Beneficial ownership reporting framework and other changes to the Companies Act 2016

March 25, 2024

The Companies (Amendment) Act 2024 (“Amendment Act”) brings about a raft of changes to the current Companies Act 2016 (“Companies Act”). The amendments establish the disclosure and reporting framework for beneficial ownership in companies; strengthen the existing provisions in relation to corporate governance, schemes of compromise or arrangement and corporate rescue mechanisms; and introduces a new Division 9 on protection for essential goods and services.

The Amendment Act was gazetted in February 2024 and is expected to come into force in 2024. Companies in Malaysia, in particular foreign companies, will need to familiarise themselves with the new provisions and ensure compliance with the new legal requirements, while also leveraging any opportunities presented by the enhanced corporate governance framework and corporate rescue mechanisms.

Definition of “beneficial owner"

Prior to the Amendment Act, the Companies Act interpreted “beneficial owner” as the ultimate holder of the shares and excludes any nominee of any description.

The new interpretation now distinguishes between the beneficial owner in relation to shares, and beneficial owner in relation to a company. Notably, the existing definition of a beneficial owner in relation to shares remains unaltered.

Beneficial ownership reporting framework

A new Division 8A, encompassing sections 60A to 60E, in relation to beneficial ownership of a company has now been introduced.

The new section 60A(1) specifies that a person is considered as a beneficial owner of a company if he is a natural person who ultimately owns or controls over a company, and includes those who exercises ultimate effective control over a company. Note that reference to a “company” also includes reference to a “foreign company”. Additionally, section 60A(2) grants the Registrar of the Companies Commission of Malaysia ("Registrar") the authority to establish guidelines for the identification of a company's beneficial owner.

Prior to the Amendment Act, the Companies Act was silent on any register of beneficial owners. The new section 60(B) sets out the requirements in relation to the beneficial owners register (“BO Register”) of a company.

In relation to the BO Register, note that:

  1. it must be maintained at the company's registered office or another designated location in Malaysia, with notification to the Registrar. The BO Register must have the beneficial owner’s full name, addresses, nationality, identification details, and usual place of residence. Additionally, it must include the dates when one becomes a beneficial owner and when they cease to be one. The Registrar may also request any other necessary information;
  2. it must be kept at the company's registered office or another location in Malaysia as notified to the Registrar;
  3. the company must inform the Registrar of any changes to the register of beneficial owners;
  4. companies are obliged to submit a notice to the Registrar within 14 days of any changes in the BO Register; and
  5. preserve records of information for seven years from the date an individual ceases to be a beneficial owner.

Non-compliance with these requirements by the company and its officers constitutes an offence. Upon conviction, the company and/or its officers can be fined up to RM20,000, with an additional daily fine of up to RM500 for a continuing offence. Prior to the amendments, while both the Companies Act[1] and the Beneficial Ownership Guidelines[2] outlined this obligation, they did not enforce non-compliance as an offence.

In addition, section 60(B) also:

  1. empowers the Registrar to determine how the form, manner and extent of information is stored in the BO Register and the particulars to be lodged with the Registrar when there are changes;
  2. establishes the register of beneficial owners as prima facie evidence;
  3. grants the Minister authority to regulate access to the BO Register. The Minister may specify eligible individuals or classes, define access terms and conditions, and establish fees for obtaining beneficial ownership information. This provision ensures controlled and regulated access to critical company information, offering a clear framework for who can access the register, how, and at what cost; and
  4. defines "identification" pragmatically, considering various forms such as identity cards issued under the National Registration Act 1959, or alternative evidence like passport details.

Company to require disclosure of beneficial owner of company

The new section 60(C) requires any member of the company to inform the company whether they are a beneficial owner of the company. If they are not, they would have to provide particulars sufficient to enable persons to be identified as the beneficial owners of the company and any other information as specified in section 60B(1). An important implication of this change is that a trust company which holds shares on behalf of individuals or entities would be considered as legal owners of the shares, and hence, may be obligated to disclose the beneficial ownership of the trust company itself.

Notices in relation to the identity of beneficial owner

When a company possesses knowledge or reasonable grounds to believe that an individual is a beneficial owner, sections 60C(1)-(3) obliges the company to issue a written notice. Once the information has been provided, they have 14 days from the date when the information was received to record it in the BO register.

Notice must also be given to the beneficial owner of the company with regards to any changes to the particulars of a beneficial owner listed in the register. If the company has reasonable grounds to believe that a change has occurred, it must notify the beneficial owner to confirm the change and provide the relevant details. Similarly, if there are reasonable grounds to suspect inaccuracies in the particulars listed, the company must notify the beneficial owner to confirm or correct the information. This ensures transparency and accountability by compelling companies to actively seek and confirm beneficial ownership information.

In addition, a company and every officer who contravenes sections 60C(1)-(6) commits an offence. Violating any notice under section 60C is an offence, unless they can demonstrate that the company is already in possession of the relevant information or that the request for information was frivolous or vexatious. False statements or recklessly providing false information while purportedly complying with a notice issued is also considered an offense.

Duty of beneficial owner of company to provide information

Any individual who believes they are a beneficial owner of a company must promptly inform the company and provide the required information. Beneficial owners are also obligated to update the company about any changes in their details listed in the BO Register. Furthermore, if a person ceases to be a beneficial owner, they must promptly notify the company, specifying the cessation date and relevant details. Violation of the provisions outlined in section 60D constitutes an offence. However, it is worth noting that the Minister has the authority to exempt certain categories of companies from complying with the new Division 8A. This exemption can be granted through an official order published in the Gazette, with or without conditions, as long as these companies are already subject to similar requirements under other laws.

