Towards ensuring that the corporate ecosystem is free from illicit activities such as money laundering, terrorism financing and other serious crimes, many jurisdictions including Malaysia have introduced measures to identify individual persons behind business entities.
Based on feedback from the Financial Action Task Force (“FATF”) and in line with the legislative improvements made by other jurisdictions, the Registrar of Companies in Malaysia (“CCM” or “the Registrar”) had on 1 March 2020 issued a Guideline for Reporting Framework for Beneficial Ownership of Legal Persons (“the Guidelines”) for all legal persons registered under the respective laws governed by the CCM.
The CCM is also proposing to amend the Companies Act 2016 (“CA 2016”) by introducing new policies to enhance the provisions relating to the beneficial ownership framework to introduce more transparency and to bring Malaysia in tandem with international best practices.
The Beneficial Ownership (“BO”) reporting framework applies to all legal persons stated below, unless they are exempted:
Based on the Guidelines, the following legal persons would be exempted from the BO reporting framework:-
Nonetheless, this exemption does not exonerate the exempted entities from providing the BO information to other regulators, competent authorities and law enforcement agencies in accordance with other written laws.
Beneficial owners are natural persons who ultimately own or control a legal entity or arrangement.
For companies limited by shares, the ultimate owner of shares covers both from the perspective of ownership and effective control. It is applicable to an individual person who meets one or more of the following criteria:
The framework imposes an obligation on companies and limited liability partnerships registered under the CA 2016 to –
Company secretarial companies are to endeavour to maintain strict confidentiality in handling reporting of the BO information to the regulatory authorities.
With the introduction of the new section 56C of the CA 2016, companies are required to record and maintain all information relating to BOs in the register of BO. To ensure the BO information is up to date, accurate and may be obtained in a timely manner, mandatory reporting of BO information is crucial for companies to record such information in the register of BO.
Companies are required to lodge changes to the BO information within fourteen (14) days from the date of the change of information recorded in the register of BO.
The current CA 2016 does not provide that it is a mandatory annual obligation to submit the BO information to the Registrar.
It has been proposed that companies are required to provide for the particulars on BO information as part of the annual return. Companies would submit their annual return together with the BO information with the Registrar at least once a year.
Companies and limited liability partnerships must give access as and when required in a timely manner, the BO information contained in the register of BO to –
For the avoidance of doubt, a BO shall only be given access to the BO information relating to him/her.
1 March 2020 – 31 December 2020
|Post Transitional Period
1 January 2021 onwards
|Existing companies and limited liability partnerships are required to obtain,
keep and update the BO information at the entity’s level.
|The Registrar will invoke section 56(6) of the CA 2016 and companies will have the obligation to submit the BO information to the Registrar within 14 days after the transitional period ends or such further extended time frame as the Registrar may determine.|
Kensington Malaysia could assist you to prepare and set out appropriate internal policies for the eventual implementation of the BO reporting framework in Malaysia.