Nominee Director Services in Malaysia
In incorporating business in Malaysia, nominee director services are one of the services that are always involved.
– Who is a nominee director?
– What are types of a nominee director?
– What are the duties of a nominee director?
The basic questions above are among the list of crucial questions that must be answered in the very first place for better understanding about a nominee director, one of the major components in company incorporation.
A person appointed by a certain appointer to the board of directors of a company. The appointer can be a person who acquires a large shareholding in the company, or a financial institution who has lent a large amount to the company. The appointer has the right to nominate a director. The selection of the director frequently happens in a joint venture company where it acts as the representative of a certain subsidiary of the company in meetings.
Not all nominee directors act as the executive in the company they represent. In this sense, a nominee director is classified into two: (1) non-executive, and (2) executive. A non-executive, also called independent, nominee director does not involve in the regular activities of the company. So, he can avoid conflicts of interest in the company by refraining from participating in decision making. In opposite, an executive nominee director has a dual duty to the company and to his appointer. On one hand, he has to regard his rights, duties and obligations as a director. On the other hand, he has to keep his appointer informed and use his voting power in meetings in the interest of his appointer. The latter type often counteracts with conflicts of interest, between the company and the pointer.
In general, a nominee director acts as the representative of the appointer and to use his voting power at meetings in the interest of the appointer. In the cases of an executive nominee director, the director also acts in the best interests of the company. The dual duty of an executive nominee director often creates conflicts of interest and further problems. Thus, when appointing this nominee director, the appointer must clearly specify his functions, rights, and duties.
To avoid unnecessary, time-wasting conflicts in the company, many joint venture companies engage with a nominee director service to get an independent nominee director. It seems to be the best attempt to avoid conflicts of interest and to create conditions where a nominee director can act correctly based on his functions, rights, and duties.