Beneficial Ownership of foreign company

A new section 573A clarifies that the provisions relating to beneficial ownership in Division 8A is also applicable to all foreign companies. In addition, section 576(2), detailing the content of an annual return for foreign companies, requires beneficial ownership information and address of where the BO Register is maintained if it differs from the foreign company's registered office.

Enhancements on Corporate Rescue Mechanism

In summary, the Amendment Act sets out changes relating to compromise or arrangement provisions under Division 7 - Charges, Arrangement and Reconstructions and Receivership, and Subdivision 2 Arrangements and Reconstruction. Key changes include the following:

  1. “Related company” and “subject company” are now defined.
  2. A company, a creditor or class of creditors of a company, a member or class of members of a company, a liquidator or a judicial manager, may apply to the Malaysian court for the approval of a scheme of compromise or arrangement provided that all meetings held pursuant to an order under section 366(2A) is chaired either by an insolvency practitioner or a person elected by the majority in value of the creditors or members.
  3. Clarifies the appointment of an insolvency practitioner such as setting out their duties, remunerations, and rights of access to all records of the company.
  4. New section 368 to facilitate a scheme of compromise or arrangement for group related companies and introduction of priority rescue financing for company in a compromise or arrangement scheme. Further, Malaysian courts are now empowered to restrain the disposition of properties for companies under a restraining order and cram down on class of creditors.
  5. Under the new section 369, the Malaysian courts can order companies to hold another meeting of creditors/class of creditors for revote on compromise or arrangement proceedings. They also allow creditors to file proof of debt with the company and the time period in which they can file them in order to vote in the meeting considering the proposed scheme of compromise or arrangement. Nonetheless, Malaysian courts can issue an order to approve a proposed scheme of compromise or arrangement even without of creditors.

Amended provisions on Judicial Management orders

In summary, Division 8 - Corporate Rescue Mechanism, Subdivision 2 Judicial Management of the Companies Act has been amended to include the following:

  1. Judicial management is applicable to all companies, including public listed companies, excluding companies regulated by Central Bank of Malaysia; and licensed, approved, or registered companies under the Capital Markets and Services Act 2007 and companies approved under the Securities Industry (Central Depositories) Act 1991.
  2. A judicial management order may be extended for a period of 6 months or longer and an approved judicial management order will remain in force beyond 12 months.
  3. A new subsection has been introduced to allow secured creditors to recover secured movable property under certain circumstances while a judicial management order is still in force.
  4. A new section to allow a company under judicial management to obtain rescue financing. In the event of a winding up the rescue financing will be given greater priority ranking.

New protection for essential goods and services provisions

The new Division 9 of the Companies Act introduces protective measures for suppliers of essential goods and services in commercial contracts. The automatic exercise of insolvency-related clauses against companies for the supply of such goods and services is prohibited. Suppliers must notify the company at least 30 days in writing before exercising insolvency-related clauses. This aims to promote communication and potential resolution. The new section 430A(3) ensures that suppliers can still exercise other contractual rights, including payment for essential goods and services. Further, "insolvency-related clauses" are defined comprehensively, encompassing terms that allow automatic termination or modification due to the company's involvement in compromise, arrangement, voluntary arrangement, or judicial management. "Essential goods and services" are specified in the Ninth Schedule, namely the supply of water, electricity or gas, point of sale terminals, computer software and hardware, information, advice and technical assistance in connection with the use of information technology, data storage and processing and website hosting.


With regards to the beneficial ownership framework, the new provisions bring about amore comprehensive beneficial ownership reporting framework under the Companies Act as well as to address the gaps identified by the Financial Action Task Force (FATF) through the Malaysian Mutual Evaluation Report published in 2015 (MER 2015).[3] The new amendments are critical to prepare Malaysia, a member of the FATF and the Asia Pacific Group on Money Laundering for the upcoming Mutual Evaluation exercise starting from 2024 to 2025.[4] To minimise the risks faced by companies in Malaysia against illicit activities, the new provisions relating to the beneficial ownership reporting framework aims to promote corporate transparency through a disclosure regime, in line with the current international standards and best practices.

The separate objectives of the Amendment Act in relation to corporate rescue mechanisms and protection for essential goods and services aim to maintain a balance between the interests of suppliers and companies, offering clear guidelines and stability in crucial supply chains during insolvency-related difficulties. It serves to protect companies in Malaysia by regulating insolvency-related clauses in contracts for the supply of essential goods and services. It is crucial for businesses to comprehend and follow these rules for successful management of commercial partnerships.

If you have any questions or require any additional information, please contact Chan Xian Ai, or the Zaid Ibrahim & Co (in association with KPMG Law) partner you usually deal with. This article was prepared with the assistance of Sarah Menon, an Associate at Zaid Ibrahim & Co (in association with KPMG Law).

This alert is for general information only and is not a substitute for legal advice.

[1] Section 56 of the Companies Act 2016.

[2] Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons.

[3] FATF, ‘Anti-money laundering and counter-terrorist financing measures Malaysia Mutual Evaluation Report’ (Sept 2015) <>.

[4] Bank Negara Malaysia, ‘Preparation for Malaysia's Mutual Evaluation 2024-2025’ (7 June 2023) <>.

Chan Xian Ai, discusses the key changes brought about by The Companies (Amendment) Act 2024.