Hi, I understand for a nominee director, it is risky as the director is liable if the company is involve in any illegal activity or wrong doing.

I did some search on google but seem like there are more protections toward the beneficial owner or the company instead of the nominee director
e.g. what happen if the nominee director run away or breach of duty

Thus, I wonder is there any protection for the person such as agreement or letter of indemnity?

*I not sure if this topic fall under this subtopic. Kindly tell me if it shall be moved to other subtopic.

how to be nominee director of company?

do you sign anything in the company? memorandum? if so you are liable even if you furnish any indemnity letter. office holders comes with the responsibility. if not why become nominee

1)when the company required local to become the director in order to set up a company
2)to avoid fulfilling some requirements in order to set up a company
3)when the client doesn't want his name appear in the company (that's why its risky)

usually is the service provider or secretarial company provide the nominee director services but now a lot of service provider reluctant to provide this service because too risky


No, no yet.
Currently the client is finding trust company/service provider to provide the nominee director service because he don't wan his name appear in Malaysia and he is from China.
So, I am thinking if it worth to take the risk if i offer them to use my name and they pay me a reasonable sum

if that is the case set up a holding company with the PRC guy or just you, the holding company will take in a share in whatever company you are investing. that way you are shielded as you only have indirect interest

It is very risky to become a director especially it is not your own company regardless of how reasonable compensation they can pay you.
The act does not differentiate whether you are a nominee or not. Even indeminity agreement cannot protect you much.
You can't run away from your director's responsibility by telling the authorities that you're a nominee or a sleeping director.
Now with the new Companies Act 2016, director has higher responsibility with fine up to RM500,000 for non-compliance.
SSM is enforcing all directors and shareholders to declare the beneficial ownership reporting framework. All these information must be submitted to SSM from 1 Jan 2021 onwards, any person give false or misleading statement will be liable to imprisonment for a term not exceeding 10 years or a fine not exceeding RM3 million. If you're a nominee director, do you think you need to declare who is your beneficial owner?
You can also be barred from leaving the country if yr company did not settle the fines with SSM & LHDN. If you have bad records with SSM, you can't even registered a sole proprietor (ROB)! or setup a partnership or become a director of other company. Fines with SSM usually arises when company did not submit its Financial Statements and Annual Return on time.
EPF & SOSCO will look for you if your company does not pay or submit the statutory payment in time as well!
There is also another compliance of which all company directors must adhere to i.e. MACC Act 2009; 2018 Amendment; Adequate Procedures. This act covers bribery, please go and read this up, I can't elaborate further.

It is also very dangerous if your company is a wholly-owned by a foreign shareholder. What if your China shareholder went missing or suddenly do not want to continue the business here and not willing to pay you and staff? You can't initiate winding up because your co is wholly owned by foreign shareholder unless they are willing to sign and comply with the necessary procedure. In this case you're left with the mess of your company and need to bear the various fees/costs and entanglement in order to get out. To setup a company is easy but when you close down the business please ensure that you wind up the company and inform SSM, otherwise the penalty will accumulate until the company is being wind up!
That is why now no service provider or secretarial firm want to offer nominee director service!

Do you think it is still worth to become a nominee director after the above lenghty explanation?

This post has been edited by Shiseido: Apr 12 2020, 12:54 AM

there will be only my name appeared in the company as only my name is registered

Thank for the so detailed information and i will keep this information.

Btw, the company i saying is Labuan Company which is slightly different from SSM Company but i think the penalty and procedure is mostly the same.

So, i guess it better to continue finding which service provider willing to provide the services. It better to be safe than risking my life for the money