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Director Profit Sharing Agreement

Director Profit Sharing Agreement Template for Malaysia

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Key Requirements PROMPT example:

Director Profit Sharing Agreement

"I need a Director Profit Sharing Agreement for a Malaysian technology startup that allocates 5% of annual net profits to our new technical director, with quarterly payments and specific KPIs related to product development milestones."

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Document background
The Director Profit Sharing Agreement is a crucial document used when companies in Malaysia wish to implement performance-based compensation structures for their directors. This agreement becomes particularly relevant when organizations seek to align director interests with company performance and shareholder value. Under Malaysian law, specifically the Companies Act 2016, such arrangements must be properly documented and approved. The agreement typically includes detailed provisions for profit calculation, payment schedules, performance metrics, and termination conditions. It's commonly used in both private and public companies, particularly those seeking to attract and retain high-caliber directors or implementing corporate governance best practices.
Suggested Sections

1. Parties: Identification of the Company and the Director entering into the profit sharing agreement

2. Background: Context of the agreement, including director's role and reason for profit sharing arrangement

3. Definitions: Key terms including 'Profit', 'Share', 'Financial Year', 'Performance Metrics' and other relevant definitions

4. Appointment and Term: Confirmation of director's appointment and duration of the profit sharing arrangement

5. Calculation of Profit Share: Detailed methodology for calculating the profit share, including basis of calculation and relevant financial metrics

6. Payment Terms: Timing, method and conditions for profit share payments

7. Director's Duties and Obligations: Specific responsibilities and performance expectations tied to the profit sharing arrangement

8. Company's Obligations: Company's responsibilities regarding financial reporting, transparency and payment obligations

9. Confidentiality: Provisions regarding confidential information and trade secrets

10. Termination: Circumstances and procedures for ending the profit sharing arrangement

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

Optional Sections

1. Non-Competition: Restrictions on director's involvement in competing businesses - include when director has access to sensitive market information

2. Clawback Provisions: Provisions for recovering paid profit share in case of misconduct - relevant for higher-value arrangements

3. Good Leaver/Bad Leaver: Different treatment of profit share based on circumstances of directorship termination - important for longer-term arrangements

4. Alternative Dispute Resolution: Mediation or arbitration procedures - useful for high-value agreements or when parties prefer private dispute resolution

5. Insurance and Indemnity: Additional protection for director - relevant when profit share is tied to specific business risks

6. Change of Control: Impact of company ownership changes on the arrangement - important for companies likely to undergo structural changes

Suggested Schedules

1. Schedule 1 - Profit Calculation Methodology: Detailed formula and examples of profit share calculation

2. Schedule 2 - Performance Metrics: Specific KPIs or targets linked to profit share entitlement

3. Schedule 3 - Payment Schedule: Timing and structure of profit share payments

4. Appendix A - Board Resolution: Copy of board resolution approving the profit sharing arrangement

5. Appendix B - Financial Reporting Requirements: Specific financial information to be provided to director

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

























Clauses



























Relevant Industries

Technology

Manufacturing

Financial Services

Real Estate

Healthcare

Retail

Professional Services

Energy

Construction

Telecommunications

Relevant Teams

Legal

Finance

Corporate Secretariat

Human Resources

Compliance

Board Secretariat

Executive Office

Corporate Governance

Relevant Roles

Director

Executive Director

Non-Executive Director

Managing Director

Chief Executive Officer

Board Chairman

Company Secretary

Chief Financial Officer

Legal Counsel

Corporate Governance Officer

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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