BENEFICIAL OWNERSHIP REPORTING FRAMEWORK IN MALAYSIA NORHAIZA JEMON - - PowerPoint PPT Presentation

BENEFICIAL OWNERSHIP REPORTING FRAMEWORK IN MALAYSIA

NORHAIZA JEMON Companies Commission of Malaysia

CCM’S POWERS & FUNCTIONS

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Companies Commission of Malaysia Act 2001

• Established in April 2002

Functions

• To regulate companies, businesses and limited liability partnerships
• To encourage and promote proper conduct amongst conduct amongst directors,

company secretaries, managers and officers of a corporation; and

• To enhance and promote the supply of corporate information of the laws under its

purview based on the information filed or lodged.

• To formulate, conduct and implement educational and training programmes relating to

the laws under its purview

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Legal Persons

CREATION OF LEGAL PERSONS

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COMPANIES ACT 2016 (CA 2016) LIMITED LIABILITY PARTNERSHIPS ACT 2012 (LLPA 2012)

LP

REGISTRATION OF BUSINESSES ACT 1956 (ROBA 1956)

BO REPORTING FRAMEWORK

DEVELOPMENT STAGE

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Definition of ‘beneficial owner’ under section 2 the CA 2016 Definition of ‘interest in shares’ under section 8(4) of the CA 2016 “The ultimate owner of the shares and does not include a nominee of any description.” “A person shall be deemed to have an interest in a share where a body corporate has an interest in a share and— (a) the body corporate is, or its directors are accustomed, or is under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person in relation to that share; (b) that person has a controlling interest in the body corporate;

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(c) that person or his associates, or that person and his associates are entitled to exercise or control the exercise of not less than twenty per centum of the votes attached to the voting shares in the body corporate.”

COMPANIES ACT 2016: BENEFICIAL OWNER

APPLICABLE LAWS ON TRANSPARENCY OF BO

Section 56 of the Companies Act 2016 empowers a company to require a disclosure: i.

from any member whether he is holding shares as beneficial owner or as trustee;

ii.

from a person who has an interest in a share of a company whether he is has interest in shares as beneficial owner or as trustee

iii.

from any member whether the voting rights held by him is the subject of an agreement or an arrangement under which another person is entitled to control those rights

Section 56 also details out the procedures in obtaining the BO information and how such information is

to be recorded in the Register of Members

Under section 56(6), the Registrar may also invoke his powers to require a company to request BO

information from its shareholders as and when necessary.

Any person who fails to comply with a notice by the company to disclose BO information or fails to

comply with the Registrar’s direction is subject to a penalty of RM50,000 or imprisonment of 3 years or both.

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APPLICABLE LAWS ON TRANSPARENCY OF BO

Section 68 requires a company to submit annual return in which the company must make a

declaration as to whether or not its shareholders are holding shares as beneficial owner or as trustee.

If a shareholder is holding shares as trustee, then a separate annexure on the BO information

must be lodged together with the annual return.

Failure to lodge annual return is subject to penalty of RM50,000 and RM1,000 each day for

continuing offence

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SANCTIONS

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• Sec. 584 CA 2016: Require a company or officer of the company including cosec to

furnish information relating to shareholding of any person to the Registrar (penalty: a fine not exceeding RM1 million)

• Sec. 584 CA 2016: Power to compel any person or individual to furnish information

and particulars of shareholding, whether directly or indirectly, when required by the Registrar (penalty: maximum of 10 years imprisonment or a fine not exceeding RM3 million or to both)

• Sec. 593 CA 2016: Any person who are making false or misleading statement or report

commits an offence (penalty: maximum 10 years imprisonment or a fine not exceeding RM3 million or to both)

• Sec. 27B CCMA 2001: Power to require information from any person (penalty: a fine

not exceeding RM500,000 or maximum of 3 years imprisonment or to both)

CHALLENGES FACED BY THE INDUSTRY

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• Lack of guidance on the

definition of BO

• Who is responsible for the

reporting

• Timeliness, accuracy of

reporting Comprehensive Guidelines on BO Reporting

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Policy Statement #1: Definition of BO

(1) Companies with share capital (also include LLP)

An individual is deemed to be a BO or have control over a company if he fulfills one or more of the tests below: (a) Directly or indirectly has interest in 20% or more of the shares; (b) Holds direct or indirect voting rights in 20% or more of the voting shares; (c) H the right to exercise significant control whether formal or informal over the company or its directors; (d) Is a member of the company and, under an agreement with another member of the company, controls the majority of the voting rights in the company; or (e) Has the right to exercise, or actually exercises dominant influence or control over the company.

