The Companies Act 2016 ("CA") was amended on 1 April 2024 to close the gaps in the previous Beneficial Ownership ("BO") reporting framework.
The definition of a "beneficial owner" in the context of a company now means "a natural person who ultimately owns or controls a company and includes a person who exercises ultimate effective control over a company", in sync with Bank Negara Malaysia's Guidance on Beneficial Ownership.
In the Companies Commission of Malaysia's ("SSM") Guidelines for the Reporting Framework for Beneficial Ownership of Companies issued at the same time as the CA amendment, "ultimate effective control" arises where an individual holds less than 20% shares or voting rights, but still exercises significant control or influence over the directors or management of the company, whether formally or informally. Thus, an individual who is not a member, director or officer in a company can also be construed as a BO.
A Malaysian incorporated company or a foreign company that is registered with SSM as a branch of a foreign company ("Subject Company") must issue a written notice to its members to inquire whether the member is a BO of the Subject Company, or if not, to indicate, so far as possible, the person(s) who is the BO. SSM initially required Subject Companies to lodge the determined BO information on or before 30 June 2024, but this deadline has been extended to 30 September 2024 by SSM's Practice Directive No. 9/2024.
The CA also closes the gap by imposing a duty on a person who is a BO to notify the Subject Company as soon as practicable accordingly, in addition to his duties to notify the Subject Company of changes in his BO information, including his cessation.
Malaysian public listed companies and foreign public listed companies should note that the exemption from the BO reporting framework which previously applied to them pre-1 April 2024 has now ceased to apply.
