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.
Beneficial ownership aims at finding out who is the actual person of a company.
A beneficial owner (BO) is a natural person that ultimately:
Notably, only persons can be useful owners. Corporate entities, nominees or intermediaries cannot be considered helpful owners.
It is important to know what is the beneficial ownership since opaque corporate structure can be used to commit illegal activities including:
Better ownership reporting is beneficial in that it assists in:
An individual can be considered a beneficial owner to the extent that one or more of the following meet either directly or indirectly.
An individual owning 20% of the share in a firm.
An individual with a minimum of 20% in the company voting shares.
The individual who has a right to exercise ultimate effective control whether formal or informal over:
An individual with the right or authority to choose or dismiss a majority of those with the majority of voting rights in board gatherings.
An individual who is also a member of the business and through an agreement takes control or powers over the business.
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.
There are a number of parties that are involved in the maintenance and the provision of beneficial information of ownership:
The companies under Companies Act 2016 should:
In order to meet beneficial ownership requirements, the companies should exercise reasonable actions, which include:
Requesting beneficial ownership information of the Companies Commission of Malaysia (SSM) may be done by the following parties:
Applicants must:
The company registration number should have been used to conduct searches and information should be based on the most recent records that SSM has.
Once approved:
In Section 60B of the Companies Act 2016:
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:
Next to the Companies (Amendment) Act 2024 came the Electronic Beneficial Ownership System (e-BOS) which was introduced on 1 April 2025.
e-BOS is available through the SSM4U Portal, and it enables firms to process BO records effectively.
Beneficial ownership identifies the real individual who owns or controls a company, even if their name is not officially registered.
Not necessarily. A director is only a beneficial owner if they meet the BO criteria, such as shareholding, voting power, or effective control.
Yes. A person holding less than 20% may still qualify if they exercise significant control or influence over the company.
No. Access is restricted to authorised parties under Malaysian law.
Authorised persons must report discrepancies to SSM within 30 days. Failure to do so is an offence.
Malaysia