The Companies (Amendment) Act 2024 (“Amendment Act”) came into operation on 1 April 2024, with the exception of four provisions.¹
 
The Companies Commission of Malaysia also uploaded the following documents, both dated 1 April 2024, on its website:

• Guidelines for the Reporting Framework for Beneficial Ownership of Companies² (“Guidelines”); and
• Case Studies and Illustrations of the Guidelines for the Reporting Framework for Beneficial Ownership of Companies (“Case Studies Guide”).  

The Amendment Act, among others, introduces a framework for the reporting of beneficial ownership of companies and enhances the existing provisions on schemes of arrangement and reconstruction, and corporate rescue mechanisms in the Companies Act 2016 (“Principal Act”).
 
We will provide a summary of the main amendments that are introduced under the Amendment Act in our two-part article. Part 1 examines the new framework for the reporting of beneficial ownership of companies, whilst Part 2 highlights the amendments to the provisions on schemes of arrangement and reconstruction and corporate rescue mechanisms.³
 
Definition of “beneficial owner”
 
The definition of “beneficial owner” in section 2 of the Principal Act is amended by introducing a sub-paragraph (b) to state that in relation to a company, the beneficial owner means a person as provided for in section 60A of the Principal Act, which will be discussed below. The existing definition of a beneficial owner in relation to shares is retained as sub-paragraph (a) of the definition.
 
The reporting of beneficial ownership framework
 
The Amendment Act introduces a new Division 8A (sections 60A to 60E) to Part II of the Principal Act.
 
Beneficial owner of company
 
Elaborating on the expanded definition of “beneficial owner” in section 2 of the Principal Act, section 60A(1) provides that “A person is a beneficial owner of a company if he is a natural person who ultimately owns or controls over a company and includes a person who exercises ultimate effective control over a company.”
 
The new section 60A(2) empowers the Registrar of the Companies Commission of Malaysia (“Registrar") to issue guidelines for the purpose of identifying a beneficial owner of a company.
 
Pursuant to section 60A(2), the Registrar has specified in paragraph 27 of the Guidelines that an individual is a beneficial owner of a company limited by shares if he satisfies one or more of the following requirements:

• Criteria A: holds, directly or indirectly, interest in not less than 20% of the shares of a company;
• Criteria B: holds, directly or indirectly, interest in not less than 20% of the voting shares of a company;
• Criteria C: has the right to exercise ultimate effective control, whether formal or informal, over the company or the directors or the management of the company;
• Criteria D: has the right or power to, directly or indirectly, appoint or remove a director(s) who holds a majority of the voting rights at the meeting of directors;
• Criteria E: is a member of the company and, under an agreement with another member of the company, controls alone a majority of the voting rights in the company;
• Criteria F: has less than 20% of the shares or voting rights but exercises significant control or influence over the company.  

The Registrar has further stipulated in Paragraph 29 of the Guidelines that an individual is a beneficial owner of a company limited by guarantee if he satisfies one or more of the following requirements:

• Criteria C: has the right to exercise ultimate effective control, whether formal or informal, over the company or the directors or the management of the company;
• Criteria D: has the right or power to, directly or indirectly, appoint or remove a director(s) who holds a majority of the voting rights at the meeting of directors;
• Criteria E: is a member of the company and, under an agreement with another member of the company, controls alone a majority of the voting rights in the company.  

Register of beneficial owners of a company
 
The new section 60B, inter alia, sets out the following requirements:

1. A requirement under section 60B(1) for every company to keep a register of beneficial owners of the company (“BO Register”) in which shall be recorded the following information:  

• the full name, addresses, nationality, identification and usual place of residence of a person who is a beneficial owner of the company;
• the date the person becomes a beneficial owner of the company;
• the date the person ceases to be a beneficial owner of the company; and
• such other information as the Registrar may require,  

2. The BO Register is to be kept at the company’s registered office or any other place in Malaysia as is notified to the Registrar (section 60B(2)).  


3. A company is required to lodge with the Registrar a notice on any change to the particulars in the BO Register within 14 days from the date on which the change is recorded in the BO Register (sections 60B(3) and 60B(4)).  


4. The information of a person who has been recorded in the BO Register as a beneficial owner of the company but subsequently ceases to be so, is to be retained for seven years from the date the person ceases to be a beneficial owner (section 60B(5)).  

Section 60B also provides as follows:

1. The form, manner and extent of the information to be kept in the BO Register and the particulars to be lodged with the Registrar upon a change to the particulars in a BO Register shall be determined by the Registrar (section 60B(7)).  


2. The Minister of Domestic Trade and Cost of Living (“Minister”) may, in relation to the BO Register or the beneficial ownership information lodged with the Registrar (“said information”), prescribe:  

• the person or class of persons who may access the BO Register or the said information; and
• the manner and terms and conditions for accessing the BO Register or the said information,  

 Duty of company to require member to disclose beneficial owner
 
Section 60C(1) imposes a duty on a company to require any member of the company to:

1. inform the company whether the member is a beneficial owner of the company, or if the member is not a beneficial owner of the company, as far as it is possible to do so, to indicate the persons by name and by other particulars sufficient to enable those persons to be identified as the beneficial owners of the company; and  


2. provide such other BO information as specified in section 60B(1).  

Duty of company to require confirmation by beneficial owner
 
Section 60C(2) requires a company which knows or has reasonable grounds to believe that any person is a beneficial owner of the company to require such person to:

1. state whether he is a beneficial owner of the company, or if he is not a beneficial owner of the company, to state whether he knows or has reasonable grounds to believe that any other person is a beneficial owner of the company and to give such particulars of that person that are within his knowledge; and  


2. provide such other BO information as required under section 60B(1).  

