Beneficial Ownership Reporting Framework for Limited Liability Partnerships enforced on 31 January 2025
05 February 2025
The Minister of Domestic Trade and Cost of Living (‘
the Minister’) has, by
Gazette Notification P.U.(B) 56/20251, appointed
31 January 2025 as the date on which sections 2 to 5, 11(a) and 13 of the
Limited Liability Partnerships (Amendment) Act 2024 (“
Amendment Act”) come into operation.
The following documents were also issued by the Registrar of Limited Liability Partnerships (“
Registrar”) on 31 January 2025:
- Guidelines for the Reporting Framework for Beneficial Ownership of Limited Liability Partnerships (“BO Guidelines”);
- Case Studies and Illustrations of the Guidelines for the Reporting Framework for Beneficial Ownership of Limited Liability Partnerships (“Case Studies”); and
- Limited Liability Partnerships Act 2012: Practice Note No. 5/2025 (“PN 5/2025”).
This article highlights the key amendments made to the Limited Liability Partnerships Act 2012 (‘the Act’) pursuant to the above-referred provisions of the Amendment Act that have come into operation as well as the criteria for determining the beneficial owner of a limited liability partnership (“LLP”) under the BO Guidelines.
Introduction of beneficial ownership framework
A new Part IIIA provides a framework for the reporting of beneficial ownership of a LLP.
Beneficial owner
The new section 20A(1) defines a beneficial owner of a LLP as a natural person who ultimately owns or controls a LLP and includes a person who exercises ultimate effective control over a LLP. The new section 20A(2) mandates the Registrar to issue guidelines for the purpose of identifying a beneficial owner of a LLP.
Pursuant to the above provision, the Registrar has stipulated in paragraph 26 of the BO Guidelines that an individual is a beneficial owner of a LLP if he meets one or more of the following six criteria:
- Criteria A: Holds directly or indirectly not less than 20% of the capital contribution of the LLP;
- Criteria B: Holds directly or indirectly not less than 20% of the rights to vote in the LLP;
- Criteria C: Has the right to exercise ultimate effective control, whether formal or informal, over the LLP or the partner or the management of the LLP;
- Criteria D: Has the right or power to directly or indirectly appoint or remove the partner who holds the majority of the voting rights in the management of the LLP;
- Criteria E: Is a partner of the LLP, and under an agreement with another partner of the LLP, controls alone a majority of the voting rights in the LLP; or
- Criteria F: Has less than 20% of the capital contribution or voting rights but exercises significant control or influence over the LLP.
Paragraph 26 of the BO Guidelines and the Case Studies provide guidance on some of the factors that are to be considered in determining whether a person satisfies any of the six criteria for beneficial ownership.
Obligations of LLP in relation to beneficial ownership
The new Part IIIA, inter alia, imposes the following obligations on a LLP in relation to beneficial ownership:
- To maintain a register of beneficial owners of the LLP (‘BO Register’) and lodge with the Registrar a notice of any change in the particulars in the BO Register in accordance with the requirements set out in the new section 20B2;
- To require any partner of the LLP by written notice to inform the LLP whether the partner is the beneficial owner of the LLP and if not, to indicate the persons by name and other particulars sufficient to enable those persons to be identified as beneficial owners of the LLP3;4
- Where a LLP knows or has reasonable grounds to believe that any person is a beneficial owner of the LLP, to require such person by written notice to state whether he is a beneficial owner of the LLP, and if not, to state whether he knows or has reasonable grounds to believe that any other person is the beneficial owner of the LLP and to give such particulars of that person that are within his knowledge5;
- Where a LLP knows or has reasonable grounds to believe that any partner or person knows the identity of a person who is a beneficial owner of the LLP, to require the partner or such person by written notice to state whether he knows, or has reasonable grounds to believe that any other person is the beneficial owner of the LLP and to give such particulars of that person that are within his knowledge6;
- When a LLP receives information from the person to whom the notice is given as mentioned in sub-paragraphs (2), (3) or (4) above, the LLP shall, within 14 days from the date of receipt of the information, 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 person7;
- If a LLP has reasonable grounds to believe that a change has occurred to the particulars of a beneficial owner of the LLP that are stated in the BO Register, to give notice to the beneficial owner of the LLP to confirm whether or not the change has occurred, and if affirmative, to state the date of the change and provide the particulars of the change8; and
- If a LLP has reasonable grounds to believe that any of the particulars of a beneficial owner of the LLP stated in the BO Register may be incorrect, the LLP shall give notice to the beneficial owner of the LLP to confirm whether the particulars are correct, and if not, to provide the correct particulars.9
A LLP and every partner and compliance officer who contravene the requirements set out in sub-paragraph (1) above shall, on conviction, be liable to a fine not exceeding RM20,000, and in the case of a continuing offence, to a further fine not exceeding RM500 for each day that the offence continues after such conviction.
10
A LLP and every partner and compliance officer who contravene the requirements set out in sub-paragraphs (2), (3), (4), (5), (6) or (7) above, commit an offence
11; and any person who contravenes any notice issued under the foregoing paragraphs commits an offence unless the person proves that the information in question was already in the possession of the LLP or that the requirement to give the information was for any other reason that is frivolous or vexatious.