BO REPORTING FRAMEWORK

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Policy Statement #1: Definition of BO (2) Companies without share capital An individual is deemed to be a BO or have control over the CLBG after fulfilling either one or more tests as follows: (a) Has the right to exercise significant control whether formal or informal over the company or its directors; (b) Has the right or power to directly or indirectly appoint or remove a director; or (c) Has the right to exercise, or actually exercises dominant influence or control over the entity has controlling interest.

BO REPORTING FRAMEWORK

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Policy Statement #2: Scope

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Reporting The following entities are within the scope of reporting: (a) Companies incorporated under the CA 2016, unless exempted; (b) Foreign companies registered under the CA 2016, unless exempted; (c) LLPs registered under the LLPA 2012; (d) Foreign LLPs registered under the LLPA 2012, unless exempted. Policy Statement #3: Exempted Entities Exempted entities: (a) Listed companies on a stock exchange either local or foreign exchange (b) Financial institutions Policy Statement #4: Access to BO Information Access will be granted to the following person: (a) Competent authority and law enforcement agencies for the purpose of administering and enforcing their respective laws; (b) a beneficial owner whose name has been entered in the company’s register; (c) The legal owner whose BO has been disclosed.

BO REPORTING FRAMEWORK

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Policy Statement #5: BO Information Entry Point (1) Local Company (a) Existing companies - annual return (section 68); (b) New companies - within 30 days from the appointment of company secretaries; (c) Companies shall notify the Registrar of the changes in the particulars of the register within 14 days from the date of change. (2) Foreign Company (a) Foreign companies have the duty to submit annual return together with BO information within 30 days from the anniversary of its registration date; (b) New foreign companies will have the obligation to submit the BO information during the registration stage; (c) Foreign companies have the duty to submit an up-to-date BO information to the Registrar within 14 days from the date of the changes.

BO REPORTING FRAMEWORK

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Policy Statement #5: BO Information Entry Point (3) LLP (a) LLPs have the duty to lodge annual declaration together with BO information within 90 days from the end of the financial year; (b) New LLPs will submit the BO information during the registration stage; (c) LLPs have the duty to submit an up-to-date BO information to the Registrar within 14 days from the date of the changes. (4) Foreign LLP New foreign LLPs will submit the BO information during the registration stage.

PROPOSED BO REPORTING FRAMEWORK

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Policy Statement #6: Verification & Lodgement of BO Information (1) It shall be the duty of the following individuals to ensure BO information is lodged, accurate and up-to-date and can be accessed in timely manner: (a) Company - Company secretary (section 236 of the CA 2016) (b) Foreign company - Agent (individual) or corporate agent (company secretary) (section 563 of the CA 2016) (c) LLP - Compliance officer (section 27 of the LLPA 2012) (d) Foreign LLP – Compliance officer (section 46 of the LLPA 2012) (2) It shall be the duty of each company/LLP to keep supporting documents as their basis for the verification of information either in physical or softcopy form.

BO REPORTING FRAMEWORK

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Legal Arrangements

CREATION OF LEGAL ARRANGEMENTS

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COMPANIES ACT 2016

LA

TRUST COMPANIES ACT 1949 (TCA 1949) TRUST BUSINESS, ACTIVITIES OR ARRANGEMENT

UNDER REVIEW

BO REPORTING FRAMEWORK

DEVELOPMENT STAGE

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Policy Statement #7: Definition of Trust Business The definition of ‘trust business’ shall constitute the following: (a) the provision of services with respect to the creation of an express trust; (b) acting as trustee in relation to an express trust; (c) arranging for any person to act as trustee in respect of an express trust; (d) the provision of trust administration services in relation to an express trust; (e) acting as (or arranging for another person to act as) a nominee shareholder for another person; (f) activities invoked on trust companies pursuant to section 3 and First Schedule of the Anti- Money Laundering, Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFAPUA 2001); and (g) exclusion of trust business or trust arrangement which is regulated under the Trustees Act 1949, Trustees (Incorporation) Act 1952, Capital Market Services Act 2007, Financial Services Act 2013, Islamic Financial Services Act 2013, Development Financial Institutions Act 2002 and any other specified written laws.

PROPOSED BO REPORTING FRAMEWORK

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Policy Statement #8: BO Information Entry Point Trust companies will submit the BO information through the following entry point: (a) At the pre-incorporation level as part of the registration documents as listed in the guidelines, ‘Application to Register a Trust Company under the Trust Companies Act 1949’; (b) Submission of annual statement together with the updated BO information of a trust company and trust arrangements it administer; (c) Submission of the BO information of trust arrangements under the statement of liabilities pursuant to section 21 of the TCA 1949.

BO REPORTING FRAMEWORK

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Thank you