Spurring corporate transparency

THE Bill seeking to amend the Companies Act 2016 was tabled in the Dewan Rakyat on Oct 10. The amendments are aimed at strengthening corporate rescue mechanism provisions in order to help companies facing financial hardship, and ensuring that companies comply with international reporting standards and requirements on beneficial ownership.

The latter, put simply, aims to shine a light on the often shadowy corridors of corporate Malaysia. But looking closely at the provisions pertaining to this matter, it is evident that there are still gaps to fill and miles to go before true transparency can be achieved.

I commend the decision to provide a clearer definition of “beneficial owner”. This step, although foundational, is paramount in ensuring that companies cannot hide behind layers of complexity.

The introduction of the “Register of beneficial owners” is another commendable move.

But an important question needs to be asked: “Who gets to access this data?”

While the minister is granted discretionary powers to determine access, it is essential to remember that the goal of this legislation is to democratise the oversight process.

A centralised public registry shouldn’t be a tool exclusively for the privileged or a select few; it should be accessible to every stakeholder concerned in order to ensure public accountability.

On the subject of penalties, while fines for non-compliance and misinformation are defined, would these be substantial enough to deter malpractice?

A carefully calibrated penalty system must ensure that it’s not just seen as another cost of doing business but as a significant deterrent against non-compliance.

In an era when businesses can easily operate across international borders, focusing on local compliance may result in missing the larger picture.

The amendments, in their current form, do not address this pressing concern.

How do we ensure that a company spread across different jurisdictions is genuinely transparent?

Furthermore, while the onus is placed on companies to keep their beneficial ownership registers updated, there’s a gaping hole when it comes to verification.

Just recording the data is not enough. A robust mechanism is needed to audit and verify the data so that credibility and authenticity are ensured.

So, while the proposed amendments to the Companies Act 2016 are a step in the right direction, they also highlight how much ground we still have to cover.

Corporate transparency isn’t just a buzzword; it’s a commitment to fair, accountable and transparent business practices that can drive Malaysia’s economic future.

RAYMON RAM

Certified fraud examiner

Kuala Lumpur