In an effort to strengthen corporate transparency and accountability, the Companies Commission of Malaysia (SSM) has implemented amendments to the Companies Act 2016 that focus on the reporting and disclosure of beneficial ownership information.
These changes require companies to identify and record individuals who ultimately own or control the company even if they are not listed as shareholders on official records.
1. What Is Beneficial Ownership
A beneficial owner refers to any natural person who ultimately owns or controls a company, either directly or indirectly. This includes individuals who:
- Hold at least 20 percent of the company’s shares or voting rights, or
- Exercise significant influence or control over the company’s decisions or management.
The concept ensures that the real individuals behind a company are known and traceable, not only the registered shareholders.
2. Why the Change Was Introduced
The updated beneficial ownership framework is part of Malaysia’s commitment to international standards on anti-money laundering, combating the financing of terrorism and improving corporate governance.
By requiring companies to disclose their true owners, the government aims to prevent the misuse of corporate entities for illegal activities such as tax evasion, fraud and corruption.
3. New Statutory Requirements
Under the revised Companies Act 2016 and related guidelines issued by SSM, companies must now:
- Identify and verify their beneficial owners;
- Maintain a register of beneficial ownership information at the registered office;
- Keep the register up to date and record any changes within 14 days; and
- Lodge beneficial ownership information with SSM upon request or as required.
These obligations apply to all companies incorporated in Malaysia, regardless of size or sector.
4. Directors’ and Company Officers’ Responsibilities
Directors and company officers play a crucial role in ensuring compliance. They must:
- Take reasonable steps to identify and record beneficial owners;
- Issue notices to shareholders or other relevant persons to obtain ownership information; and
- Keep accurate records of beneficial ownership declarations and updates.
Failure to comply with these duties can result in penalties under the Companies Act.
5. Practical Steps for Compliance
To meet these requirements effectively, companies should:
- Review and update internal procedures for identifying beneficial owners;
- Request written declarations from shareholders annually;
- Record and file any ownership changes promptly; and
- Store supporting documents securely in case of inspection by SSM.
Companies that adopt proactive compliance measures can avoid penalties and strengthen trust with regulators, investors and business partners.
🔖 All directors and company officers should familiarise themselves with these requirements and review their current compliance practices. Taking timely action today will help your company stay compliant and maintain its credibility under the evolving corporate governance framework.
The new beneficial ownership disclosure rules mark a significant step toward improving transparency in Malaysia’s corporate sector.
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