12
Any person who in purported compliance with any notice referred to in sub-paragraphs (2), (3), (4), (5), (6) or (7) above makes any statement which he knows to be false or recklessly makes any false statement commits an offence.
13
The offences cited in the preceding two paragraphs are punishable upon conviction with a fine not exceeding RM50,000 or with imprisonment for a term not exceeding one year or with both.
14
Duties of beneficial owner
The Amendment Act introduces provisions into the Act that impose the following obligations on a beneficial owner or a person who has reason to believe that he is a beneficial owner of a LLP:
- A person who has reason to believe that he is a beneficial owner of a LLP shall, as soon as practicable, notify the LLP that he is a beneficial owner of the LLP, and provide the LLP with such information as may be prescribed15;
- A beneficial owner of a LLP shall notify the LLP of any changes in his particulars in the BO Register16; and
- A person who ceases to be a beneficial owner of a LLP shall notify the LLP, as soon as practicable, the date the cessation occurred and the particulars of the cessation.17
Any person who contravenes the requirements set out in the preceding sub-paragraphs commits an offence
18, and shall on conviction be liable to a fine not exceeding RM50,000 or with imprisonment for a term not exceeding one year or with both.
19
Access to BO Register and beneficial ownership information lodged with Registrar
The Minister may prescribe the persons or classes of persons who may be given access to the BO Register or the beneficial ownership information lodged with the Registrar and the terms and conditions, including any fee for supplying of such information, on which the access to such information may be given.
20
Additional information to be provided upon registration
Section 10(2) of the Act has been amended to require the following additional information to be provided upon an application to register a LLP:
- the beneficial ownership as specified in the new section 20C(1); and
- the amount of capital contribution by each partner.
Place at which BO Register is to be kept
Section 19(1) of the Act has been amended to include the BO Register as one of the documents that a LLP is required to keep at its registered office.
Power to exempt
A new section 20E empowers the Minister, by order published in the
Gazette, to exempt any class of LLPs from the application of the new Part IIIA either unconditionally or subject to such terms as the Minister may impose, if such LLPs are subject to any requirements under any other written laws that are similar to Part IIIA.
Obligations of compliance officer
The obligations of a compliance officer of a LLP under section 27(7)(a) of the Act have been enhanced to make a compliance officer responsible for ensuring the performance of acts, matters and things required to be done by a LLP under the new section 20C (
requirement for LLP to require disclosure of beneficial ownership of a LLP) and section 20D (
duty of beneficial owner of a LLP to provide information).
Foreign LLPs
The provisions of the new Part IIIA also apply to foreign LLPs that are registered under section 45 of the Act as the definition of a LLP in section 2 of the Act includes a foreign LLP.
Transitional provisions
Under PN 5/2025, LLPs are given a transitional time frame of three months from 1 February 2025 until 30 April 2025 to determine its beneficial owners at the LLP level and to record such information in the BO Register. Thereafter, LLPs are given a further six months until 31 October 2025 (or such extended period as may be allowed by the Registrar) to lodge and update their beneficial ownership information with the Registrar.
21
Amendments pending enforcement
Several amendments under the Amendment Act will come into operation on a later date or dates as may be appointed by the Minister. An outline of these provisions is as follows:
- the extension of the corporate voluntary arrangement and judicial management provisions under the Companies Act 2016 to LLPs;22
- the option to publish or advertise on the website of the Companies Commission of Malaysia, any information required to be published or advertised in a newspaper;23
- expansion of the methods of service of documents on a LLP;24 and
- the introduction of a 30-day time period to take action or provide document under the Act where a time frame is not specifically provided therein.25
Comments
The reporting of beneficial ownership framework introduced under the Amendment Act is substantially similar to the corresponding provisions of the Companies Act 2016 and will align the requirements under the Act with those under the Companies Act 2016.
In addition to the new Part IIIA of the Act, it is imperative that partners, compliance officers and other persons who are beneficial owners of LLPs also familiarise themselves with the BO Guidelines, the Case Studies and PN 5/2025 to obtain a holistic understanding of the requirements of the reporting of beneficial ownership framework for LLPs.
Article by Phua Pao Yii (Partner), Tan Wei Liang (Partner) and Chong Cai Yi (Associate) of the Corporate Practice of Skrine.
1 P.U.(B) 56/2025 was published on 28 January 2025.
4 Paragraph 32(a) of the BO Guidelines requires a LLP to issue a notice under the new section 20C(1) annually from the end of the LLP’s financial year for the purposes of submitting the annual declaration under section 68(1) of the Act.
14 Section 86 of the Act.
19 Section 86 of the Act.
21 Unless otherwise allowed by the Registrar, a LLP is required to lodge its beneficial ownership information through the Electronic Beneficial Ownership System (e-BOS LLP) (paragraph 7, PN 5/2025).
22 New sections 49A and 49B.
24 Amendment to section 76 of the Act.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.