Beneficial Ownership Disclosure: Malaysia’s New Requirement for Greater Transparency
Malaysia’s regulatory body, Suruhanjaya Syarikat Malaysia (SSM), has issued a Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons to promote transparency and align with global corporate practices.
Deadline for Compliance
The deadline for companies, limited liability partnerships, and businesses to obtain and update their beneficial ownership information is December 31, 2020.
Global Trend towards Transparency
Malaysia’s move towards greater transparency in beneficial ownership disclosure follows international jurisdictions such as the United Kingdom and Singapore, which have implemented similar measures to combat corporate corruption and tax evasion.
Definition of Beneficial Ownership
Under Malaysia’s Companies Act 2016, a beneficial owner is defined as the ultimate owner of shares in a company, excluding nominees. Section 56 of the act provides companies with the necessary powers to achieve transparency by requiring members or other persons holding voting shares to provide confirmation on their ownership status.
Guideline Requirements
The Guideline requires companies and limited liability partnerships to:
- Take reasonable steps to identify, obtain, and verify beneficial ownership information
- Enter it into a register
- Keep it accurate and up-to-date
- Make it accessible to competent authorities and law enforcement agencies
Compliance and Penalties
Failure to comply with the new requirement can result in penalties under Section 591 of the CA 2016, including imprisonment for up to ten years or a fine not exceeding RM3 million.
Best Practices for Compliance
To safeguard compliance and uphold corporate governance practices, companies are advised to:
- Adopt an internal policy on beneficial ownership reporting prior to the December 31, 2020 deadline
- Outline procedures for identifying, obtaining, and verifying beneficial ownership information
- Require shareholders or partners to notify the company of changes in BO information
Seek Professional Guidance
PwC Malaysia is available to help navigate companies through this new landscape of beneficial ownership reporting. Contact us today for more information on how we can assist you in ensuring compliance with the new requirement.