Duty of company to require any member or person to confirm beneficial owner
 
Where a company knows or has reasonable grounds to believe that any member or person knows the identity of a person who is a beneficial owner of the company, section 60C(3) imposes a duty on the company to require such member or person to:

1. state whether he knows, or has reasonable grounds to believe that any other person is a beneficial owner of the company and to give such particulars of that person that are within his knowledge; and  


2. provide such other BO information as required under section 60B(1).  

Duty of company to seek confirmation of change to particulars of beneficial owner
 
Section 60C(5) requires a company that has reasonable grounds to believe that a change has occurred to the particulars of a beneficial owner of the company that are stated in the BO Register, to give notice to the beneficial owner:

1. to confirm whether or not the change has occurred; and  


2. if the change has occurred, to state the date of the change, and to provide the particulars of the change.  

Duty of company to seek confirmation whether information in BO Register is correct
 
If a company has reasonable grounds to believe that any of the particulars of a beneficial owner stated in the BO Register may be incorrect, the company is required under section 60C(6) to give notice to the beneficial owner to confirm whether the particulars are correct, and if not, to provide the correct particulars.
 
Matters relating to notices issued
 
A notice to be issued under section 60C(1), 60C(2) or 60C(3) is to be in writing and the person to whom it is issued is required to respond to the notice within such reasonable time and manner as specified in the notice.
 
A company which receives information from the person to whom a notice is issued under section 60C(1), 60C (2) or 60C(3) is required under section 60C(4) to record in the BO Register, the date on which the notice requiring such information was issued, and the particulars of the information received from the person within 14 days from the date on which the information is received.
 
Offences
 
A company and every officer who contravene section 60C(1), 60C(2), 60C(3), 60C(4), 60C(5) or 60C(6) commit an offence (section 60C(7)).
 
Any person who contravenes any notice under section 60C commits an offence unless he proves that the information in question was already in the possession of the company or that the requirement to give the information was for any other reason that is frivolous or vexatious (section 60C(8)). Further, any person who in purported compliance with any notice issued under section 60C makes any statement which he knows to be false or recklessly makes any false statement commits an offence (section 60C(9)).
 
Duty of beneficial owner to provide information
 
Section 60D(1) requires a person who has reason to believe that he is a beneficial owner of a company to, as soon as practicable, notify the company that he is a beneficial owner of the company, and provide such information as may be prescribed.
 
A beneficial owner of a company is required under section 60D(2) to notify the company of any changes to his particulars in the BO Register.
 
Section 60D(3) requires a person who ceases to be a beneficial owner of a company to notify the company, as soon as practicable, of the change by stating the date the cessation occurred, and the particulars of the cessation.
 
Any person who contravenes section 60D commits an offence (section 60D(4)).
 
Exemption from Division 8A
 
The Minister may, by order published in the Gazette, exempt any class of companies from the application of Division 8A of Part II either unconditionally or subject to such terms as the Minister may impose, if such companies are subject to any requirements under any other written laws similar to those in Division 8A (section 60E).
 
The Registrar has stipulated in paragraph 13 of the Guidelines that no company is exempted from the application of Division 8A of Part II of the Principal Act.
 
Foreign companies
 
The requirements relating to foreign companies under Division 1 of Part V of the Principal Act are amended in the manner set out below.
 
Additional information for registration
 
In addition to the information set out in section 562(1) of the Principal Act, a foreign company is required to provide the BO information for the purpose of its registration as a foreign company under the Principal Act.
 
Beneficial ownership of foreign company
 
A new section 573A extends the provisions in Division 8A of Part II of the Principal Act to a foreign company.
 
Deferred enforcement
 
The three non-insolvency related provisions in the Amendment Act that will be enforced at a later date or later dates to be appointed by the Minister are as follows:
 
Information to be included in annual return
 
Section 68(3) of the Principal Act which sets out the information to be included in an annual return of a company will be amended to include the BO information and the address at which the BO Register is kept if it is not kept at the company’s registered office.
 
Annual return of foreign company
 
Section 576(2) of the Principal Act which sets out the information to be included in an annual return of a foreign company will be amended to include the BO information and the address at which the BO Register is kept if it is not kept at the foreign company’s registered office.
 
Publication of notices on the Companies Commission of Malaysia’s website
 
The new section 612A will allow a company which is required to publish or advertise any information in a newspaper under the Principal Act to instead publish or advertise the same on the website of the Companies Commission of Malaysia in the form and manner to be determined by the Registrar and upon payment of a prescribed fee.
 
Comments
 
The decision to not exempt listed companies from the framework for reporting of beneficial ownership means that listed companies and, where applicable, their shareholders will have to comply with both the framework for reporting of beneficial ownership under Division 8A of Part II as well as the substantial shareholding disclosure requirements under subdivision 7 (sections 134 to 145) of Division 1 of Part III of the Principal Act. This will undoubtedly increase the compliance costs and administrative burdens for listed companies and their affected shareholders.
 
The Case Studies Guide is to complement the Guidelines and the case studies and illustrations in Case Studies Guide are for illustrative purposes to facilitate the understanding of the Guidelines
 
 
Article by Phua Pao Yii (Partner), Kok Chee Kheong (Partner) and Tan Wei Liang (Senior Associate) of the Corporate Practice of Skrine.