There is currently uncertainty on determining ultimate effective control in the context of a beneficial owner of a company.
Companies, directors and the beneficial owners of companies have until the extended deadline of 30 September 2024 to lodge accurate beneficial ownership information with the Companies Commission of Malaysia. I examine these uncertainties ahead of the lodgment deadline.
The Companies Amendment Bill 2023 provides enhancements to the beneficial ownership of companies framework and will usher in stronger statutory footing to enforce beneficial ownership reporting.
Section 2 of the Companies Act 2016 (CA 2016) only defines ‘beneficial owner’ as ‘the ultimate owner of the shares and does not include a nominee of any description’. Information on the beneficial ownership of shares will be disclosed under section 56 of the CA 2016.
The current beneficial ownership reporting regime is also governed by the Companies Commission of Malaysia’s Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons (BO Guidelines) (accessible here).
There is a possible gap in the current legal framework. The CA 2016 only relates to reporting on beneficial ownership of shares in a company. However, the BO Guidelines are wider and enforce a reporting on the beneficial ownership of companies.
In the Companies Amendment Bill 2023, we will see an enhancement of the statutory framework on the reporting of beneficial ownership of companies. There are 8 key areas.
Continue reading
The Companies Commission of Malaysia (SSM) has issued the Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons. This guideline has already come into force. Companies, limited liability partnerships and businesses have up to 31 December 2020 to obtain and update their beneficial ownership information.
I had earlier written about the global trends on disclosure of beneficial ownership and also the existing Malaysian position in the Companies Act 2016 (CA 2016). I had also made some comments on the consultation document on the proposed beneficial ownership guidelines.
I now write on 10 things on the beneficial ownership framework to Malaysian companies and the responsibilities that follow.
On 16 December 2019, I spoke live on BFM’s Morning Run on the Companies Commission of Malaysia proposed guidelines on the beneficial ownership reporting framework. I had written earlier about beneficial ownership in Malaysia and also 8 observations I had on the proposed beneficial ownership guidelines.
You can access the podcast here (you may be required to do a free registration on the BFM website). Continue reading
On 8 November 2019, the Companies Commission of Malaysia (or SSM, being its abbreviation in Malay) issued its Consultation Document for the Guidelines for the Reporting Framework for Beneficial Ownership of Legal Persons. SSM has invited any comments by 4 December 2019.
I had written earlier about the global trends for the need for transparency in beneficial ownership details and also the existing Malaysian position in the Companies Act 2016.
Once these proposed guidelines on beneficial ownership are brought into force, they will bring much certainty in terms of the disclosure obligations on the part of companies, limited liability partnerships and businesses in general. This is a good step in strengthening the need for disclosure on beneficial ownership.
In the first part of this post, I highlight some of the salient changes being proposed for companies specifically. In the second part, I then set out 8 of my observations on the proposed guidelines in relation to companies. Continue reading
Recent headlines have carried the news that the Malaysian Anti-Corruption Commission wants to have its own provision on beneficial ownership in the MACC Act 2009 to identify real owners of businesses or properties to further eradicate corruption. This is also against a backdrop of the Panama Papers, and the Paradise Papers.
There is already an existing provision in the Companies Act 2016 (CA 2016) that deals with beneficial ownership. But perhaps, it does not go far enough.
It is important to identify the beneficial owner of a legal entity such as a company, a trust or a partnership. This will ensure tax transparency, and help to fight against tax evasion and financial crimes such as money laundering or terrorism financing. The true controllers of companies will be brought out of the shadows.
I set out some global trends, and I explain the existing Malaysian provision under the Companies Act 2016 (CA 2016) and the possible direction going forward.
[edit: On 8 November 2019, the Companies Commission of Malaysia issued its consultation document on the reporting framework for beneficial ownership. I have since written about it and with my observations over here.]
