Entrusted Shareholding Agreement Template for Malaysia

An Entrusted Shareholding Agreement is utilized in situations where direct share ownership may not be practical or desired, while ensuring compliance with Malaysian law and regulations. This arrangement is commonly used in scenarios involving foreign ownership restrictions, corporate restructuring, or strategic business arrangements. The document establishes a trust relationship where shares are legally held by one party while the economic benefits flow to another. The agreement must carefully balance the rights and obligations of both parties while ensuring compliance with the Malaysian Companies Act 2016, securities regulations, and anti-money laundering requirements. It includes detailed provisions for share management, voting rights, dividend distribution, and termination procedures, making it essential for businesses operating within Malaysia's legal framework.

1. Parties: Identification of the entrusted shareholder (trustee) and the beneficial owner, including full legal names and addresses

2. Background: Context of the arrangement, relationship between parties, and purpose of the entrusted shareholding structure

3. Definitions: Defined terms used throughout the agreement, including 'Shares', 'Company', 'Trust Period', 'Dividends', etc.

4. Declaration of Trust: Clear statement that the entrusted shareholder holds the shares in trust for the beneficial owner

5. Share Details: Specific information about the shares being held in trust, including number, class, and nominal value

6. Consideration: Details of any payment or consideration for the trustee's services

7. Rights and Obligations of the Trustee: Detailed responsibilities of the entrusted shareholder, including voting, dividend collection, and record-keeping

8. Rights and Obligations of the Beneficial Owner: Rights of the beneficial owner, including right to dividends and directing the trustee on voting

9. Voting Arrangements: Procedures for exercising voting rights and obtaining instructions from the beneficial owner

10. Dividend Treatment: Handling and distribution of dividends and other benefits received from the shares

11. Confidentiality: Obligations to maintain confidentiality of the arrangement and related information

12. Compliance Requirements: Obligations to comply with relevant laws, regulations, and reporting requirements

13. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

14. Transfer of Shares: Procedures for transferring shares upon termination or as directed by the beneficial owner

15. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes