practical bo reporting of legal persons bo... · 2020. 8. 22. · bo to ssm offence if any person...

By:

Leong Oi WahAssociate TrainerCompanies Commission of Malaysia (SSM)30 July 2020

PRACTICAL BO REPORTINGOF LEGAL PERSONS

APPLICATION OF SECTION 56

S56 CA 2016Company may require

every member todisclose BO

Guidelines on BOReporting

Only those holding20% interest or moreor those who control

2

Copyrights Reserved Companies Commission of Malaysia

3

COMPANY - BO Reporting Obligation

New companies(Prior to theobligation tosubmit the firstannual return)Starts aftercompany secretaryappointed

To obtain the BO information within 30 daysafter the appointment of a company secretary.

To enter the BO information into the Registerof BO within 60 days after the BO informationhas been obtained or received.

To notify the Registrar within 14 days from thedate the BO information is entered into theRegister of BO (* SSM will advise of SubmissionChannel of notification later on)

To lodge annual return together with the “Annexure –Particulars of BO” not later than 30 days from theanniversary of its incorporation date.


4

Update BO info in MyCoID ROM ? ? ?


5

Update BO info in MyCoID ROM ? ? ?


6

Existingcompanies(Commencingfrom obligationto submit firstannual returnandsubsequently)Starts from1 March 2020

To notify the Registrar of the changes in theRegister of Members within 14 days from thedate the BO information is recorded in theRegister of BO. (* SSM will advise of SubmissionChannel of notification later on)To lodge annual return together with the“Annexure – Particulars of BO” not later than30 days from the anniversary of itsincorporation date.

COMPANY - BO Reporting Obligation


7

Consider interests in the company held by individual, corporateentities and/or trust.

If corporate shareholder then, identify the individuals controllingthe corporate shareholder.

Review all documents and information available at the company(eg Register of Members, trust deed, shareholders agreement,Constitution)

Consider any evidence that may show interests or rights heldthrough a variety of means that may ultimately be controlled bythe same person, e.g. joint arrangement, control of Board/Boarddecision

COMPANY - BO IdentificationGUIDELINES REQUIREMENTSCompany has a duty to identify, obtain and verify the BO information and tokeep the BO information together with the supporting documents relating tothe BO information.


8

IdentifiedBO

Has interest, direct or indirectly, in not less than 20% of theshares

Hold, directly or indirectly, not less than 20% of the votingshares of the Company

PotentialBO

Has the right to exercise ultimate effective control whetherformal or informal over the company; or the directors or themanagement of the company

Has the right or power to directly or indirectly appoint orremove a director(s) who hold a majority of the voting rightsat meeting of directors

Is a member of the company and, under an agreement withanother member of the company, controls alone a majority ofthe voting right in the company

COMPANY - BO Identification


9

Company to send s56 notification to identified BO orpotential BO to seek confirmation.

When there are changes in shareholders orshareholding, Company is to send s56 notification toseek confirmation of BO.

Annually send s56 notification to re-confirm the BOinformation before filing of Annual Return

GUIDELINES REQUIREMENTSCompany has a duty to identify, obtain and verify the BO information and tokeep the BO information together with the supporting documents relating tothe BO information.

COMPANY – Obtain BO Info


10

A company secretary is obliged to conduct verification when :(a) the obligation arises to enter the name of a BO in the Register

of BO from 1 March 2020 Within 30 days from first appointment as company secretary from date of changes entered in the Register of Members

(b) when an obligation arises to enter the changes to theparticulars of BO information in the Register of BO

on receipt of notification from BO or nominee of changes on annual BO verification for Annual Return submission

COMPANY - BO VerificationGUIDELINES REQUIREMENTSCompany has a duty to identify, obtain and verify the BO information and tokeep the BO information together with the supporting documents relating tothe BO information.


11

Company has a duty to identify, obtain and verify theBO information and to keep the BO informationtogether with the supporting documents (i.e. the repliesreceived from Nominee/BO) relating to the BOinformation.

Only the verified BO information (i.e. when BO hasreplied with confirmation) can be entered into theRegister of BO.

Register of Beneficial Owner cannot be empty. Even ifthe BO does not reply, the information on the name ofregistered member and date of s56 notice sent to him isentered into the Register of BO.

COMPANY - Register of BO


12

Company can only grant access of BO information tocompetent authorities (Auditors are not authorities), lawenforcement agencies, the BO whose name has been enteredin the Register of BO and any other person authorised bythe BO.

BO shall only be given access to the BO information relatingto him (BO A can only view BO A’s info and he cannot viewBO B’s info. Therefore a Register of BO is kept for each BOseparately).

Copies of the BO information shall be provided on request(in writing) of the competent authorities, law enforcementagencies, the BO whose name has been entered in theRegister of BO and any other person authorised by the BO.

ASSESS TO REGISTER OF BO


13

BO information and supporting documents to be kept atthe registered office or where the register of membersis being kept.

BO information and supporting documents must be keptfor at least 7 years from the date a person ceases to be aBO

PLACE WHERE REG. OF BO TO BE KEPT

RO – Place ARegister of BO kept at Place A

No filing to SSM

RO – Place A and ROM – Place BRegister of BO kept at Place B

To file S47(2) to SSMwithin 14 days

RO – Place A and ROM – Place BRegister of BO kept at Place C

Not allowed


14

EXEMPTION FROM BO REPORTINGEn

titie

s • Financial Institutions• SC licensed

companies• Public Listed

companies• Public Un-Listed

companies whereshares still in centraldepository

Dec

lara

tion

of S

tatu

s • When SSM invokes56(6) on 1 January2021 or later

• Declare in AnnualReturn (AR formatwill be changed)

Subsidiaries of EntitiesNOT exempted


15

FROM 1 MARCH 2020• Adopt internal policy/constitution on

BO reporting• Send s56 notices to members/other

persons to obtain BO information• Update BO information in Register of

BO• Annually to send s56(1) notice to

members/other persons to update BOinformation before filing of AnnualReturn

No need tosubmit

Register ofBO to SSM

SubmitRegisterof BO to

SSM

TIMELINE OF BO REPORTING OBLIGATION

1 Mac – 31 Dec2020

1 Jan 2021onwards


16

INVOKE S56 ON BO REPORTING

Board Resolution(i) Adopt BO

Disclosure Policy(ii) Amend

Constitution(iii) Invoke Section 56

Companyto sendout S56

Notices toMembers

Company update BOinfo within 14 days ofreply in :a) Register of BOb) Submit* Register of

BO to SSM

Offence if any person doesnot reply or provide false

informationPenalty : up to RM3.0

million and/or 10 years

Company to :a) Send reminder to submit BO infob) Update Register of BO with

information of Members and dateof S56 notices sent.

c) Keep communication withMembers/Other Persons

Reply received

No Reply


17

OBLIGATION ARISING TO ENTER BO CHANGES (1)

Changes in BO due to:a) Allotment of sharesb) Transfer or

Transmission of sharesc) Conversion to shares

Companyto sendout S56

Notices toMembers

Company update BOinfo within 14 days ofreply in :a) Register of BOb) Submit* Register

of BO to SSM

Offence if any persondoes not reply or provide

false informationPenalty : up to RM3.0


Company to :a) Send reminder to submit BO infob) Update Register of BO with

information of Members and dateof S56 notices sent.

c) Keep communication withMembers/Other Persons

Reply received

No Reply


18


Nomineenotifieschange of BO

Companyto sendout S56Noticesto BO

Company update BOinfo within 14 days ofreply in :a) Register of BOb) Submit* Registerof BO to SSM

Offence if any person doesnot reply or provide false

informationPenalty : up to RM3.0


Company to :a) Send reminder to submit BO infob) Update Register of BO withinformation of Members and date of S56notices sent.c) Keep communication withMembers/Other Persons

Reply received

No Reply


19


BO notifieschange ofparticulars

Company update BO infowithin 14 days of reply in :a) Register of BOb) Submit* Register of BO toSSM


Company does notidentify new BO

Company to sends56(1) notices to BOto re-confirm interest

BO reply - no change tointerest.Supporting documents (noticesand reply letter) to bemaintained with Register of BO

File AnnualReturn withexisting BOinformation

ANNUAL UPDATE OF BO FOR ANNUAL RETURNMember/BO reply no change


Companyidentifynew BO

Company to send :a) s56(1) noticesto existing BOb) s56(1) ands56(3) to new BO

Existing/NewBO reply with

changes

Company update BO infowithin 14 days of reply in :a) Register of BOb) Submit* Register of BOto SSM

File Annual Returnwith updated BO

Information

ANNUAL UPDATE OF BO FOR ANNUAL RETURNMember/BO reply with changes


22

RESOLVED THAT the Policy on Beneficial OwnershipReporting, requiring shareholders of the Company tonotify the Company on the identity of the beneficialownership and when there are changes in the beneficialownership information, as attached be adopted.

THAT a Meeting of Members be convened at (venue)on (date) at (time) for the Members to consider theSpecial Resolution to approve the amendment to theConstitution of the Company as follows:………

BOARD RESOLUTION – Adopt Policy


23

INFORMATION OF SHAREHOLDING(i) The Company may require any information of a Member

The Company may by notice in writing require any Memberwithin such reasonable time as is specified in the notice:-(a) to inform the Company whether he holds any voting

shares in the Company as beneficial owner or astrustee; and

(b) if he holds them as trustee, to indicate so far as he canthe persons for whom he holds them by name and byother particulars sufficient to enable those persons tobe identified and the nature of their interest.

SAMPLE ARTICLE IN CONSTITUTION


24

INFORMATION OF SHAREHOLDING (continued)(ii) Company may require any information of beneficial

interestWhere the Company is informed in pursuance of anotice given to any person under Article (i) hereof or thisArticle that any other person has an interest in any of thevoting shares in the Company, the Company may bynotice in writing require that other person within suchreasonable time as is specified in the notice:-(a) to inform the Company whether he holds that

interest as beneficial owner or as trustee; and(b) if he holds the interest as trustee, to indicate so far as

he can the persons for whom he holds such interestby name and by other particulars sufficient to enablethem to be identified and the nature of theirinterest.



25

INFORMATION OF SHAREHOLDING (continued)

(iii) The Company may by notice in writing require a Member toinform the Company, within such reasonable time as isspecified in the notice, whether any of the voting rightscarried by any voting shares in the Company held by him arethe subject of an agreement or arrangement under whichanother person is entitled to control his exercise of thoserights and, if so, to give particulars of the agreement orarrangement and the parties to such agreement orarrangement.



26

RESOLVED THAT in accordance with the Guideline for theReporting Framework for Beneficial ownership of LegalPersons issued by the Companies Commission of Malaysia on1 March 2020, the Company shall invoke section 56 of theCompanies Act 2016 (“Act”) and shall authorise the CompanySecretary to send out the notices pursuant to subsection56(1), (2) or (3) of the Act to the identified beneficial owners.THAT the Company Secretary be further authorised to sendout the notices under subsection 56(1) in the month of ____every calendar year for the purposes of updating the beneficialownership information for the submission of the AnnualReturn of the Company.

BOARD RESOLUTION – Invoke s56


27

PROCEDURES UPON INVOKING S56


1. Send to identified BO- S56(1) [Annexure C(I) pg54-56]- Reply slip [under s56(1) pg64-65]

2. Member replies confirming BO

3. Update Register of BO and submitnotification* to SSM on or before 28.6.2020

28



1. Send to identified BO- S56(1) notification [Annexure C(I) pg54-56]- Reply slip [under s56(1) pg64-65]

2. Member replies that he is a nominee shareholder and holding onbehalf of another person.

3. Send to identified BO- S56(2) notification [Annexure C(I) pg54-56]- Reply slip [under s56(1) pg64-65]

4. BO replies confirming details

5. Update Register of BO and submit notification* to SSMon or before 28.6.2020

29



1. Send to potential BO- S56(3) [Annexure C(I) pg60-61]- Reply slip [under s56(3) pg68-69]

2. Members replies confirming BOthrough joint arrangement

3. Update Register of BO and submitnotification* to SSM on or before 28.6.2020

30



Co. D Co. C Co. B Mr A95% 100% 100%

1. Co. D sends s56to Co. C

2. Co. C sends s56to Co. B

3. Co. B sends s56to Mr A

4. Mr A confirms toCo. B that he is BO

5. Co. B confirms toCo. C that Mr A is BO

8. Co. C confirms toCo. D that Mr A is BO

9. Co. D sends s56to Mr A

Co B updateRegister of BO.

10. Mr A confirms toCo. D that he is BO

Co C updateRegister of BO.

11. Co D updateRegister of BO.

6. Co. C sends s56to Mr A

7. Mr A confirms toCo. C that he is BO

31

CRITERIA OF BOA Has interest, direct or indirectly, in not less than 20% of the shares

(includes both voting and non-voting shares);

B Hold, directly or indirectly, not less than 20% of the voting sharesof the Company (voting shares only);

C Has the right to exercise ultimate effective control whether formalor informal over the company; or the directors or themanagement of the company (decision maker on running of thebusiness of the company);

D Has the right or power to directly or indirectly appoint or removea director(s) who hold a majority of the voting rights at meeting ofdirectors (founder is no longer a member or director but hisrecommendations are always followed by the Board); or

E Is a member of the company and, under an agreement withanother member of the company, controls alone a majority of thevoting right in the company (joint arrangement).


32

Illustration 1 – new incorporationCo. Q is incorporated on 18.7.2020 and the Secretaryappointed on 31.7.2020. Shareholders are Mr X, Mr Yand Mr Z with 8000, 1500 and 500 shares.

UPDATING REGISTER OF BO

IdentifyBO

2.8.2020(within 30 days ofSecretary appt)

Only Mr X has interest of not lessthan 20% of shares

ObtainBO info

22.8.2020(Board invokes56)

Send s56(1) and s56(3) notices andreply slip to Mr X

UpdateBO info

Mr X reply on14.9.2020

Update Register of BO and submitnotification* to SSM on or before28.6.2020


33

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS

NATIONALITY/DATE OFBIRTH/NRIC/ PASSPORT No.

Mr X Mr X 13 Jalan 4/54, 46000 PuchongSelangor

Malaysian3.10.1956561003-10-5555


(7) (8) (9) (10) (11) (12)TO STATEPOSITION

IN THECOMPANY,(if applicable)

PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL

OWNERDirect orIndirect

CRITERIA OFBENEFICIALOWNER*/EXEMPTED

DATE APERSON

BECOMES/CEASES TO

BECOME BO

DATE OF NOTICESPURSUANT TO

SUBSECTIONS 56(1), (2) & (3) OF

CA2016 & DATE OFBO RECEIVED

N/A 80% Direct A & B Date ofbecoming BO

18.7.2020

Date of the notice22.8.2020

Date of BO replyreceived

14.9.2020

Additional factsThe Company knows, or has reasonable cause to

believe, that the legal owner is the beneficial owner.Copyrights Reserved Companies Commission of Malaysia

34

Illustration 2 – Typical SMEs

Mr A and Mr B were allotted 900 and 100 shares of theCompany respectively on 3.3.2007.

IdentifyBO

1.3.2020 Only Mr A has interest of not lessthan 20% of shares

ObtainBO info

15.5.2020(Boardinvoke s56)

Send s56(1) and s56(3) notices andreply slip to Mr A

UpdateBO info

Mr A replyon 4.6.2020




35

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


Mr A Mr A 123 Jalan 4, 46000 PuchongSelangor

Malaysian3.10.1955551003-10-5555



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO





3.3.2007


Date of BO replyreceived4.6.2020


believe, that the legal owner is the beneficial owner.Copyrights Reserved Companies Commission of Malaysia


36

Illustration 3 – wholly-subsidiary of PLC

PLC X acquired 100% interest in Co P Sdn Bhd on2.3.2012.


IdentifyBO

9.4.2020 Only PLC X has interest of not lessthan 20% of shares

Obtain BOinfo


Send s56(1) and s56(3) notices andreply slip to PLC X

UpdateBO info

PLC X replyon 14.5.2020



37

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


PLC X PLC X 13-15 Jalan Terus,56000 Shah AlamSelangor

Incorporated in MalaysiaIncorporated on 3.10.1995Co. No. 1212333-A



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO





2.3.2012



14.5.2020

Additional factsThe legal owner is a PLC which is exempted

from the BO Reporting Framework.



38

Illustration 4 – Indirect interest in Co. YMr AA and Mr BB were allotted 900 and 100 shares of Co. X respectively on3.3.2017. Co. X acquired 100% interest in Co. Y on 15.5.2020. Co. Y can either :(a) request Co. X to disclose the shareholders holding more than 20% interestin Co. X; or(b) Do a company search to find out who are the shareholders holding morethan 20% interest in Co. X.

IdentifyBO

15.5.2020 Mr AA is deemed to have an interest in Co. Ythrough Co. X which has interest of not lessthan 20% of shares

ObtainBO info


Send s56(1) and s56(3) notices and reply slipto Mr AA

UpdateBO info

Mr AA replyon 8.7.2020

Update Register of BO and submitnotification* to SSM on or before 22.7.2020



39

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


Co. X Mr AA 123 Jalan 4, 46050 Petaling JayaSelangor

Malaysian3.10.1965651003-10-5555



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO




N/A 100% Indirect A & B Date ofbecoming BO

15.5.2020






believe, that Mr AA is the beneficial owner.

40

Illustration 5 – Joint arrangement in Co. PMr C, Mr D and Mr E own 15% each in Co. P and balance of55% is held Co. X which is owned by 10 individuals equally. MrC, D and E have an arrangement with each other to votecollectively but this is not made known to Co. P before.


IdentifyBO

30.4.2020 No BO identified as all hold lessthan 20% interest

ObtainBO info

15.5.2020 (Boardinvoke s56)

Send s56(3) notice and reply slip toall members.

UpdateBO info

Mr C, D and E replyon 8.6.2020 of theirjoint arrangementsince 2.2.1999



41

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


Mr C, D and E Mr CMr DMr E

1 Jalan Ipoh, 55000 KL5 Jalan Kinta, 10120 Ipoh, Perak18 Jalan 3, 12200 Teluk Intan, Perak

Malaysian, xxx, yyyMalaysian, xxx, yyyMalaysian, xxx, yyy



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO




N/A 45% Direct E Date ofbecoming BO

2.2.1999





Additional factsThe Company knows, or has reasonable cause to believe,

that the legal owners are the beneficial owners.

42

Illustration 6 – BO based on controlCo. P has 8 shareholders and individually own less than 20%shares each. Mr E and F are Executive Directors of Co. P since13.5.2000 whilst Mr B, C and D are non-executive directors.

Identify BO 9.8.2020 No members identified as direct BO as all hold lessthan 20% interest but may be potential BO throughjoint arrangement.

Obtain BOinfo


Send s56(3) notice and reply slip to all members (tofind out if there is joint arrangement).

Identify BO 14.9.2020 All members reply no joint arrangement.Mr E and F then identified as potential BO.

Obtain BOinfo

19.9.2020 Send s56(1) notice and reply slip to Mr E and F

Update BOinfo

Mr E & Freply on30.9.2020

Update Register of BO and submit notification* to SSMon or before 14.10.2020



43

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


- Mr EMr F

13 Jalan Tenun, 56000 Klang13-1 Block C, Kelana Point,47500 Petaling Jaya

Malaysian, xxx, yyyMalaysian, xxx, yyy



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO




Exec DirExec Dir

N/A Indirect C Date ofbecoming BO

13.5.2000



30.9.2020Copyrights Reserved Companies Commission of Malaysia


Additional factsThe Company knows, or has reasonable cause to believe,

that the Executive Directors of the Company are thebeneficial owner.

44

Illustration 7 – Unidentified BOCo. K has 8 shareholders and individually own less than 20%shares. Mr P and Q are Directors of Co. K since 13.5.2001.



Identify BO 9.9.2020 No members identified as direct BO as all hold lessthan 20% interest but may be potential BO throughjoint arrangement.

Obtain BO info 30.9.2020(Boardinvoke s56)

Send s56(3) notice and reply slip to all members (tofind out if there is joint arrangement).

Identify BO 14.10.2020 All members reply no joint arrangement.Mr P and Q then identified as potential BO.

Obtain BO info 19.10.2020 Send s56(1) notice and reply slip to Mr P and Q

19.11.2020 • No reply received by due date from Mr P and Q.• Reminder sent to Mr P and Q.• No reply received by due date on 19.12.2020.

Update Register of BO and submit notification*to SSM on or before 3.1.2021.

45

(1) (2) (3) (4) – (6)

LEGALOWNER

FULL NAME

BO FULLNAME

RESIDENTIALADDRESS


- - - -



PERCENTAGEOF

OWNERSHIP/VOTING

RIGHTS (%)

TYPE OFBENEFICIAL



DATE APERSON

BECOMES/CEASES TO

BECOME BO




- - - - - Date of the notice19.10.2020

Date of Remindernotice

19.11.2020

Additional factsThe Company knows or has reasonable cause tobelieve that it has a beneficial owners but has not

been able to identify that individual.



46Copyrights Reserved Companies Commission of Malaysia

47Copyrights Reserved Companies Commission of Malaysia

THANK YOU

practical bo reporting of legal persons bo... · 2020. 8. 22. · bo to ssm offence if any person...

Documents