Registrar issues revised Guidelines on Beneficial Ownership of Companies and related Case Studies and Illustrations
22 January 2025
Background
On 10 January 2025, the Registrar of the Companies Commission of Malaysia (“Registrar”) issued the following revised documents:
- Guidelines for the Reporting Framework for Beneficial Ownership of Companies (Revised 10 January 2025) (“Revised Guidelines”); and
- Case Studies and Illustrations of the Guidelines for the Reporting Framework for Beneficial Ownership of Companies (Revised 10 January 2025) (“Revised Case Studies”).
The Revised Guidelines supersede, inter alia, the Guidelines for the Reporting Framework for Beneficial Ownership of Companies issued on 1 April 2024 (“Superseded Guidelines”), while the Revised Case Studies supersede the Case Studies and Illustrations of the Guidelines for the Reporting Framework for Beneficial Ownership of Companies issued on 1 April 2024 (“Superseded Case Studies”).
The Superseded Guidelines were issued to assist companies to understand and fully comply with the beneficial ownership reporting requirements under the new Division 8A that were introduced into the Companies Act 2016 (“CA 2016”) on 1 April 2024. In particular, the Superseded Guidelines set out the criteria for determining a beneficial owner, the obligations of the directors and the secretary to ascertain the beneficial owners of the company, specimen enquiry and response forms that may be used to ascertain details of the beneficial owners of the company and the requirement to provide the details of a senior management personnel where the company has no beneficial owner or the beneficial owner cannot be identified. The Revised Guidelines serve the same purposes and are essentially an update of the Superseded Guidelines.
The Superseded Case Studies complement the Superseded Guidelines and provide case studies and illustrations to facilitate the understanding of the Superseded Guidelines. The Revised Case Studies serve the same purposes in relation to the Revised Guidelines and are essentially an update of the Superseded Case Studies.
Key changes in the Revised Guidelines
The key changes introduced under the Revised Guidelines are as follows:
Revised Guidelines |
Paragraph |
Comments |
7(c) |
This paragraph has been clarified to state that the obligation of beneficial owners to notify the company of changes to information is not confined to beneficial ownership information but includes other information recorded in the Register of Beneficial Owners (“BO Register”). |
17(a) |
The second paragraph has been amended as follows:
- Inserting the phrase “to believe that there is a …” after the term “reasonable ground” to correct an inadvertent omission in the Superseded Guidelines.
- Replacing “and” with “or” to clarify that the obligations of the board of directors to ensure the company exercises its powers applies in two situations, i.e. when there is reasonable ground to believe that there has been a change to the beneficial ownership information stated in the BO Register or when there are incorrect particulars of the beneficial owners stated in the BO Register.
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20(a) |
Paragraph 20(a) of the Superseded Guidelines which sets out the obligations of a company prior to the submission of its first annual return has been redrafted from two sub-paragraphs to three sub-paragraphs in the Revised Guidelines as follows:
- sub-paragraph (i) – to obtain the beneficial ownership within 60 days from the date of appointment of the secretary;
- sub-paragraph (ii) – to record the beneficial ownership information in the BO Register within 14 days from the date of receipt of the information under section 60C(4) of the CA 2016; and
- sub-paragraph (iii) – to lodge the beneficial ownership information with the Registrar within 14 days from the date such information is recorded in the BO Register pursuant to section 60B(3) of the CA 2016.
A new sub-paragraph has been introduced into the Revised Guidelines to clarify that the 60-day period referred to in the new sub-paragraph (i) includes the 14-day period referred to in the new sub-paragraph (ii) and the 14-day period referred to in the new sub-paragraph (iii).
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20(b) |
Paragraph 20(b) of the Superseded Guidelines which sets out the obligations of a company after the submission of its first annual return has been amended to introduce a new sub-paragraph (i) and to re-number the existing sub-paragraphs (i) and (ii) as sub-paragraphs (ii) and (iii), so that paragraph 20(b) of the Revised Guidelines reads as follows:
- new sub-paragraph (i) – record any changes to the particulars of beneficial ownership information recorded in the BO Register within 14 days from the date of receipt of such information pursuant to section 60C(4) of the CA 2016;
- existing paragraph (ii) – lodge with the Registrar any changes to the particulars of beneficial ownership information within 14 days of such change being recorded in the BO Register pursuant to section 60B(3) of the CA 2016; and
- existing paragraph (iii) – lodge annual return together with the beneficial ownership information not later than 30 days from the anniversary of its incorporation date pursuant to sections 68(1) and 68(3)(ia) of the CA 2016.
