Issued under section 20C of Companies Commission of Malaysia Act 2001 (CCMA 2001) Governed by Companies Act 2016 (CA 2016)
Latest proposed amendments under Companies (Amendment) Bill 2020
In year 2020, CCM has proposed to amend the Companies Act 2016 (CA 2016) by introducing policies to enhance provisions relating to corporate rescue mechanisms & beneficial ownership framework
As part of the proposed amendments, proposed policy statements 16 to 21 aim to provide:
Clarity to the definition of ‘beneficial owner’ (BO)
Provide clarity & guidance of the BO reporting framework
Streamline the reporting of BO information between CCM & other relevaant authorities
Integrate international standards in regards of anti-money laundering with Malaysian laws
Fundamentally when dealing with Beneficial Owners reporting regiment, there are 2 general rules:
General rule 1: All companies incorporated under CA 2016 are subject to the BO reporting framework; and
General rule 2: All LLPs registered under Limited Liability Partnership Act 2012 (LLPA 2012) are subject to the BO reporting framework.
These are briefly discussed in turn below.
General rule 1: All companies incorporated under CA 2016 are subject to the BO reporting framework.
Whilst all companies under the CA 2016 are required to comply with the BO reporting framework, there are a few exceptions:
a) Companies which are licensed by Bank Negara Malaysia under Financial Services Act 2013 & Islamic Financial Services Act 2013.
b) Entities licensed or registered or regulated under Capital Markets and Services Act 2007.
c) Companies whose shares are quoted in the stock exchange.
d) Companies whose shares are deposited in the central depository under the Securities Industry (Central Depositories) Act 1991.
General rule 2: All LLPs registered under Limited Liability Partnership Act 2012 (LLPA 2012) are subject to the BO reporting framework.
Whilst all LLPs under the LLPA 2012 are required to comply with the BO reporting framework, there are a few exceptions:
a) LLPs which are licensed by Bank Negara Malaysia under Financial Services Act 2013 & Islamic Financial Services Act 2013.
b) LLPs licensed or registered or regulated under Capital Markets and Services Act 2007.
Who is the Beneficial Owner (BO) ?
Natural persons who ultimately own or control a legal entity or arrangement.
Ultimate owner of the shares and does not include a nominee of any description.
Definition provided by 4th EU Anti-Money Laundering Directive 2015: Any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted.
A person’s ownership and/or control in a business entity is important in determining whether the person is a BO.
For example:
A person who holds 20% shares or more in a company is a BO.
A person who has the right to exercise ultimate effective control over an LLP is a BO.
When should companies & LLP notify Registrar regarding BO information?
Section 56(6) Companies Act 2016 (CA 2016) – companies’ obligation to submit the BO information to the Registrar arise within 14 days after the transitional period ends.
For LLP – obligation to notify Registrar arises within 14 days after the transitional period ends, if there is any changes made to the BO information or registered particulars of the LLP.
Overview of the BO Reporting Framework
Procedures Upon Invoking S56
Section 56 CA 2016
Can be invoked by companies via Board Resolution.
Authorizing the Company Secretary to send out notices pursuant to s. 56(1), (2) or (3) to identify the BOs.
Authorizing the Company Secretary to send out notices pursuant to s. 56(1) annually to update the BO information.
What information of the BO should be obtained?
Full Name
Nationality
Residential Address
Date of Birth
NRIC/Passport Number
Type of BO (direct/indirect)
Criteria of BO (including % of ownership or capital contribution, if any)
Date of becoming / ceasing to be BO
Date of notices and date of BO information was received (if BO information is obtained via notices issued under s. 56(1), (2) or (3) CA 2016)
Email address (if any)
Example of ownership in identifying BO:
Based on Scenario 1, Mr. AA is deemed to have an interest in Company D through 100% ownership of Company B that holds 100% ownership of Company D. Therefore, Mr. AA is the ultimate owner of the shares and his name must be entered in the register of BO as the BO of Company D.
Based on Scenario 2, Mr. Q, Mr. R and Mr. S each hold not less than 20% of the shares and voting rights of Company B. Therefore, Mr. Q, Mr. R, and Mr. S are deemed the BOs of Company B and their names must be entered in the register of BO.
Comments