Significant Changes in Beneficial Ownership Reporting in Malaysia

Understanding Malaysia's New Beneficial Ownership Reporting Framework

Effective April 1, 2024, significant changes have been implemented regarding beneficial ownership reporting under the Companies Act 2016 ("CA 2016") in Malaysia. These changes, introduced through the Companies (Amendment) Act 2024, mark a crucial step in enhancing transparency and combating financial crimes such as money laundering and terrorism financing.

Overview of Changes:

1. Expanded Definition of Beneficial Owner: Section 60A of the CA 2016 now defines a beneficial owner as a natural person who ultimately owns or controls a company, including those exerting significant influence or control over the company, even with less than 20% ownership. The Companies Commission of Malaysia ("CCM") has provided clarity on this definition through its Revised Guidelines.

2. Enhanced Verification Process: The Revised Guidelines specify that notices issued under section 60C of the CA 2016, along with their corresponding replies, serve as supporting documents for verifying beneficial ownership. Additionally, certified copies of identification documents and other relevant records are required for this process. This verification can be conducted either at the company level or by the company secretary.

3. Information of Senior Management: Companies now have to provide information on senior management in specific scenarios, such as when the beneficial owner is unidentified or during the information acquisition process. This ensures transparency and accountability within corporate structures.

4. Notification via e-BOS System: The Electronic Beneficial Ownership System ("e-BOS System") launched by CCM allows companies to notify the authorities of their beneficial ownership information online. Companies have a designated timeframe to comply with these reporting requirements, which can be accessed through the SSM4U Portal.

5. Removal of Exemption: Previously exempted entities are now obligated to adhere to the beneficial ownership reporting framework, with discretionary powers granted to the Minister for specific exemptions. Even exempted companies must notify CCM of their status and provide senior management information.

6. Access to Information: While beneficial ownership information is not publicly available, certain entities like regulatory bodies and law enforcement agencies have access as per anti-money laundering laws. However, access is limited to ensure the accuracy and privacy of the information, with strict authorization required from the beneficial owner.

In conclusion, these amendments signify Malaysia's commitment to international standards in combating financial crimes and enhancing corporate transparency. Companies must proactively identify and verify their beneficial owners, maintaining updated records and notifying CCM accordingly. While these changes streamline regulatory processes, companies should seek legal counsel for specific advice tailored to their circumstances.

Message to Readers:

If you have any questions or need further clarification on Malaysia's beneficial ownership reporting framework, don't hesitate to contact Allpro Consultants (M) Sdn Bhd. Our team of experts can provide guidance and support tailored to your specific needs. We understand the complexities of regulatory compliance and are committed to assisting you every step of the way. Contact us today for personalized assistance.

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