The Companies (Amendment) Bill 2023 (‘Amendment Bill’) was passed by the Dewan Negara yesterday, having been passed by the Dewan Rakyat on 28th November 2023. The Amendment Bill addresses amendments to be made to the Malaysian Companies Act 2016 (‘CA 2016’). Whilst it is not yet in force, it is envisaged that the amendments to the CA 2016 will be implemented in the first quarter of 2024. Once the Amendment Bill comes into force, the proposed thirty-one clauses will bring with it two key areas of legal changes (along with other miscellaneous changes) to ensure the corporate sector in Malaysia remains competitive and strong.
First, the improvisations of existing corporate rescue mechanisms under the CA 2016 – the aim here is to implement an effective rehabilitation tool for companies facing financial difficulties post Covid-19. Second, the amplification of the beneficial ownership reporting framework (‘BO Framework’) under the CA 2016. The strengthened BO Framework aims to bridge the gaps sown by CCM’s Guidelines for the Reporting Framework for Beneficial Ownership of Legal Persons (‘BO Guidelines’) issued on 17th December 2020, ultimately to enhance corporate transparency and accountability.
This article highlights the key changes to the BO Framework and the new mandatory beneficial ownership reporting requirements to be complied by Malaysian companies, as proposed in the Amendment Bill.
Enhanced Beneficial Ownership Reporting Framework
Before the amendments to the CA 2016 come into force, Malaysian companies are currently subject to limited beneficial ownership reporting requirements under the existing section 56 CA 2016 and the BO Guidelines. The Amendment Bill, legislated in line with international standards laid out by The Financial Action Task Force and Organisation for Economic Co-operation and Development now aims to further amplify the obligation for Malaysian companies to identify and disclose beneficial ownership information to the CCM.
With the passing of the Amendment Bill, companies are advised to take heed of the mandatory beneficial ownership reporting requirements set out under the Amendment Bill as listed below:
1. Definition and criteria of ‘beneficial owners’
The definition of ‘beneficial owners’ under the existing section 2 CA 2016 will soon be amended and widened to include:
a. In relation to shares, the ultimate owner of the shares and does not include a nominee of any description; and
b. In relation to a company, a natural person who ultimately owns or controls over a company and includes a person who exercises ultimate effective control over a company.
The new section 60A (2) also empowers CCM to issue guidelines to assist in identifying beneficial owners of a company.
This amendment to the definition of BO is to bridge the gap between CA 2016 and the BO Guidelines, confirming that the interpretation of ‘beneficial owners’ takes into account actual and practical control over a company (as opposed to only control over shares of the company).
2. Duty to record and maintain register of beneficial owners
The Amendment Bill will soon impose a legal requirement for companies to maintain and keep a register of beneficial owners (‘BO Register’) at the registered office of the company (or any other place in Malaysia as notified to CCM), and to record the following information in the said BO Register:
a. The full name, address, nationality, identification and usual place of residence of its BO;
b. The date the person becomes a BO of the company;
c. The date the person ceases to be a BO of the company and
d. Such other information CCM may require.
If there are any changes to beneficial ownership information, such changes must be notified with CCM within 14 days. The information of a person who ceases to be a beneficial owner must be kept in the BO Register for at least 7 years.
Both the company and its officers are liable to ensure compliance of the new section 60B. Failure to comply to the proposed section 60B is an offence and upon conviction, the company and/or its officers can be fined up to RM 20,000. If the offence continues after conviction, an additional fine of up to RM 500 per day may apply. Currently, both the CA 2016 and BO Guidelines set out this duty albeit superficially where non-compliance is not an offence.
Section 68 CA 2016 addressing information to be included in an annual return will also be amended to include beneficial ownership information and the address at which the BO Register is kept. In other words, once the Amendment Bill comes into force, companies are obliged to ensure that its beneficial ownership information and address at which the BO Register is kept are filed to CCM along with the company’s annual return.
3. Duty of company to require beneficial ownership disclosure
The proposed section 60C (1) now imposes a duty for (as opposed to empowering) companies to, by way of notice in writing, require the members of the company to disclose as to whether the member is a beneficial owner of the company. If the member is not a beneficial owner of the company, he should indicate (as far as possible) the identity and particulars of the beneficial owners of the company, and to provide the relevant beneficial ownership information.
The proposed section 60C (2) and (3) further mandates companies to by way of notice in writing, enquire on particulars of beneficial owners with the following persons:
a. any persons whom the company knows or has reasonable grounds to believe that the person is a beneficial owner of the company; and
b. any member or person whom the company knows or has reasonable grounds to believe that the person knows the identity of the beneficial owners of the company.
Given that the proposed section 60C requires companies to make enquiries in relation to the identity and particulars of beneficial owners by way of notice in writing, it may be inferred that having written record of such notices will be valuable in demonstrating the company’s adherence to, or efforts towards meeting the new legal obligations.
As it stands, the existing BO Guidelines offer more details as to what constitute ‘reasonable measures’, ’reasonable grounds to believe’ and ‘reasonable time’ as seen from the proposed provisions. For instance, the format of the written notice, the reply and its timeframe can be obtained from Annexure C of the BO Guidelines. However, it bears remembrance that the BO Guidelines were issued in reflection of section 56 CA 2016. Thus, the full impact of the new provisions will only be clear once new guidelines are issued under the amended law.
In addition to the companies’ duty to obtain the beneficial ownership information, any such information received by the company must be recorded in its BO Register within 14 days from the date on which the information is received. 
If a company has reasonable grounds to believe that a change has occurred, or if any particulars are incorrect, the company shall give notice to the beneficial owners to confirm whether there have been any changes and if so, to state the date of the change and to provide particulars of the change.
4. Duty of beneficial owners to self-disclose
Pursuant to the proposed new section 60D, a person who has reasons to believe themselves to be a beneficial owner of a company is imposed the duty to disclose themselves to the company as the beneficial owner of the company, along with the information required in the BO Register. In this regard, the proposed sections 60D (2) and (3) impose further obligations on a beneficial owner of a company to:
a. notify the company of any changes in his particulars in the BO Register; and
b. if the person ceases to be a BO of the company, to notify the company of the date and particulars of cessation.
With this proposed section 60D, the liability extends to the individual beneficial owners, who will now be independently obligated to disclose their details to the company.
Any person who contravenes the proposed section 60D CA 2016 commits an offence. As the Amendment Bill does not provide any specific penalty for breach of this proposed section 60D, it may be inferred that the general penalty will be applicable, and any person found guilty may be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding 3 years, or to both.
5. Access to beneficial ownership information
The proposed section 60B (9) grants extensive powers to the Minister of Domestic Trade and Cost of Living to prescribe any persons or class of persons who may access the BO Register or beneficial ownership information, and the manner and terms and conditions for accessing the same.
The above proposed provision however raises concerns as it implies that the Minister has sole discretion in determining who can access the register, without specifying any criteria for granting access. This absence of details leads to uncertainty on whether the access could be broad and unrestricted, hinging on further guidelines or clarifications to be provided by the authorities.
6. Exempted companies
Pursuant to the proposed section 60E CA 2016, the Minister may by Gazette publication exempt any class of companies from the obligations set out under the BO Framework, either unconditionally or subject to certain terms. On this note, the BO Guidelines currently provides for categories of entities which are exempted from the BO Framework, including among others, companies licensed under the Financial Services Act 2013, entities licensed or registered under the Capital Markets and Services Act 2007, companies listed on stock exchange (either local or foreign exchange). It remains uncertain as to whether this list will be replicated for the purpose of the current legislative changes under Division 8A, CA 2016.
The proposed changes brought by the Amendment Bill addressing beneficial ownership reporting framework is shaped by international best practices and stakeholder consultation, and are strategically crafted to bolster corporate durability, transparency and accountability. Companies are advised to take reasonable steps in identifying possible beneficial owners as set out in the existing BO Guideline. Not only would this ease transition for compliance, but also contribute significantly to an enhanced corporate governance framework, ultimately fostering a business environment that is resilient and globally competitive.
Due to the prevalence of beneficial ownership structures in Malaysia – these legislative amendments hold potential for substantial consequences. However, the actual impact or repercussions will only become apparent upon implementation and enforcement of the changes to the law.
To know more about how these changes will affect the corporate sector, feel free to contact the Corporate, Commercial and M&A Practice Group of LAW Partnership for advice on steps to be taken by companies in Malaysia in preparation for the upcoming legislative changes.
 Companies Commission of Malaysia, Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons (Revised 2020) <https://www.ssm.com.my/Pages/Legal_Framework/Document/Revised%20Guidelines%20for%20BO%20Reporting%20Framework%20(17122020)%20(Final).pdf> accessed on 6th December 2023
 Companies Commission of Malaysia, Media Statement: Announcement on Companies (Amendment) Bill 2023, (Oct 2023). <https://www.maicsa.org.my/media/8689/technical_announcements_231017_2_1.pdf> accessed on 6th December 2023
 Proposed section 60A (1), CA 2016
 Proposed section 60A (2), CA 2016
 Proposed section 60B (1), CA 2016
 Proposed section 60B (4), CA 2016
 Proposed section 60B (5), CA 2016
 Proposed section 60B (6), CA 2016
 Proposed section 60C (2), CA 2016
 Proposed section 60C (3), CA 2016
 Proposed section 60C (4), CA 2016
 Proposed sections 60C (5) and (6), CA 2016
 Proposed section 60D (4), CA 2016
 Section 588, CA 2016
 Paragraph 17, BO Guidelines