Lending your name to someone else to start a company? Beware of these risks!
Directors and Shareholders Have Legal Responsibilities
- Under the Companies Act 2016
- Both directors and shareholders may be subject to legal responsibilities
- Being a nominee does not automatically exempt a person from liability
Potential Legal Consequences
- If the company is involved in:
- Illegal business activities
- Unpaid debts
- Tax evasion
- Fraudulent conduct
- The individuals involved may still be investigated or held responsible
Risk of Money Laundering and Scams
- If the company is used for money laundering or fraudulent activities
- Individuals involved may be subject to the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA)
- And could face criminal investigations and legal consequences
Impact on：
- Personal Reputation:
- If the company is blacklisted or flagged by SSM
- The individual's reputation and credit standing may also be affected
- Future Opportunities May Be Affected：
- Loan applications may become more difficult
- Future business ventures may be affected
- Employment opportunities may also be impacted
Being a Nominee Is Not a Defence
- Malaysian law does not automatically excuse nominee directors or nominee shareholders from responsibility
- Legal consequences may still arise if problems occur
Summary
- Do not lend your name to others merely for small benefits or personal favours
- Understand the responsibilities and risks before accepting any director or shareholder position
- This helps protect your reputation, financial security, and legal standing in the future