Malaysia has introduced a mandatory disclosure of beneficial ownership.

The Companies Commission of Malaysia (SSM) has introduced guidelines on the disclosure of beneficial ownership.

The SSM issued the Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons which came into effect on 1 March 2020.

The guidelines require that all companies and Limited Liability Partnerships (LLPs) must:

• Identify the beneficial owners
• Determine whether shareholders are holding shares for themselves or are acting as trustees
• Maintain up-to-date and accurate information on the beneficial owner
• Grant access to the beneficial owner’s information to law enforcement and inform the SSM of any changes to the information

Exempted companies

The beneficial ownership reporting framework applies to all companies except companies that are regulated or licensed by Bank Negara Malaysia, the Securities Commission or are listed on local or foreign stock exchanges.

Definition of beneficial owner

The beneficial owner (BO) is, as defined by the Companies Act 2016, the ultimate owner of the shares and does not include a nominee of any description. The ultimate owner is a natural person who has interest, directly or indirectly, in not less than 20% of the company shares, or holds directly or indirectly not less than 20% of the company’s voting shares.

Steps companies need to take

• Consider the interests of the company or LLP held by individuals, corporate entities and/or trusts.
• Review all documents and information at the company’s or LLP’s level.
• Sending out notices according to subsection 56(1), (2) or (3) of the Companies Act 2016.
• Consider any evidence that can show interests or rights held through a variety of means which might ultimately be controlled by the same person.
• Have an internal policy to require shareholders/partners to notify the company/LLP on beneficial ownership information or when there is a change to the beneficial ownership information.
• Any other actions that may have to be taken depending on the circumstances of each company.

Important timelines

Transitional period and post-transitional period

• During the transitional period, which is 1 March to 31 December 2020, companies and LLPs must obtain, keep and update the BO information at the entity’s level.
• The post-transitional period starting from 1 January 2021, companies and LLPs must obtain, keep and update the BO information and notify the SSM.

Obtaining and providing the BO information

Companies:

• Obtain the BO information within 30 days after the appointment of the company secretary.
• Enter the BO information into the register of BO within 60 days after the BO information has been obtained.
• Notify the SSM of the BO information and any changes within 14 days from the date the BO information is recorded in the register of BO.
• Lodge the annual return together with the BO information not later than 30 days from the anniversary of the incorporation date.
• New foreign companies must obtain the BO information, enter the BO information into the register of Bo and notify the SSM during the registration stage.

LLPs:

• Provide the BO information during the registration stage.
• Notify the SSM of changes in the registered particulars within 14 days from the date of the changes of the BO information.
• Lodge the annual declaration along with the BO information within 90 days from the end of the financial year.

Failure to meet the requirements may result in imprisonment of not more than 10 years, a fine not more than RM 3 million or both.