Knowing Beneficial Ownership of Malaysian Companies and Following Legal Procedures
What exactly is beneficial ownership in Malaysia, and why is it important to declare? The Companies Commission of Malaysia (CCM) has created a draft and subsequently published a guideline in the March of 2020. It became legally mandatory for every company and Limited Liability Partnerships (LLPs). The partnership is registered to declare their Ultimate Beneficial Owners (UBOs) of Beneficial Ownership of Legal Persons. This complies with the Malaysian Companies Act 2016, and the prescribed instructions must be followed to avoid potential legal actions. Learn more about the beneficial ownership of Malaysian companies and how you can stay on the right side of the law!
What is Beneficial Ownership?
Beneficial ownerships are essentially the people (BO) who have the ultimate control over companies. This can include company owners and shareholders. The person has at least 20% influence in shares or voting shares in the company. According to the Malaysian Companies Act, 2016, every registered company will have to declare who these people are. This is to allow for better documentation and the reference of Malaysian law enforcement. It also serves as a measure against money laundering, terrorism funding, and other illegal activities. Beneficial Ownership of Malaysian Companies is, hence, a serious matter.
Things You Should Know
Exposure drafts (the Guidelines for the Reporting Framework for the Beneficial Ownership of Legal Persons) are given to all incorporated companies. These documents will serve as a guideline to BO inquiry. The following are some of the essential things that you should know:
Exposure Draft
The exposure drafts mentioned earlier provide companies with guidelines for identifying and preparing information or documentation regarding their BO. This can include reviewing all company documents regarding the BO, Annual BO information update, and other relevant information that details the BO’s relationship with the company. Refer to the CCM for more.
Does Not Apply to All Companies
While other incorporated companies are required to identify their BO’s, several types of companies are exempted from this. These companies are financial institutions, publicly listed companies, and companies with deposits in a central depository. However, you may be surprised to know that some government-controlled or owned companies are not exempted from this, depending on their nature.
Bookkeeping
The board of directors of a company must keep the BO up to date, and these records are to be kept or stored for at least seven years. Generally, all these documents are to be collated and updated before December 31, 2020. After that date, companies are to file in BO information, should there be changes to the registrar and CCM within 14 days.
Consequences of Non-Compliance
Failure to comply with the conditions may result in hefty fines and possibly imprisonment. Penalties can be up to MYR50 000 and up to MYR3 000 000 or imprisonment up to ten years or both at once. Furnishing false and misleading information is also considered a severe offence.
Dealing With Corporate Matters the Easier Way
You may benefit from knowing that you do not have to figure out all the details from scratch when you can hire corporate service providers to help you in these matters and at a reasonable rate. There’s where we can be of help. We are 3E Accounting Malaysia, well-versed in the legal intricacies of the law, and can reliably chart solutions that are best tailored to your company’s nature.
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