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The Future Of Corporate Dynamics: Exploring Nominee And Anonymous Shareholders

In today's corporate landscape, the roles of nominee shareholders and anonymous shareholders are undeniably significant. While both concepts involve individuals holding shares of companies, there is a difference between the two. Nominee shareholders typically represent others in holding shares, while anonymous shareholders prefer to keep their identities confidential and hidden.


Who Is A Nominee Shareholder?


A nominee shareholder refers to a person acting as a legal but unrelated third party who is registered as the owner of the shares on behalf of the true owner. A nominee shareholder is not empowered to vote and have no substantial powers in management. The meaning of “nominee” was further illustrated in Selvaraju a/l Sithamparam lwn Kanthimathi a/p Sithambaram [2023] MLJU 2533 as “a person in whose name assets (for example, a nominee shareholder of company shares) are held, but who does not have any beneficial entitlement to those assets. A nominee is a mere agent of the person who appoints them”.


With this arrangement, the true owner of shares get the benefit of privacy from being publicly associated with the company. In addition, the true owner’s shares can be protected at the same time. This is because the nominee shareholder does not actually own the shares or any benefits arising from the shares due to the declaration of trust between the nominee shareholder and the true owner of shares. In the other words, the nominee shareholder would have no legal claim over the shares.


However, a practical risk is that in the event the nominee shareholder passes away, his representative might refuse to honour the trust arrangement between the deceased nominee shareholder and the true owner. This creates a predicament for the true owner to claim back the ownership.


Who Is An Anonymous Shareholder?


An anonymous shareholder, also known as a “nominator” as per the definition in the Consultative Document on the Proposed Amendments to the Companies Act 2016 Relating to Nominee Shareholders & Nominee Directors issued by Companies Commission of Malaysia (Consultative Document), means that a member of the company who owns the shares but the ownership is kept confidential and hidden when issuing instructions whether directly or indirectly to a nominee to act on their behalf in a capacity of a shareholder. It also sometimes referred to as a “silent partner”.


Legal Realm – Nominee Shareholders


Under the Companies Act 2016 (CA 2016), there is no specific definition of “nominee shareholder”. However, an understanding of the concept definition can be obtained through two relevant provisions i.e. Section 56(1) of the CA 2016 read together with Section 2 of the CA 2016. Section 56(1) reads:

(1) Any company may, by notice in writing, require any member of the company within such reasonable time as is specified in the notice-


(a)               to inform the company whether the member holds any voting shares in the company as beneficial owner or as trustee; and


(b)        if the member holds the voting shares as trustee, so far as it is possible to do so, to indicate the persons for whom the member holds the voting shares by name and by other particulars sufficient to enable those persons to be identified and the nature of their interest.


Meanwhile, “beneficial owner” in Section 2 means “the ultimate owner of the shares and does not include a nominee of any description”.


Based on these provisions, it can be inferred that shares could be held by a nominee, who acts as a trustee for the beneficial owner. In other words, ownership of the shares can be attributed to either the beneficial owner directly or a nominee functioning as a trustee on their behalf. This reading is recognised in item 8 of Part I of the Consultative Document, which reads as follows:


Although currently there are no specific definitions provided under CA 2016 for ‘nominee’, ‘nominee shareholder’ and ‘nominee director’, the concept of ‘nominee’ is recognised under the CA 2016.”


In the Consultative Document, the Companies Commission of Malaysia (CCM) has proposed several specific amendments to be incorporated into the CA 2016 in relation to the registration of nominee shareholders i.e. Division AA into the current CA 2016. The proposal is that every company will be required to keep a register and record of nominee shareholders of the company. In the event that the company fails to do the same, upon conviction, the company shall be liable to a fine not exceeding RM20,000.00 and in the case of continuing offence, to a further fine not exceeding RM500.00 for each day during which the offence continues after conviction.


Unlike the only notification upon request as imposed under Section 56(1) of the CA 2016, the newly proposed Section A4 of Division AA would introduce the requirement for the nominee shareholders to notify the company their status as nominee shareholders.


Legal Realm – Anonymous Shareholders


Current laws do not expressly deal with the issue on anonymous shareholders. Nevertheless, Section 56(1)(b) of the CA 2016 provides that a company has the authority to require its shareholders to declare whether they hold shares for a beneficiary and in such cases, the company may request information relating to the beneficial owner.


Additionally, the Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons issued by CCM (Guideline) state that a company, among others, is required to verify the information of beneficial owner, record such information into the register of beneficial owner and keep the record accurate and up to date. In summary, while the concept of nominal shareholders is allowed, this concept remains uncertain as while there is no specific law governing the same. In FKJV (M) Sdn Bhd (formerly known as Ardenmax Cosmetic Sdn Bhd) v Mode Circle Sdn Bhd and Ors Suit [2012] MLJU 75, it was held that anonymous shareholders may be referred to as the persons behind the nominee shareholders and the anonymous shareholders will hardly be disclosed. The following passage from the judgment is instructive:


Madam Ong was the controlling shareholder of MCSB. Indeed the evidence adduced on her behalf is that she started using nominees to hold shares for her in the companies that she had set up in Malaysia as part of her expansion strategies.…The system of using nominees to hold shares on her behalf “shielded” her from the consequences of the bankruptcy that she was subject to.”


The recently gazetted Companies (Amendment) Act 2024 mandates every company to keep a register of beneficial owners of the company by virtue of Section 60B of the CA 2016. Additionally, Section 60C(3) of the CA 2016 allows companies to request individuals they believe to be beneficial owners to confirm their status. Once the Companies (Amendment) Act 2024 comes into effect on 1 April 2024,  companies could invoke Section 60C to compel nominee shareholders to disclose the true beneficiaries for inclusion in the register of beneficial owners.




The amendments to the CA 2016 and the recommendations in the consultation papers are in line with Recommendation 24 of the Financial Action Task Force (FATF), which requires the disclosure of nominee shareholders and their nominators as public information. By making such data public, it helps to prevent and mitigate the risk of misuses by nominee shareholders (for money laundering, terrorism financing).


The proposed revisions via the Consultative Document are hoped to provide clear guidance to companies and shareholders on their rights, responsibilities and obligations. This will help prevent misuse of nominee or anonymous shareholders structures for illicit purposes and strengthen the integrity of our corporate sector.


 1 April 2024


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