When a candidate has completed registration requirements as REA, a 'E' number will be given to him to reflect in the bis system. My E number given is E3009.
However, at this stage, he is still attached to the firm where he previously attached as PEA for training. Nevertheless, as the new REA is no more a probationer under supervision, he is "assumed" to have his practice as attached with the firm. His legal position however is a REA and liable for all the risks required of him.
Now, a REA might have already decided to leave the firm, his status in bis system is however, still attached to the firm. Insofar, this is practical, but not necessarily so as some New REAs have already informed the firm of their decision to resign. Despite that being the case, bis system does not show this status. Hence, there is this step to be taken - to write in a formal resignation letter. This is because in law, the engagement was a contract he had with the firm when he first joined years ago as a PEA. This engagement contract is still valid.
Thus, in order to leave the firm, he has to resign from the firm officially.
Usually, there are two documents which are required to effect the change of status from engagement with the previous firm.
1. The REA resigns from the firm.
2. The firm terminates the engagement with the REA.
In most cases, the firm would like to offer the new REA a position to continue contributing to the firm. This may be proposed in two common ways.
1. Employment as resident manager
2. Partner or shareholder of the firm as well as being a resident manager
of a branch or within the same office. In this context, there are a few differences.
1. Employment - a salaried person with some benefits of profit sharing for deals done by the REA in his personal capacity. This may be better than the % sharing of the negotiators. However, there is no participation of firm earnings as a whole.
In most scenarios, the deals negotiated is very much depending on the ability of the new REA to bring in businesses to the firm. The most likely scenario would be a higher salary, in place of the 50 REN numbers given to the firm. Most principal agent of the soleprop firm would prefer to pay a salary to get the 50 REN numbers, and the new REA be left nothing to bother about in the daily running of the business.
This is market practice and salary may range from RM3,000 to RM8,000 depending on the location, opportunities and market demand.
During the earlier years when market was spectacular, payment of whooping salary was beyond RM10,000 per month.
2. Getting to be offered as a partner or shareholder of a firm is a rare occurrence nowadays. This is being the case as most firms would not want to dilute their ownership to a new REA. Making you a partner/shareholder means you are taking profit sharing on the worth of the firm. Mind you, much of such worth had been contributed by the existing and previous owners!
Hence, unless you are a family member or someone with much contribution to the firm, being invited to the family is rather unheard of. Even if there is such policy in bigger firms, the % shareholding is minimal.
In the liberalized scheme - read here to know more, ownership of the firm could be held by some RENs or family members of the registered members (not registrants). Unless these members are willing to relinquish their shareholding, for example, due to old age, retirement or illness, it is usually hard to get invited to become a partner or shareholder of a good firm. Rather, the existing registrants may not be keen to share the firm that had been their sweats and tears till its glory today.
Furthermore, shareholding might require a huge sum of money invested into the firm. For eg. firms which are of millions of ringgit worth might transfer shares which are expensive to acquire from the shareholders. Inevitably, the owners would want to exit the shareholding with handsome returns after so many years of founding the firm.
So, the progressive leaving the firm is very likely rather than being invited to participate in the firm.
For the knowledge of understanding how employment can be arranged, below are few scenarios and the considerations.
1. Soleprop firm. A REA can be employed by a Soleprop firm, just like a Sdn Bhd or partnership firm. A firm E(3)XXXX can have a branch with E(3)XXXX/1 (1st branch) by an employed REA or just remaining within the same office which has more than 1 REA. In this scenario, there can be 1 principal, and another employed REA as Resident Manager.
2. Partnership firm. A REA can be employed by a partnership firm with 2 or more principal partners. Like the above, a partnership E(2)XXXX can have a branch with E(2)XXXX/1 (1st branch) by an employed REA or just remaining within the same office which has more than 2 partnership REAs. The owners are Principals & Partners, and the employed REA as Resident Manager.
3. Sdn Bhd firm. A REA can be employed by a Sdn Bhd firm with 2 or more principal shareholder directors. Like the above, a Sdn Bhd with E(1)XXXX can have a branch with E(1)XXXX/1 (1st branch) by an employed REA or just remaining within the same office which has more than 2 shareholder directors REAs. The owners are Principals & Directors, and the employed REA as Resident Manager.
Here, certainly there is deal negotiated with the firm, and market practice also falls into 2 major types.
1. Employment for a fixed terms (3 years or 5 years) with future options to extend. Usually, it is a contract of a few years with profit sharing schemes. This may be restrictive as you might have to pay compensation when you decide to terminate the contract. On the other hand, you might be invited to participate in the decision making of the management.
2. Employment without fixed term. A contract of employment like any other jobs, where you can leave anytime you want without a fixed term of duration of employment. This means, either party can terminate the contract based on a notice of termination (eg 3 months). In this arrangement, most likely you do not have any role in higher management decisions. You are just an employee.
Back to the resignation.
Indeed, a letter of resignation need to be produced (attached in an email) to Board to notify the resignation from the firm.
Upon this notification, the firm name will be taken down from the bis system of the REA. See below after my resignation from my previous firm.
Although it was mentioned that, a letter of acceptance of resignation is required as well, in my case, just my resignation letter was sufficient remove the firm from my registration.
This may be unknown to me that the Board has make verification with the firm prior to removal of the engagement in the bis system.
See below the screenshot from bis system.
Screenshot captured on 15 Sep, 2023 after email which was sent on 13 Sep, 2023 - thank to the prompt action taken by Board.
And, the record of employment in bis system is updated as below.
Indicating the date of resignation.
Next will be formation of NEW FIRM!