The Companies Commission of Malaysia (SSM) had recently introduced additional requirements on beneficial ownership (BO) for companies in Malaysia. The enhanced BO disclosure requirements are anticipated to improve the corporate ecosystem in Malaysia, reducing risks of companies being misused for illegal activities such as money laundering, terrorism financing and other serious crimes.
The Companies (Amendment) Act 2023 Bill (2023 CA Bill) was gazette on 2 February 2024. The effective date shall be 1 April 2024 and all companies are required to submit their respective BO information via the e-BOS system by 30 June 2024.
The following are key details from the 2023 CA Bill:
1) New definition of beneficial ownership
The definition of BO is now expanded to include a natural person who ultimately owns or controls over a company and not just ownership of shares only. This includes a person who has ultimate effective control over a company i.e. individual holding less than 20% of shares / voting rights, but still exercises significant control or influence over the directors or the management of the company.
2) Mandatory requirement to maintain a register of beneficial owners
A company is now required to keep and maintain a register of beneficial owners at the registered office of the company e.g. at the secretary’s office and notify the SSM when there are any changes to the information within 14 days.
The Company, and every officer who fails to comply shall, on conviction, be liable to a fine not exceeding RM20,000. In the case of continuing offence, a further fine of RM500/ day can be imposed.
In the case where a false / misleading information is furnished, a fine not exceeding RM3 million, or imprisonment for a term not exceeding 10 years, or both, is applicable, upon conviction.
3) Mandatory requirement for company to obtain and verify BO information
A company is now required to send a notice in writing (at least once a year) to any of the following persons to obtain/ verify BO related information:
- Member of the company
- Any persons whom the company knows or has reasonable grounds to believe is a beneficial owner of the company
- Any member or any person whom the company knows or has reasonable grounds to believe knows the identify of a person who is a beneficial owner of the company
In other words, the company has the responsibility to identify the beneficial owner of the company and ensure that the information is accurate and up to date at all times.
The Company, and every officer who fails to comply shall be considered as committing an offence.
4) Requirement to lodge particulars of BO in the company annual return
A company is now required to include information on the company’s BO as well as the address where the register of beneficial owners is kept in its annual return.
The following are additional information from the BO Consultative Guidelines issued by the SSM:
a) Obligation for newly incorporated company
A newly incorporation company shall observe the following timeline:
- Obtain BO information within 30 days from the appointment of company secretary.
- Record the BO information within 60 days from the date of appointment of the company secretary
- Notify SSM within 14 days from the date the BO is recorded in the register of beneficial owners.
b) Senior management as beneficial owner
Where a company is not able to identify a beneficial owner, the company shall identify the senior management as the beneficial owner.
c) Obligations of company secretary
The company secretary is obliged to conduct verification to record and update the register of beneficial owners. Further, the company secretary should also ensure that the BO information entered is in accordance with the requirements of the Companies Act 2016.
What should be considered by the Company?
The board of directors is ultimately responsible for ensuring that the company complies with the BO reporting framework. As such, it is important for the company to consider the below:
- Liaise with the company secretary to create and maintain the register of
- Maintain supporting documents for the purposes of verification checks on BO information
- Adopt a BO policy to comply with BO requirements.
