Beneficial Ownership under the Companies Act 2016
By: Josephine Loh, Director
A company’s register of members tells you who holds its shares — but not always who truly owns or controls it. Shares may be held through nominees, layered corporate vehicles or trusts, obscuring the individual behind the corporate veil. To combat misuse of companies for money laundering, tax evasion and terrorism financing and to align Malaysia with International Standards set by the Financial Action Task Force (FATF), the Companies (Amendment) Act 2024 (Act A1701) introduced a dedicated beneficial ownership reporting framework into the Companies Act 2016 (“CA 2016”), in force since 1 April 2024 as a new Division 8A (Sections 60A–60E).
Who Is a Beneficial Owner
Under Section 60A, a beneficial owner is a natural person who ultimately owns or controls a company, including a person who exercises ultimate effective control over it. A beneficial owner must always be an individual — never another company. The Registrar’s Guidelines for the Reporting Framework for Beneficial Ownership of Companies flesh out the test: broadly, an individual who holds directly or indirectly 20% or more of the shares or voting rights, who can appoint or remove a majority of the directors, or who otherwise exercises significant influence or control over the company or its directors.
Core Obligations
- Register of beneficial owners (S.60B). Every company must keep a register recording each beneficial owner’s full name, address, nationality, identification and usual place of residence, together with the dates they became (and ceased to be) a beneficial owner. The Register is kept at the registered office and the information must be lodged with the Registrar (SSM), with changes notified within the prescribed period.
- Power to require disclosure (S.60C). A company may issue notices to its members — and to persons it believes to be, or to know the identity of, beneficial owners — requiring them to disclose beneficial ownership information.
- Duty to notify (S.60D). The obligation is two-way: a person who is, becomes, or ceases to be a beneficial owner must notify the company and keep the information current, without waiting to be asked.
- Exemptions (S.60E). The Minister may exempt classes of companies; entities already subject to equivalent transparency regimes (for example, certain licensed or publicly listed entities) enjoy modified treatment under the Guidelines.
Consequences of Non-Compliance
Failure to keep or update the register, or providing false or misleading information, is an offence exposing the company and every officer in default to fines, with continuing daily penalties for ongoing breaches. Directors and Company Secretaries therefore carry the practical burden of ensuring the framework is complied with.
Division 8A marks a decisive shift from the old, limited disclosure regime toward genuine corporate transparency: every Malaysian company must now be able to name the human beings behind it. Companies should establish standing procedures to identify, verify and update beneficial ownership information, while substantial shareholders and controllers should recognise that anonymity through nominees or layered structures is no longer legally tenable.