loader

The Companies Act 2016 has recently undergone substantial changes through the implementation of the Companies (Amendment) Act 2024, which became effective on April 1st, 2024. One notable aspect of these updates is the strengthening of the Beneficial Ownership (BO) Reporting Framework, which applies to both domestic and foreign companies operating in Malaysia.

1. Expanded Definition of 'Beneficial Owner

  • Individuals with significant control over a company are now classified as Beneficial Owners.
  • Six criteria, including shareholding, voting rights, and management control, determine Beneficial Ownership.
  • Meeting any one criterion qualifies a person as a Beneficial Owner, emphasizing effective control over the company.
  • 1st Criteria: Directly or indirectly holds at least 20% of company shares.
  • 2nd Criteria: Directly or indirectly holds at least 20% of company voting shares.
  • 3rd Criteria: Able to exercise control over directors and/or management.
  • 4th Criteria: Able to appoint or remove a director with majority voting rights.
  • 5th Criteria: A company member who partners with another to gain majority voting rights.
  • 6th Criteria: Has less than 20% of shares but has significant control over the company.

 

2. Beneficial Owner Register is a MUST

The Bill proposes that companies be required to maintain and update a database of all Beneficial Owners and to submit it to SSM as part of their Annual Submissions.

Key provisions under this new mandate include:

  1. Maintenance and Updating:

Companies are mandated to maintain an up-to-date database of all Beneficial Owners and submit it to the Companies Commission of Malaysia (SSM) as part of their Annual Submissions.

  1. Verification Notices:

Beneficial Owners must receive annual notices to verify and update their details, ensuring accuracy and currency of information.

  1. Communication Records:

All correspondence with Beneficial Owners must be diligently recorded in the Register, maintaining a clear audit trail of communications.

  1. Prompt Reporting:

Any changes in Beneficial Owner details must be promptly reported to SSM within 14 days, ensuring timely updates to regulatory authorities.

  1. Access to Register:

Authorities and individuals identified as Beneficial Owners are entitled to access the register, promoting transparency and regulatory compliance.

  1. Record Retention:

Records of Beneficial Owners must be maintained from the day they assume the role until seven years after they cease to be a Beneficial Owner, ensuring historical continuity and compliance with retention requirements.

  1. Storage Options:

The register can be kept either physically or electronically at the company’s registered office, providing flexibility while ensuring accessibility and security of information.

  1. Stand-In Designation:

In cases where no Beneficial Owner is identified, a person in a senior management position is designated as a stand-in, ensuring continuity of compliance efforts.

3. BO disclosure for foreign companies

Not much here, but the Bill proposes that foreign companies verify and submit their beneficial ownership information to SSM during the registration stage.

4. Companies can request the details

Under the Companies (Amendment) Act 2024, companies are empowered to request details under the following circumstances:

  1. If the company believes that a person is a Beneficial Owner of the company.
  2. If a member possesses knowledge of the identity of a Beneficial Owner.
  3. In the event of a change in the Beneficial Owner’s details.
  4. If discrepancies are found in the Beneficial Owner register.

In each of these situations, the company has legal authorization to request confirmation from relevant individuals to uphold or restore the accuracy of the Beneficial Owner register.

 

 

Recent Posts

Categories