The Companies Commission of Malaysia has made it mandatory for all legal persons to disclose their Ultimate Beneficial Owners

In March 2020, the Companies Commission of Malaysia (SSM) produced guidelines which outlined rules surrounding the disclosure of Beneficial Owners for legal persons in Malaysia. As of March 1, 2020 all companies and Limited Liability Partnerships (LLPs) will be required to identify their Ultimate Beneficial Owners (UBOs), record key information on the UBOs, enable access to this information to law enforcement and notify authorities of any changes to this information.

The Companies Act 2016 (CA2016) had previously provided that a company could ask registered shareholders to advise whether they are a Beneficial Owner or not and if not, to declare the Beneficial Owner. The latest guidelines make this mandatory.

A UBO is a person who has ultimate control over the entity such as having the power to appoint and/or remove directors who have majority voting rights. The new reporting rules apply to all entities mentioned previously with the exception of companies licensed by the Central Bank of Malaysia and companies listed on local or foreign stock exchanges.

Non-exempt companies in Malaysia are now required to identify their UBOs, prepare a UBO register and lodge this register with the SSM. All information on the UBOs will need to be verified and kept up to date with internal rules ensuring UBOs notify the company of changes, with the SSM notified of any changes and UBO information lodged with the SSM on an annual basis along with the annual return. Until this change, annual returns have included a section where the Beneficial Owner can be mentioned, however it had never been mandatory to be filled out.

The Board of Directors is responsible for keeping UBO information correct and up to date and this information must be kept for at least seven years after the persons ceases to be a UBO and it should be stored in the registered company address (or wherever the register of its members is kept). All UBO information must be collated, prepared and updated at entity level before December 31, 2020 after which companies are required to submit UBO information within 14 days to the SSM and the Company Secretary must notify the Registrar.

Failure to comply may result in a fine of up to MYR50,000, the submission of false or misleading information may result in a fine of up to MYR3 million or imprisonment of up to 10 years or both.

The new guidelines have been introduced to reduce illicit activities such as money laundering, terrorism financing and other serious crimes which often involve individuals hiding behind businesses to avoid detection. The SSM are also seeking to harmonise their laws in accordance with international rules.

For more information on the new UBO guidelines.