What Is the Beneficial Ownership in Malaysia?

Beneficial ownership is the natural individual that ends up being the ultimate owner, controlling, or influential person of a company although this person is not registered as a shareholder and director.

Beneficial ownership reporting is a compliance issue in Malaysia, particularly under the Companies Act 2016 which has been effective due to the legislative amendments and the implementation of Electronic Beneficial Ownership System (e-BOS). The goal is to enhance transparency, curb the abuse of corporate forms and aid in the enforcement of financial crimes.

The article describes the definition of what is the beneficial ownership, who is a beneficial owner, identification of beneficial owners, obligations, procedures and penalties.

What Is the Beneficial Ownership?

Beneficial ownership aims at finding out who is the actual person of a company.

A beneficial owner (BO) is a natural person that ultimately:

• Direct or indirectly owns a business;
• Manages a company by way of shares, voting, or otherwise; or
• Has ultimate effective control or material influence over the company management or decisions.

Notably, only persons can be useful owners. Corporate entities, nominees or intermediaries cannot be considered helpful owners.

What Is the Value of Beneficial Ownership?

It is important to know what is the beneficial ownership since opaque corporate structure can be used to commit illegal activities including:

• Money laundering
• Terrorism financing
• Proliferation financing
• Corruption
• Tax evasion

The most important advantages of Beneficial Ownership Reporting.

Better ownership reporting is beneficial in that it assists in:

• Increase corporate transparency.
• Enhance regulatory inspection and control.
• Make sure that there is adherence to law and other regulations.
• Encourage global collaboration in financial management.

Eligible Requirements to Identify a Beneficial Owner (BO).

An individual can be considered a beneficial owner to the extent that one or more of the following meet either directly or indirectly.

1. Shareholding Threshold

An individual owning 20% of the share in a firm.

2. Voting Rights Threshold

An individual with a minimum of 20% in the company voting shares.

3. Ultimate Effective Control

The individual who has a right to exercise ultimate effective control whether formal or informal over:

• The company
• Its directors
• Its management

4. Authority to Elect or dismiss Directors.

An individual with the right or authority to choose or dismiss a majority of those with the majority of voting rights in board gatherings.

5. Control Through Agreements

An individual who is also a member of the business and through an agreement takes control or powers over the business.

6. Below 20% Influential Significance.

An individual with less than 20% of the shares or voting power, but which, individually or in common with others, has a controlling interest in the majority of the voting power, which causes a majority to possess the voting power.

Who Beneficially Owns the Information of Beneficial Ownership?

There are a number of parties that are involved in the maintenance and the provision of beneficial information of ownership:

• Board of Directors
• Appointed agent or Company Secretary.
• Company members
• Beneficial owners
• Any individual who is given a notice pursuant of Section 60C of the Companies Act 2016.

Important Companies Responsibilities.

The companies under Companies Act 2016 should:

• Acquire, determine, testify and document positive ownership facts.
• Register of profitable ownership information with the Registrar.
• Maintain records of BO accurate and up to date.
• Make BO information available at the request of authorised persons under the
• Companies ( Access to the Register and Information relating to the Beneficial ownership) Regulations 2025.

Reasonable Measures to determine beneficial owners.

In order to meet beneficial ownership requirements, the companies should exercise reasonable actions, which include:

• Evaluation of ownership and control structure such as direct and indirect ownership.
• Examination of records and documents of the company maintained in the registered office.
• Giving notices under the Companies Act 2016 section 60C.
• The other way to establish control is by other means, such as significant or effective influence.
• Doing the right thing based on the structure of the company.

Who May Demand Beneficial Ownership Information of SSM?

Requesting beneficial ownership information of the Companies Commission of Malaysia (SSM) may be done by the following parties:

• To the beneficial owner of his own information.
• An individual who is given a written authorisation by the beneficial owner.
• The Anti-Money laundering laws of Bank Negara Malaysia.
• Malaysian enforcement bodies in charge of investigation and prevention of offences.
• Institutions in the First Schedule of the AMLA.
• Government procurement, ministry of finance Malaysia.

Process and Charges of getting the beneficial ownership information.

Application Process

Applicants must:

1. Create and open up a SSM4U portal account.
2. Fill the beneficial ownership application form.
3. Make sure that the form is certified and stamped by the head of the corresponding department.
4. Hand the form along with the authorisation letter at Menara SSM@Sentral.
5. Present extra documents in case of SSM.

The company registration number should have been used to conduct searches and information should be based on the most recent records that SSM has.

Application Fee

• RM20 per company
• Non-refundable
• To be paid in cash or debit/ credit card.

The way beneficial ownership information is provided?

Once approved:

• There is the provision of information in PDF form.
• Mailed to the email address of the applicant.
• Supplied in a period of three (3) working days after full payment has been made.

Sanctions of non-obligation.

Penalties for Companies

In Section 60B of the Companies Act 2016:

• The inability to uphold or file beneficial ownership information can attract a fine of up to RM 20,000.
• Repeat offences can impose the penalty of a fine up to RM500 daily.

Punishment on the Beneficial Owners.

In the Companies Act 2016, beneficial owners have the requirement of notifying the company of the same and any modifications under Ne 60D.

Failure to do so may result in:

• A fine of up to RM50,000
• Up to three (3) years in jail.
• Or both

What Is the Electronic Beneficial Ownership System (e-BOS)?

Next to the Companies (Amendment) Act 2024 came the Electronic Beneficial Ownership System (e-BOS) which was introduced on 1 April 2025.

Purpose of e-BOS

• Facilitates electronic filing of information of beneficial ownership.
• Promotes money laundering, funding of terrorism, corruption and avoiding taxes.
• Provides a full BO database to the enforcement agencies.

e-BOS is available through the SSM4U Portal, and it enables firms to process BO records effectively.