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Beneficial Ownership Disclosure in Malaysia: What You Need to Know

As of April 1, 2024, the Companies Commission of Malaysia (CCM) has launched the Electronic Beneficial Ownership System (e-BOSS) and updated the Guidelines for the Reporting Framework for Beneficial Ownership of Companies. The revised guidelines aim to strengthen the reporting framework and enhance transparency in combating money laundering, terrorism financing, and other unlawful activities.

Identification of a Beneficial Owner

The definition of a beneficial owner has been widened to include a natural person who exercises ultimate effective control over a company, even if they hold less than 20% of shares or voting shares. This can be demonstrated by significant influence or control over the directors or management of the company.

Verification of Beneficial Ownership Information

Companies are required to verify beneficial ownership information and maintain supporting documents, including:

  • Notices issued under section 60C of the Companies Act 2016
  • Certified copies of identification documents
  • Founding documents
  • Agreements regulating power to bind the company

The verification obligation can be conducted at the company level or by the company secretary.

Information on Senior Management

Companies must provide information on senior management in two additional scenarios:

  • When obtaining and recording beneficial ownership information
  • When notifying the CCM

This includes providing access to:

  • Bank Negara Malaysia
  • Law enforcement agencies
  • Any other person authorized by the beneficial owner

Removal of Exemption

All companies are now required to report beneficial ownership information, with the Minister retaining discretionary powers to exempt certain classes of companies from this requirement.

Access to Beneficial Ownership Information

While beneficial ownership information is not publicly available, companies must provide access to authorized persons, including:

  • Bank Negara Malaysia
  • Law enforcement agencies
  • The beneficial owner themselves

However, authorization by the beneficial owner is strictly limited to their own information and not other beneficial owners.

Conclusion

The revised guidelines require companies to take the initiative in identifying and verifying their beneficial owners and maintaining accurate records. The amendments aim to strengthen Malaysia’s standards in combating money laundering, terrorism financing, and proliferation financing, in line with Recommendation 24 of the Financial Action Task Force. We are interested to see how this framework could potentially increase efficiencies in know-your-customer processes.

Note

This article is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.