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20(d) |
Paragraph 20(d) of the Superseded Guidelines which sets out the obligations of a foreign company after it has been registered under the CA 2016 has been amended to introduce a new sub-paragraph (i) and to re-number the existing sub-paragraphs (i) and (ii) as sub-paragraphs (ii) and (iii), so that paragraph 20(d) of the Revised Guidelines reads as follows:
- new sub-paragraph (i) – record any changes to the particulars of beneficial ownership information recorded in the BO Register within 14 days from the date of receipt of such information pursuant to section 60C(4) of the CA 2016;
- existing paragraph (ii) – lodge with the Registrar any changes to the particulars of beneficial ownership information within 14 days from the date the changes are recorded in the BO Register pursuant to section 60B(3) of the CA 2016; and
- existing paragraph (iii) – lodge annual return together with the beneficial ownership information not later than 30 days from the anniversary of its registration date pursuant to sections 576(1) and 576(2)(ha) of the CA 2016.
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27(c) |
This paragraph sets out the circumstances in which an individual is deemed to be a beneficial owner of a company limited by shares under Criteria C. The original provision explains that an individual exercises ultimate effective control over a company when the recommendation made by him is always followed by members holding a majority of the voting rights in the company. The paragraph has been amended to provide that in addition, an individual exercises ultimate effective control over a company when his recommendation is always followed by the majority of the board of directors. |
27(f) |
This paragraph which states that under Criteria F, an individual who has less than 20% of shares or voting shares in a company is a beneficial owner if he has significant influence or control over the company. The reference to “20% shares” has now been clarified to refer to “20% shares or voting shares” in the company. |
29 |
This paragraph which previously referred to “company limited by guarantee (without shares)” has been amended to refer to “company limited by guarantee”. |
29(a) |
This paragraph has been amended in the same manner as paragraph 27(c). |
47
(new) |
A new paragraph 47 has been introduced into the Revised Guidelines to require a company to exercise continuous effort to identify its beneficial owner when the company has named its senior management in place of the beneficial owner. |
57 |
The obligation of a company to obtain beneficial ownership information and to notify the Registrar of the place where its BO Register is kept (if not at its registered office) has been enhanced by substituting the word “shall” with “must.” |
61
(new) |
A new paragraph 61 has been added to the Revised Guidelines to state that as Malaysia subscribes for a multi-pronged approach, beneficial ownership information supplied by the Registrar is one of the sources of information to identify and verify the identity of a beneficial owner and hence the information may be verified with multiple sources of information. |
67 |
Paragraph 67 (previously paragraph 65) has been clarified in two respects:
- Firstly, the provision only applies to a person who has been supplied with beneficial ownership information in the registry of beneficial owners maintained by the Registrar; and
- Secondly, the person as aforesaid is required to report to the Registrar, any discrepancy discovered by him in the beneficial ownership information within 30 days from the date the information was supplied.
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Key changes in the Revised Case Studies
The key changes introduced under the Revised Case Studies are as follows:
Revised Case Studies |
Paragraph |
Comments |
Illustration 1(b) |
The statement in the Superseded Case Studies that part of Muthu’s shareholding is to be disregarded in determining beneficial ownership as those shares are not full paid and not entitled to voting rights has been removed from the Revised Case Studies. |
Illustration 3(b) |
The statement in the Superseded Case Studies that only the part of Mei Ling’s shareholding in ABC Sdn Bhd that are paid shares is to be included in determining beneficial ownership has been removed from the Revised Case Studies. The statement has also been amended to include all of Mei Ling’s shares in ABC Sdn Bhd in calculating her beneficial ownership in the company. |
Paragraph (c) of
Part C of Annexure A |
The reference to “President” in the penultimate sub-paragraph of this paragraph of the Superseded Case Studies has been removed and replaced by “Chief Executive Officer” and “Managing Director” as persons who may be considered as persons in control of a company in the Revised Case Studies. |
Paragraph (c) of
Part C of Annexure A (new sub-paras.) |
The following three new sub-paragraphs have been added at the end of Paragraph (c) of Part C of Annexure A of the Revised Case Studies:
- Scenario A which provides that where a reporting company has individual shareholders only and none of its shareholders are beneficial owners, a reporting company may name its senior management in place of the beneficial owner.
- Scenario B which provides that where a corporate shareholder (Company A) holds more than 20% shares in a reporting company, the reporting company must obtain the beneficial ownership information from Company A. Company A must identify its beneficial owner and if Company A is still in the process of identifying its beneficial owner, Company A may submit the name of its senior management to the reporting company.
- A third paragraph states that every company’s structure/shareholding is unique, hence the determination of senior management from one company to another might differ. Thus, every company must assess its senior management based on the company’s structure and circumstances.
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Comments
As mentioned earlier, the Revised Guidelines update the Superseded Guidelines, and the Revised Case Studies update the Superseded Case Studies. In addition to the above revisions, a number of drafting amendments have been made in the Revised Guidelines to clarify the provisions in the Superseded Guidelines.
Article by Phua Pao Yii (Partner) and Tan Wei Liang (Partner) of the Corporate Practice of Skrine.
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.