The Companies Commission of Malaysia (“SSM”) issued the Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons on 27 February 2020 (“Guideline”).

Please click here for the Guideline.

The Guideline provides guidance to all legal persons as stated below on the requirements relating to beneficial ownership (“BO”) and the procedure in complying with the reporting framework:

1.  Companies (local and foreign companies);
2.  Limited Liability Partnerships; and
3. Business (sole proprietors and partnerships).

However, the following companies are exempted from the beneficial ownership reporting framework:

1. Listed companies on any local or foreign stock exchange;
2. Financial institutions; or
3. Companies whose shares are deposited in the central depository pursuant to the Securities Industry (Central Depositories) Act 1991.

The timeline of the obligation for companies and limited liability partnerships relating to obtaining and keeping the BO information accurate and up-to-date are as follows:

DEFINITION OF BO

Companies Limited by Shares

An individual is deemed to be a beneficial owner or have control over a company if the individual satisfies one or more of the criteria below:

1. Has interest, directly or indirectly, in not less than 20% of the shares;
2. Hold, directly or indirectly, not less than 20% of the voting shares of a company;
3. Has the right to exercise ultimate effective control whether formal or informal over the company; or the directors or the management of a company;
4. Has the right or power to directly or indirectly appoint or remove a director(s) who hold a majority of the voting rights at meeting of directors; or
5. Is a member of a company and, under an agreement with another member of the company, controls alone a majority of the voting right in a company.

Companies Limited by Guarantee (“CLGB”)

An individual is deemed to be a beneficial owner or have control over the CLGB if the individual satisfies one or more of the criteria below:

1. Has the right to exercise significant control whether formal or informal over a company or its directors;
2. Has the right or power to directly or indirectly appoint or remove a director; or
3. Has the right to exercise, or actually exercises ultimate effective control over a company.

REASONABLE MEASURES TO IDENTIFY BO

The Companies and Limited Liability Partnership shall take reasonable measures to identify their BO(s) by employing at least one or more of the following actions:

1. Consider all interests in the company or limited liability partnership which are held by individuals, corporate entities and/or trusts;
2. Review all documents and information available at the company’s level i.e. register of members, shareholders agreement, constitution etc;
3. Send notices pursuant to subsection 56(1), (2) or (3) of the Companies Act 2016 and companies are required to send a notice under subsection 56(1) at least once in a calendar year for the purposes of the submission of the annual return;
4. Consider any evidence that may show interests or rights held through a variety of means that may ultimately be controlled by the same person;
5. Have an appropriate internal policy on BO reporting and to require shareholders to notify the company on the identity of the BO and when there are changes in the BO information; and
6. Any other actions that may have to be taken depending on the circumstances of each company.

ENTRY POINTS OF THE BO INFORMATION

The entry points of the BO information relating to Companies are as follows: