Continuing from Part 1, in this article, we will discuss the second objective of the Companies (Amendment) Act 2024 – Enhancing Beneficiary Ownership Framework.
The Companies (Amendment) Act 2024 significantly strengthens Malaysia's Beneficial Ownership Reporting Framework, aiming to increase transparency and combat financial crimes. Here's a breakdown of the key changes:
Addressing Regulatory Gaps
Previously, companies were required to record and report beneficial ownership information, but the system had limitations. The amendments address these gaps, aligning Malaysia with international best practices set by organizations like the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD). This improved transparency will aid law enforcement agencies like the Royal Malaysian Police, Bank Negara Malaysia (BNM), and the Malaysian Anti-Corruption Commission in investigating and preventing serious crimes like money laundering, terrorism financing, corruption, and tax evasion.
New Requirements for Companies
The Act introduces a new Division 8A and several sections, including 60B and 60D, which outline stricter obligations for companies:
Maintaining a Register of Beneficial Owners: Companies must maintain a register of beneficial owners at their registered office or a designated location notified to the Registrar of Companies (SSM).
Updating the Register: Any changes to beneficial ownership information must be reflected in the register within 14 days. SSM must also be notified of these updates.
Retention Period: Information on beneficial owners must be kept for a minimum of seven (7) years after they cease to be beneficial owners.
Access to Beneficial Ownership Information
The Minister has the authority to designate specific individuals or classes of individuals who can access the beneficial ownership information recorded by companies and submitted to SSM. This allows authorised personnel to investigate suspicious activity and enforce regulations.
New Obligations for Beneficial Owners
The Act also imposes new responsibilities on beneficial owners:
Notification of Beneficial Ownership: Individuals who are beneficial owners are now obligated to notify the company of their status.
Reporting Changes: Any changes to their personal details recorded in the register must be communicated to the company.
Notification of Cessation: Beneficial owners must inform the company when they cease to be beneficial owners.
Useful links provided by SSM:
Conclusion
These amendments represent a significant step towards enhancing Malaysia's corporate governance framework. By strengthening the Beneficial Ownership Reporting Framework, the government aims to increase transparency, deter financial crimes, and promote a more robust business environment.
Stay tuned for Part 3, which will discuss the Act's focus on Fortifying Corporate Governance and Practice.
If you have any enquiries regarding the above article, please contact our Managing Partner, Eugene Yeong for clarification.
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