysia. They serve in a non‑executive, passive role and do not participate in management, decision‑making, or bank account signing. You need a nominee director if you are a foreign owner without a Malaysian resident director.

  • ✓ Required under Section 196 of the Companies Act 2016 [citation:8]
  • ✓ Nominee director has no ownership or management control [citation:2]
  • ✓ Annual fees typically range from RM3,500–RM5,000 plus refundable deposit [citation:5][citation:9]
  • ✓ Protected by a nominee director agreement defining passive role [citation:5]

🇲🇾 Key Facts

Legal requirement: 1 resident director

Typical annual fee: RM3,500–RM5,000

Security deposit: RM5,000–RM10,000 (refundable) [citation:5]

Section 217 penalty for breach: up to RM3M fine or 5 years imprisonment [citation:8]

What is a nominee director?

A nominee director is a Malaysian resident individual appointed to act as a director of a company solely to satisfy the statutory requirement for a local resident director under the Companies Act 2016. The nominee does not hold any shares, has no management or operational role, and does not participate in decision‑making [citation:2][citation:5].

The arrangement is governed by a nominee director agreement (also called a service agreement or indemnity agreement), which clearly defines the nominee’s limited, passive role. This protects both the beneficial owner (the foreign shareholder) and the nominee director [citation:5][citation:6].

What does a nominee director do — and not do?

What a nominee director does:

  • Appointed to satisfy the resident director requirement
  • Signs statutory documents (e.g., annual returns, SSM filings) when required
  • May attend bank account opening interviews (at no additional fee, per some providers) [citation:2]
  • Cooperates with compliance and regulatory filings

What a nominee director does NOT do:

  • No management or operational control – they do not run the business [citation:2][citation:5]
  • No bank account signing authority – they are not authorised signatories [citation:5][citation:9]
  • No shareholding – they own no shares in the company [citation:9]
  • No involvement in contracts or commercial decisions

⚠️ Important legal duty: Under Section 217 of the Companies Act 2016, every director (including a nominee director) must act in the best interests of the company. A nominee director cannot simply follow instructions blindly if doing so would harm the company. Breach of this duty can result in fines up to RM3 million or imprisonment of up to five years [citation:8].

How much does nominee director service cost?

Annual fees for nominee director services typically range from RM3,500 to RM5,000 per year, plus a refundable security deposit of RM5,000 to RM10,000 [citation:5][citation:9]. Fees vary based on business risk profile, expected job scope, and whether the nominee is required to perform additional tasks.

Fee structure example (based on market rates):

Service Component Typical Amount Notes
Annual nominee director fee RM3,500–RM5,000 Paid annually in advance
Security deposit RM5,000–RM10,000 Refundable upon termination, subject to compliance [citation:5]
Higher deposit for high‑risk businesses Additional RM10,000+ For high turnover, GST-registered, or employee‑heavy companies [citation:5]
Additional services (e.g., limited power of attorney) RM3,000+ If the nominee must act beyond passive role [citation:5]

Why is a security deposit required? All directors (including nominees) have legal liability. If the company fails to meet its obligations (e.g., unpaid debts, regulatory penalties) and the foreign owner cannot be contacted, the nominee director may be held responsible. The deposit protects the nominee against such risks [citation:5].

What is included in a nominee director agreement?

A nominee director agreement (also called an indemnity agreement or service agreement) is a legally binding document that defines the passive role of the nominee director and protects both the beneficial owner and the nominee. A professionally drafted agreement is essential to avoid disputes and ensure compliance.

Key clauses in a standard nominee director agreement:

  • Passive role declaration – The nominee director will not interfere in business operations or management [citation:2][citation:5]
  • No bank signatory authority – The nominee has no access to or authority over company bank accounts [citation:5]
  • No shareholding – The nominee holds no shares and has no economic interest [citation:9]
  • Indemnification – The beneficial owner agrees to indemnify the nominee against liabilities arising from company operations [citation:5]
  • Termination rights – Either party may terminate with notice; procedures for appointing a replacement [citation:5]
  • Fee and deposit terms – Annual fee, refundable deposit conditions [citation:5][citation:9]
  • Compliance obligations – The beneficial owner agrees to maintain proper accounting, tax filings, and annual returns [citation:5]

How can you terminate a nominee director?

You may terminate the nominee director at any time, provided you appoint a new resident director to replace them. The termination process typically involves:

  • Notifying the nominee director service provider in writing
  • Appointing a replacement resident director (either yourself if you now qualify, a local partner, or another nominee)
  • Filing the director change with SSM (Form 48A and Form 49) [citation:2]
  • Receiving your refundable security deposit back (subject to compliance with agreement terms) [citation:5]

Most nominee director services are structured as annual contracts. If you terminate mid‑term, fees already paid are typically non‑refundable, but the security deposit is returned once all obligations are met [citation:7].

