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Understanding Beneficial Ownership (BO) Reporting for Company (Sdn Bhd) in 2024
As of April 1, 2024, all companies in Malaysia are required to report their beneficial owners to the Companies Commission of Malaysia (SSM). As your company secretary, we will handle the compliance and reporting processes. This guide will help you understand what beneficial ownership means and your obligations in this reporting process.
What is a Beneficial Owner?
According to the Companies Act 2016, a beneficial owner is defined as “a natural person who ultimately owns or controls over a company and includes a person who exercises ultimate effective control over a company.”
Criteria for Identifying Beneficial Owners
A natural person is considered a beneficial owner if they meet one or more of the following criteria:
- Criteria A: Holds directly or indirectly not less than 20% of the shares of the company.
- Criteria B: Holds directly or indirectly not less than 20% of the voting shares of the company.
- Criteria C: Has the right to exercise ultimate effective control, whether formal or informal, over the company or its directors or management.
- Criteria D: Has the right or power to directly or indirectly appoint or remove director(s) who hold the majority of voting rights at directors’ meetings.
- Criteria E: Is a member of the company and, under an agreement with another member, controls alone a majority of the voting rights.
- Criteria F: Has less than 20% of shares or voting shares but exercises significant control or influence over the company.
Your Company’s Obligations
As per the Companies Act 2016, your company has the following obligations:
- Maintain a Register: Keep a register of beneficial owners at the company’s registered office (Section 60B).
- Identify Beneficial Owners: Take reasonable steps to identify beneficial owners, including sending notices to members and potential beneficial owners (Section 60C).
- Keep Information Updated: Ensure the beneficial ownership information is accurate and up-to-date (Section 60B).
- Lodge Information: Submit beneficial ownership information to SSM within the specified timeframes (Section 60B).
- Provide Access: Allow access to the register for competent authorities, law enforcement agencies, beneficial owners, and persons authorized by beneficial owners (Section 60B).
- Respond to Notices: If you receive a notice from us regarding beneficial ownership, you must respond within 30 days (Section 60C).
- Report Changes: Notify us of any changes to beneficial ownership information immediately as the changes need to be lodged with SSM within 14 days of the change (Section 60C).
Examples of Beneficial Owners
To help you understand these criteria better, here are some examples from the guidelines:
Direct Ownership
In ABC Sdn Bhd, Mr. Ahmad holds 100% of the shares. Mr. Ahmad is the beneficial owner.
Indirect Ownership
XYZ Sdn Bhd holds 50% shares in ABC Sdn Bhd. Mr. Ahmad owns 100% of XYZ Sdn Bhd. Mr. Ahmad is the beneficial owner of ABC Sdn Bhd through his indirect ownership.
Shares held by Nominee
Mr. Singh holds 20% shares in RST Sdn Bhd. He has been appointed as a nominee by Mr. Chen to hold the shares on his behalf. Therefore, Mr. Chen is deemed to be the beneficial owner of RST Sdn Bhd. Mr. Singh’s holding of 20% shares are disregarded as he is a nominee for Mr. Chen.
Our Role in the Process
We are committed to ensuring that your company complies with these requirements. We will assist you in identifying beneficial owners and managing the reporting process.
- We will send out BO Notices to your shareholders, directors, and any other relevant parties to determine who the beneficial owners are.
- Lodgement with SSM: Once the beneficial owners are identified, we will lodge this information with the Electronic Beneficial Ownership System (e-BOS) as required by law.
What You Need to Do
While we will handle the compliance and reporting processes, your role is crucial in ensuring we have accurate and up-to-date information. You should:
- Respond to BO Notices: When you receive a BO Notice from us, please review the criteria carefully and disclose whether you or any other individual meets the definition of a beneficial owner. Accurate and timely responses are crucial for compliance.
- Provide Accurate Information: Ensure that the information you provide is complete and correct. This includes details on any direct or indirect shareholdings, voting rights, and control agreements.
- Notify Us of Changes: If there are any changes in ownership or control within your company, inform us immediately so we can update the register of beneficial owners and lodge the changes with the Registrar.
Complying with the BO reporting requirements is essential for maintaining your company’s legal standing and avoiding penalties. Please note that any person who fails to comply with this notice commits an offence under subsection 60C(7) of the Companies Act 2016 and/or provides false or misleading information commits an offence under section 593 of the Companies Act 2016.
By working closely with us, you can ensure that your company meets these obligations efficiently and effectively. Remember, accurate disclosure is not just a legal requirement; it is a critical component of good corporate governance. For further assistance or clarification, please do not hesitate to contact our team. We are here to support you every step of the way.
Additional Resources
Guideline For The Reporting Framework For Beneficial Ownership Of Companies