The Beneficial Ownership Regime Under The Limited Liability Partnerships (Amendment) Bill, 2024
by Rachel Ng Li Hui & Tan Zec Kie ~ 23 October 2024
The Limited Liability Partnerships (Amendment) Bill 2024 (the “Bill”) was passed by the Dewan Negara on 31.07.2024. The Bill covers proposed amendments of the Limited Liability Partnerships Act, 2012 (the “Act”), where one of the important amendments is the introduction of a reporting and disclosure framework on beneficial ownerships in a limited liability partnership. The key amendments are in the proposed insertion of Part IIIA to the Act.
According to proposed Section 20E of the Act, Part IIIA of the Act shall apply to all limited liability partnerships, except for certain classes of limited liability partnerships that are subjected to similar obligations under other written laws.1
Definition of a Beneficial Owner
The definition of beneficial owner of a limited liability partnership is provided under the proposed Section 20A(1) of the Act, which reads as follows:-
“A person is a beneficial owner of a limited liability partnership if he is a natural person who ultimately owns or controls over a limited liability partnership and includes a person who exercises ultimate effective control over a limited liability partnership.”2
Section 20A(2) of the Act empowers the Registrar to issue guidelines for the identification of a beneficial owner of a limited liability partnership3. The Deputy Minister of Domestic Trade and Cost of Living, Fuziah Salleh, said that the Companies Commission of Malaysia has prepared guidelines to aid limited liability partnerships to understand and comply with the said amendments.4
Obligations of a Limited Liability Partnership
A limited liability partnership must keep and maintain a register of beneficial owners. According to the proposed Section 20B(1) of the Act5, every limited liability partnership shall keep a register of beneficial owners and record in the register. The following information are required to be recorded:
- the full name, addresses, nationality, identification and usual place of residence of the beneficial owner;
- the date the person becomes the beneficial owner;
- the date the person ceases to become the beneficial owner; and
- such other information as the Registrar may require.
This is important as the proposed Section 20B(8) of the Act6 provides that the register of beneficial owners of the limited liability partnership shall be prima facie evidence of any matter inserted in the register under this Act.
Powers of a Limited Liability Partnership
In addition, the proposed Section 20C of the Act7 empowers a limited liability partnership to require the disclosure of its beneficial owner from any partner. This provision enables a limited liability partnership to obtain its beneficial owner’s information or confirm the accuracy of information herein.
For the above purpose, Clause 5 of the Bill8 seeks to amend paragraph 27(7)(a) of the Act to impose additional obligations on the compliance officer to maintain the register of beneficial owner and to require the disclosure of beneficial owner.
Duties of a Beneficial Owner
The proposed Section 20D of the Act9 sets out the duty of a beneficial owner to provide certain information:
- A person who has reason to believe that he is the beneficial owner of the limited liability partnership shall notify and provide information prescribed to the limited liability partnership.
- A person who is a beneficial owner of a limited liability partnership shall notify the limited liability partnership of any changes in his particulars.
- A person who ceased to be beneficial owner of a limited liability partnership shall notify the limited liability partnership of the said cessation with the date and particulars of the cessation.
Registration of a Limited Liability Partnership
For a limited liability partnership formed after the commencement of the amendments above, Section 10(2) of the Act10 provides that the registration of limited liability partnership shall be accompanied by a statement signed by all partners of the limited liability partnership, and that Clause 2 of the Bill11 requires this statement to contain the particulars of a beneficial ownership.
Conclusion
The Limited Liability Partnerships (Amendment) Bill, 2024 mandates beneficial ownership disclosure, boosting transparency and accountability in limited liability partnerships.