Regulatory updates for nominee directors in Malaysia

Following FATF Recommendation 24, many jurisdictions are tightening rules on nominee directors to prevent misuse for money laundering and terrorist financing [citation:3]. Malaysia is expected to introduce similar transparency measures.

⚠️ Upcoming changes (not yet law but expected): SSM has proposed amendments requiring nominee directors to disclose their nominee status and nominator information to the Registrar. The nominee status would become publicly visible on ACRA‑type business profiles. The nominator’s identity remains confidential to regulators [citation:3].

For foreign business owners, this means that while nominee directors remain a valid compliance tool, transparency is increasing. Choose a reputable provider that stays current with regulatory changes.

How JT & CY Advisory can help with nominee director services

  • ✓ Referral to trusted nominee director providers – We work with reputable, licensed corporate service firms
  • ✓ Review of nominee director agreements – Ensuring your interests are protected
  • ✓ Coordination with company secretary – Seamless integration with your incorporation and annual compliance
  • ✓ Advice on your eligibility – We help you determine whether you actually need a nominee director or can serve as your own resident director
  • ✓ Transition planning – If you later obtain residency, we help transition from nominee to self‑directorship
Sim Chong Yen

Sim Chong Yen
FCCA, MIA

Frequently asked questions about nominee director services

1. Is a nominee director mandatory for foreign-owned companies in Malaysia?

A resident director is mandatory. A nominee director is one way to satisfy that requirement. If you (the foreign owner) hold a valid Employment Pass and have a principal place of residence in Malaysia, you can serve as your own resident director and do not need a nominee [citation:2][citation:10].

2. Can a nominee director sign my company’s bank account?

No, generally not. Most reputable nominee director agreements explicitly state that the nominee will not be a bank signatory. However, some providers may attend the bank interview to assist with account opening without having signing authority [citation:2][citation:5].

3. How much does a nominee director cost in Malaysia?

Annual fees typically range from RM3,500 to RM5,000 plus a refundable security deposit of RM5,000 to RM10,000 [citation:5][citation:9]. Higher-risk businesses may require additional deposits [citation:5].

4. What is the difference between a nominee director and a resident director?

A resident director is a legal requirement (anyone who ordinarily resides in Malaysia). A nominee director is a service — a resident director appointed by a service provider specifically to fulfil that requirement. All nominee directors are resident directors, but not all resident directors are nominees [citation:2][citation:6].

5. Can a nominee director be a shareholder?

Typically, no. In standard nominee director arrangements, the nominee does not hold any shares. Ownership remains 100% with the foreign beneficial owner [citation:9].

6. What happens if my company fails to comply with regulations?

Directors, including nominee directors, can be held personally liable for breaches of the Companies Act 2016. Under Section 217, penalties can include fines up to RM3 million or imprisonment of up to five years [citation:8]. This is why reputable providers require indemnity agreements and security deposits.

7. Can I terminate the nominee director service at any time?

Yes, you can terminate at any time, provided you appoint a replacement resident director first. The security deposit is refundable upon termination, subject to compliance with the agreement terms. Annual fees already paid are typically non‑refundable [citation:5][citation:7].

8. Will the nominee director appear on public records?

Yes. The nominee director’s name will appear on SSM public records as a director of your company. However, their status as a “nominee” may not currently be publicly visible — though future regulatory changes may require disclosure of nominee status [citation:3][citation:6].

9. Do I need a nominee director if I have a Malaysian business partner?

No. If your Malaysian business partner is a director and ordinarily resides in Malaysia, they satisfy the resident director requirement. You do not need a separate nominee director.

10. What documents are required to appoint a nominee director?

Typical requirements include: passport copies of beneficial owners, proof of residential address, company business plan or activity description, KYC declaration, and signed nominee director agreement [citation:2][citation:5].

11. Can a nominee director help with opening a corporate bank account?

Some providers offer bank interview attendance as part of their service at no additional fee [citation:2]. However, the nominee director will not be a signatory on the account. The beneficial owner must still provide KYC documents and may need to attend remotely via video call.

12. Does JT & CY Advisory provide nominee director services directly?

We do not directly provide nominee director services, but we can introduce you to trusted, licensed providers. Our role is to advise you on whether you need a nominee director, review the agreement to protect your interests, and coordinate with your company secretary for seamless integration.

Important Notice: This information is for general informational purposes only and should not be relied upon as legal or professional advice. Nominee director arrangements involve significant legal obligations under the Companies Act 2016. JT & CY Advisory does not directly provide nominee director services but can refer you to trusted, licensed providers and review agreements to protect your interests. For advice tailored to your specific circumstances, please contact us directly. Last updated: March 2026.