Reporting Framework for Beneficial Ownership of Legal Persons

Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons

The Guideline for the Reporting Framework for Beneficial Ownership of legal persons was recently issued in Malaysia. Here is how businesses could meet those requirements.

The guideline was issued by the Companies Commission of Malaysia (SSM). It applies to companies who are both foreign and local operating here in the country. This means all business entities such as sole proprietors, limited liability partnerships, and partnerships should comply with the requirements.

How Meeting These Requirements Will Benefit Businesses

This guideline is Malaysia’s attempt to ensure businesses are on par with other global practices. The requirements have been given additional boost in the Companies Act 2016. All businesses should treat these guidelines seriously if they want to ensure they are meeting the higher corporate governance standards down the road.

Under the Companies Act 2016, the ultimate owner is a natural person who is classified as the “beneficial owner”. The ultimate owner is the one who owns the shares of the company. The nominee is not included. The owner controls the arrangement or the business entity entirely.

The way to achieve this status has been outlined in the Companies Act under Section 56.

The Responsibilities of The Company

To meet the beneficial ownership reporting requirements, companies should adhere to the following guidelines:

Obtain beneficial ownership information
Identify beneficial ownership information
Verify beneficial ownership information
Register the beneficial ownership information with SSM
Keep the beneficial ownership information up to date regularly
When there is a change of information, the beneficial ownership data should be updated with SSM
Allow the relevant authorities and agencies access to the beneficial ownership information
Maintain an effective policy for beneficial ownership reporting within the company
Shareholders or partners of the company must notify the company regarding the identity of the beneficial owner if and when changes in information take place
Policies must undergo changes that reflect the current constitution of the business where necessary. This ensures proper documentation of the processes that take place.
SSM requires that information and facts that are submitted by any persons must first undergo a declaration. The persons must declare that all information submitted is true at the time to the best of their knowledge.

Are There Penalties Involved If a Company Is Not Compliant?

Yes, there will be penalties involved under section 591 of the Companies Act. If found guilty of making a false or misleading statement, the persons involved could be held liable.

If convicted, they could face up to 10 years in prison (maximum sentence). They could also be facing a fine of RM3 million (maximum). They could be charged with both penalties too, depending on the circumstances.

Let Aseanz Consulting Help You

Staying compliant and keeping up to speed on what the latest rules and regulations are should be a priority for every business owner. Not only does this ensure that your company is safeguarding its future, it ensures your business upholds a strong stance when it comes to corporate governance practices.

For help navigating the ins and outs of beneficial ownership reporting in Malaysia, get in touch with the Aseanz Consulting team today.

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