The Companies Commission of Malaysia has made it mandatory for all legal persons to disclose their Ultimate Beneficial Owners
In March 2020, the Companies Commission of Malaysia (SSM) produced guidelines which outlined rules surrounding the disclosure of Beneficial Owners for legal persons in Malaysia. As of March 1, 2020 all companies and Limited Liability Partnerships (LLPs) will be required to identify their Ultimate Beneficial Owners (UBOs), record key information on the UBOs, enable access to this information to law enforcement and notify authorities of any changes to this information.
Key Issues to Note
- Exempted Companies
The following 4 types of companies are excluded from this reporting framework:
- Companies which are licensed by Bank Negara Malaysia under the Financial Services Act 2013, Islamic Financial Services Act 2013, a prescribed development financial institution under the Development Financial Institutions Act 2002 or a licensed money services business under the Money Services Business Act 2001.
- Certain entities regulated under the securities laws. The exempted entities are an entity licensed or registered under the Capital Markets and Services Act 2007 (CMSA). A stock exchange, derivatives exchange, clearing house and central depository. A recognised self-regulatory organisation under the CMSA. A private scheme administrator approved under the CMSA.
- Companies whose shares are quoted in a local or foreign stock exchange.
- Companies whose shares are deposited in the central depository pursuant to the Securities Industry (Central Depositories) Act 1991.
These exempted companies must still make a declaration of their exempted status
- Company Shall Maintain a new Register of Beneficial Owner
Pursuant to the Guidelines, CCM has also sought to introduce to incorporate a new sub-section to require companies to maintain and record all information relating to beneficial owners. Under the proposed new amendment, it will impose a statutory duty on the company and company secretary to lodge the information of beneficial owners to CCM.
- Requirement to Lodge Information of Beneficial Owner in Annual Return
Although there is no requirement under the existing CA 2016 to lodge the beneficial ownership information to CCM (or the Registrar) on annual basis, however CCM is seeking to propose the companies should be required to submit such information as part of annual return to ensure the information is up-to-date.
Conclusion
The proposed amendments to CA 2016 is currently in the review stage and aligns the beneficial ownership framework with international best practices. It provides clarity and guidance to the beneficial ownership framework as well as clear structure to the framework.
