Malaysia: Revised beneficial ownership reporting requirements under the Companies (Amendment) 2023 Bill

In brief

On 10 October 2023, the Companies (Amendment) 2023 Bill (“Bill”) was tabled for the first reading at the Dewan Rakyat. The Bill, once in force, aims to enhance corporate transparency and accountability by supplementing the existing provisions on beneficial ownership reporting.


Key changes to the beneficial ownership reporting requirements

The key changes to the beneficial ownership provisions include the following:

  1. The expanded criteria of a beneficial owner (BO)
  2. Register of beneficial owners (RBO)
  3. Mandatory requirement for a company to obtain BO information
  4. Self-disclosure obligation by a BO of a company

In depth

  1. The expanded criteria of a BO

Presently, s2 of the Companies Act 2016 (CA) defines a BO as the ultimate owner of the shares and does not include a nominee of any description.  The Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons (“BO Guidelines”) issued by the Companies Commission of Malaysia (CCM) further clarifies that the BO must be natural persons who fulfill any/all of the criteria as set out in the BO Guidelines.

The proposed revision to s2 and the introduction of the new s60A of the CA will expand the definition of a BO to the following:

  1. In relation to shares, the ultimate owner of the shares and does not include a nominee of any description.
  2. In relation to a company, a natural person who ultimately owns or controls a company and includes a person who exercises ultimate effective control over a company.
  1. Register of beneficial owners (RBO)

The requirement for a company to keep and maintain its RBO under the present BO Guidelines will be statutorily codified in the new s60B of the CA.

Aside from keeping the RBO, a company will also be required to notify the CCM of the particulars of the BO which have been entered in the RBO, in the form and manner which the CCM will prescribe.

s60B of the CA also provides for the RBO or BO information to be accessible by categories of persons (which the CCM will likely prescribe in due course).

  1. Mandatory requirement for a company to obtain BO information

Under s56 of the CA, a company has the option to issue notices in writing to its members or any person who has an interest in the company’s shares to obtain the required BO information.

However, under the new s60C of the CA, it will be mandatory for a company to issue notices in writing to its members, or any person whom the company knows or has reasonable grounds to believe is a BO of the company, to obtain the required BO information or any changes to the information.

  1. Self-disclosure obligation by a BO of a company

The new s60D of the CA will compel an individual to notify a company of his status as a BO of the company and such obligation includes the requirement of such individual to notify the company of any changes to their status or particulars.

Aside from the present penalty provisions applicable to the BO reporting requirements, there will be a specific penalty for non-compliance with the provisions of the new s60B of the CA (relating to maintaining the RBO and notifying the CCM of the particulars of the BO which have been entered in the RBO).  A company and every officer in contravention of s60B of the CA shall, on conviction, be liable to a fine not exceeding RM20,000 and, in the case of a continuing offense, to a further fine not exceeding RM500 for each day the offence continues after conviction.

Next steps

Looking ahead, the Bill is expected to enter its second reading at the end of November 2023 but it is unclear as to when the amended CA will come into force.  Subsequently, we envisage that the CCM will release additional guidelines on the implementation of the new sections in the CA and hopefully provide a transition period for companies and relevant persons to adhere to these new provisions.

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LOGO Malaysia_Wong & Partners_KualaLumpur

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Contact Information
Poh Seng Lim
General Manager, B&M Consultancy Services
Kuala Lumpur

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