New Beneficial Ownership Reporting Framework in Malaysia
Malaysia has taken a significant step towards enhancing corporate transparency and fighting financial crimes by introducing a new Beneficial Ownership (BO) Reporting Framework. Effective 1 April 2024, the Companies (Amendment) Act 2024 came into force, amending the Companies Act 2016 to impose stricter obligations on companies to identify, maintain, and report their BO to the Companies Commission of Malaysia (SSM).
This reform aligns Malaysia’s corporate governance standards with global recommendations from the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD), particularly in combating money laundering, terrorism financing, and the concealment of illicit funds through complex ownership structures.
In this new framework, the Electronic Beneficial Ownership System (e-BOS), is the digital platform used to submit and update BO information with SSM.
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Expanded Definition of Beneficial Owner
Previously, Malaysia’s BO definition focused primarily on individuals holding a certain threshold of ownership. Under the revised framework, the definition has been broadened to capture a wider range of control scenarios:
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Ownership: Any individual who holds 20% or more of the issued shares in a company whether directly or indirectly.
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Control without Ownership: Even if a person holds less than 20% ownership, he/she may still be deemed a beneficial owner if he/she exercise significant control or influence over the company’s decision-making or operations.
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Indirect Ownership: Control through a chain of companies, nominee arrangements, or other indirect means also qualifies.
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With the implementation of the revised BO Guideline, all entities are now subject to the BO reporting framework without exemption. This includes public listed and government or state-owned entities, who will be subject to similar reporting obligations such as private limited companies and foreign companies registered in Malaysia.
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Amendments to the New Beneficial Ownership Reporting Framework
The new BO framework are revised to cover the following areas:
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To widen the definition of BO to include any person that can exercise ultimate control over an entity
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The obligation of companies to maintain the register of beneficial owners at the registered office
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The obligation of BO to report their status as BO of the companies including any changes to the BO information kept at the registered office.
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Reporting Obligations & Deadlines
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Existing Entities: All companies and foreign entities existing as of 1 April 2024 must file their BO information via e-BOS no later than 30 September 2024.
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New Companies: A newly incorporated company must file BO information within 60 days from the date its first company secretary is appointed.
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Foreign Company Branches: Must file BO details at the time of registration with SSM.
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Ongoing Updates: Any change in BO information must be updated in e-BOS within 14 days of change. BO information must also be filed as part of the company’s annual return submission not later than 30 days from the anniversary of incorporation.
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Internal Record Keeping & Verification Duties
The reporting obligations are complemented by stringent internal record keeping requirements:
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BO Register: Every company must maintain an up-to-date register of beneficial owners at its registered office or any other place notified to SSM.
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Supporting Documents: The register must include sufficient documentation to verify the BO’s identity and ownership/control structure.
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Retention Period: BO records must be retained for at least seven (7) years after the individual ceases to be a beneficial owner.
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Verification Duty: Companies must take reasonable steps to ensure the accuracy of the BO information collected, including seeking confirmations from shareholders and related parties.
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If inaccurate or incomplete BO information is discovered, the company must correct it and inform SSM without delay
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Penalty for Non-Compliance
The framework imposes strict penalties to ensure compliance:
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General Offence: A fine of up to RM20,000 for failing to lodge or maintain BO information.
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Continuing Offence: An additional RM500 per day for each day the offence continues after conviction.
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Personal Liability: Directors, company secretaries, and other responsible officers may also be held personally liable for non-compliance.
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Recommended Compliance Actions
To comply effectively with the new requirements, companies should:
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Identify Beneficial Owners: Review shareholding structures, shareholder agreements, and control arrangements to determine all individuals meeting the BO criteria.
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Collect Documentation: Obtain official identification, proof of address, and supporting evidence of ownership/control.
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Maintain an Internal BO Register: Keep it updated with all required details and supporting documents.
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File with e-BOS: Ensure timely submission of BO information to SSM and update promptly upon any changes.
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Educate Stakeholders: Ensure directors, company secretaries, shareholders and beneficial owners understand their roles and responsibilities under the new framework.
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Review AML/CFT controls: align BO identification with existing KYC and AML customer due-diligence procedures.
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Monitor Deadlines: Set internal reminders for filing dates and annual updates.
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Conclusion
The New Beneficial Ownership Reporting Framework marks a decisive shift in Malaysia’s approach to corporate transparency and governance. By expanding the definition of beneficial ownership, removing exemptions, and introducing a streamlined digital reporting platform, Malaysia is aligning itself with global anti-money laundering standards while promoting a more transparent and accountable corporate environment.
All companies, whether local or foreign, must now treat BO compliance as a core governance obligation. Failure to act could result not only in financial penalties but also in reputational damage, regulatory scrutiny, and potential legal consequences for company officers.
Kaizen, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professionals in Kaizen for further clarification.
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