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The Companies Commission of Malaysia (“CCM”) has issued the Guideline For The Reporting Framework For Beneficial Ownership Of Legal Persons, effective on 1 March 2020 (“the Guideline”) to provide guidance to business entities in complying with the requirements to obtain, keep and hold up-to-date BO information in accordance with Section 56 of the Companies Act 2016 (“the Act”).

THE GUIDELINE APPLIES TO:

(a) companies incorporated in Malaysia under the Act;

(b) foreign companies registered in Malaysia under the Act;

(c) companies limited by guarantee; and

(d) limited liability partnerships.

EXEMPTION FROM BO REPORTING:

(a) companies licenced by Bank Negara Malaysia pursuant to the Financial Services Act 2013 and/or the Islamic Financial Services Act 2013;

(b) a prescribed development financial institution under the Development Financial Institutions Act 2002;

(c) a licenced money services business under the Money Services Business Act 2011;

(d) an entity licenced or registered under the Capital Markets and Services Act 2007;

(e) companies whose shares are quoted in a local or foreign stock exchange; and

(f) companies whose shares are all deposited in the central depository pursuant to the Securities Industry (Central Depositories) Act 1991.

 
Who is BO?

The ultimate owner of the shares (an individual) and does not include a nominee of any description and to be read together with the definition of “interest in shares” under Section 8 of the Companies Act 2016. 

CRITERIAS OF BO:
(for Companies Limited by Shares)

An individual is a BO if he:-

(a) has interest, direct or indirectly, in not less than 20% of the shares (includes both voting and non-voting shares);

(b) hold, directly or indirectly, not less than 20% of the voting shares of the company;

(c) has the right to exercise ultimate effective control whether formal or informal over the company; or the directors or the management of the company (decision maker on running of the business of the company);

(d) has the right or power to directly or indirectly appoint or remove director(s) who holds a majority of the voting rights at meeting of directors (founder is no longer a member or director but his recommendations are always followed by the Board); or

(e) is a member of the company and, under an agreement with another member of the company, controls a majority of the voting right in the company (joint arrangement).

CRITERIAS OF BO:
(for Companies Limited By Guarantee)

An individual is a BO if he:-

(a) has the right to exercise ultimate effective control whether formal or informal over the company: or the directors or the management of the company;

(b) has the right or power directly or indirectly to appoint or remove director(s); or

(c) has the right to exercise or actually exercises ultimate effective control over the company.

RESPONSIBILITIES OF THE DIRECTORS, SHAREHOLDERS/MEMBERS AND ANY OTHER PERSON GIVEN NOTICE:

 
Board of Directors

The Board of Directors is ultimately responsible for ensuring that the company has obtained the beneficial ownership information through the issuance of notices under Sub Section 56(1), (2) or (3) of the Act. The Board of Directors must ensure that once such BO information is received, that the information is entered into a separate part of the register of members.

Shareholders/Members of the Company

If a member of the company receives a notice under Sub Section 56(1) or (3) of the Act, the member is under an obligation to inform the company whether he is the BO as defined in the Act or has met at least one of the criterias in the Guideline. Additionally, if applicable, the member must also provide the particulars of the persons for whom the member holds the voting shares or the parties to the agreements or arrangements, as the case may be, to the extent that such other persons can be identified.

Any Other Person Given Notice under Sub Section 56(2) of the Act

If a non-member receives a notice under Sub Section 56(2), he has to inform the company whether he is the BO as defined under the Act or has met at least one of the criterias or as trustee. Similarly, he also has to provide particulars of the persons for whom he holds the voting shares in his capacity as trustee to the extent that such other persons can be identified.

STEPS AND PROCEDURES:

 

1.  The Board of Directors shall look into adopting an internal policy on setting up a BO register and the procedures to:-

(a) identify, obtain and verify the BO information;

(b) record the BO information into the BO register;

(c) keep the BO information accurate and up-to-date and can be accessed in a timely manner;

(d) update the BO information whenever there is a change to the particulars of the BO and then notify CCM;

(e) keep the BO information and supporting documents at the registered office or wherever the register of members is being kept; and

(f)  give access to competent authorities, law enforcement agencies, the BO whose name has been entered in the BO register and any other person authorised by the BO.

 

2. To comply with the Guideline, our corporate services department will follow up with a separate communication on directional guidance for the next steps in complying with the BO reporting framework. This will include templates of the notification letter, form to be completed with the BO information and other requirements.

Once the BO information has been obtained, our corporate services department will populate the BO Register during the transition period. After the transition period, the necessary disclosures will be made to the CCM.

As there is a continuing disclosure obligation, the BO Register will be updated whenever there are updates or changes to the BO information.

ACCESS TO BO INFORMATION:

1. Company can only grant access of BO information to competent authorities, law enforcement agencies, the BO whose name has been entered in the Register of BO and any other person authorised by the BO.
2. BO shall only be given access to the BO information relating to him.
3. Copies of the BO information shall be provided on request of the competent authorities, law enforcement agencies, the BO whose name has been entered in the Register of BO and any other person authorised by the BO.

 

 

COMPLIANCE TIMELINE FOR BO REPORTING OBLIGATION:

1 March 2020 to 31 December 2020	Obtain, keep and update the BO information at entity level
1 January 2021 onwards	Obtain, keep and update the BO information at entity level and notify CCM