Key Changes in Beneficial Ownership Reporting in Malaysia

Background

The Companies Act, 2016 was amended by the Companies Amendment Act 2024 (Act A1701) to introduce a new Division 8A after Section 60, to enhance the beneficial ownership reporting in Malaysia.

These amendments came into force on April 1, 2024, whereby all companies must identify the company's beneficial owner.  The beneficial owner is defined as a person who ultimately owns or controls a company by whatever means.  The main intention of these amendments is to promote corporate transparency through a robust disclosure regime and to close gaps where corrupt practices can profligate. 

A new set of guidelines known as the "Guidelines for the Reporting Framework for Beneficial Ownership of Companies" were issued on 1st April 2024.  The new guidelines supercedes the previous guidelines issued in 2020 by the Registrar of Companies. 

The Key Differences between the previous and new guidelines

3 key new changes were introduced by the new BO guidelines framework:

(1) Beneficial ownership reporting is now applicable to ALL Companies without exceptions and includes all government-owned or state-owned companies.

(2) A new criteria F (has less than 20% of shares or voting shares but exercises significant control or influence over the company) has been introduced.

(3) Section 60D imposes a duty on the BO to disclose and notify the Company that he is the BO and to provide the prescribed statutory information.

The Amendments

The amendments under the new Division 8A includes the following:

(1) Section 60A - defines the BO of a company to be an individual natural person who ultimately owns or controls a company by whatever means and includes a person who exercises ultimate effective control over a company. 6 criteria have been sent to identify the BO and anyone who meets one or more criteria is a BO.

If a BO cannot be determined, a member of the Senior Management of the Company is to be named a BO under the type of BO known as "Control by Other Means." Persons in control of the Company include the Board of Directors/Trustees or any similar body, and/or senior management such as the President or the Chief Operating Officer.

(2) Section 60B - all companies are mandated to identify, obtain, verify, record and maintain an updated information the BO, together with supporting documents in the Register of BO and to notify the Registrar within the given time-frame.

(3) Section 60C - all companies are to issue notice in writing to its members to establish the identity of the BO of the Company. Sample notices are set out in the annexure of the BO Reporting Guideline Framework. These notices are to be sent out annually when preparing and updating the Annual Returns of the Company under Section 68 of the Companies Act, 2016.

(4) Section 60D - the BO has a duty to furnish the Company with the information required under Section 60B.

Reporting Time- frame

(1) A company has to lodge the BO information with the Registrar within 14 days from the date that the BO information is recorded into the Register of BO.

(2) A newly incorporated company has 60 days from the date of the appointment of the Company Secretary to obtain, and record the BO information into the Register of BO. This 60 day period includes the 14 days period to lodge the BO information with the Registrar.

Penalty for non-compliance

(1) For an offence under Section 60B (6), the Company and every officer shall upon conviction be liable to a fine not exceeding RM20,000 and a further fine not exceeding RM500 for each day of continuing offence.

(2) For offences under Section 60C (7), (8) and (9),

• in the case of an individual, shall upon conviction be liable to a fine not exceeding RM50000 or to an imprisonment term not exceeding 3 years or both.

• in the case of a person other than an individual, shall on conviction be liable to a fine not exceeding RM50000.