Introduction
Music is not only a form of artistic expression but also a valuable category of intellectual property. For composers, lyricists and performers, a musical work represents both creative output and an economic asset. Copyright law provides the legal framework that enables creators to control how their works are used and to receive remuneration when those works are reproduced, performed or communicated to the public.
In today’s digital environment, music is more accessible than ever. Songs can be streamed instantly, performed publicly across countless venues and shared across multiple platforms. While this accessibility has expanded opportunities for the industry, it has also made the management of rights more complex. Protecting musical works is no longer only about recognising authorship. It is equally about ensuring that licensing systems function effectively and that royalties are properly collected and distributed.
In Malaysia, this coordination is achieved primarily through Collective Management Organizations (CMOs), operating under the Copyright Act 1987 (the "Act"). These entities aggregate rights, administer licensing schemes, collect royalties and distribute income to copyright owners and performers.
The current framework rests on the Act, supplemented by the Copyright (Collective Management Organization) Regulations 2022 and, most recently, the Guidelines of Copyright (Collective Management Organization) 2025 ("2025 Guideline"), issued pursuant to section 27M of the Act and came into force on 16 January 2026.
The 2025 Guideline introduce a structured regulatory framework governing the operation, transparency and accountability of CMOs in Malaysia. The changes are particularly significant for the music industry, copyright owners and businesses that require music licences.
Therefore, this article will discuss the licensing framework for musical works, the supervisory role of the Copyright Tribunal and the governance reforms introduced under the 2025 Guidelines.
Collective Management and Musical Works
Musical works involve multiple layers of rights, including composition, lyrics, sound recordings and performers’ rights. Under Section 27AA of the Copyright Act 1987, declared CMOs may grant licences for acts such as reproduction, public performance, communication to the public, rebroadcasting, commercial rental and adaptation. This includes the licensing of cover songs and derivative musical arrangements.
In Malaysia, the following organisations are currently declared CMOs in the music sector:
These organisations represent different categories of rights holders within the music ecosystem and are listed as declared CMOs under the 2025 Guidelines.
At the same time, certain organisations have had their declarations revoked, including:
The revised framework reinforces a clear message. Only organisations formally declared or renewed under the Act are authorised to operate as CMOs and collect licensing fees. Businesses must exercise due diligence to ensure that payments are made only to authorised entities or their officially appointed licensing agents.
The 2025 Governance Framework
The most notable development under the new framework is the introducing of clearer governance standards and financial transparency
1. Corporate Structure Requirement
A significant clarification under the 2025 Guidelines is that a CMO must be established as a company limited by guarantee under the Companies Act 2016.
Section 27A(1) of the Copyright Act refers to a “society or organisation” intending to operate as a licensing body. However, the 2022 Regulations required submission of a certificate of incorporation of a company limited by guarantee.
The 2025 Guidelines now provide express clarification.
Paragraph 4(1) stipulates that a collective management organisation must be:
“a body corporate being a company limited by guarantee incorporated under the Companies Act 2016.”
This confirms the regulatory direction introduced under the 2022 Regulations and removes uncertainty regarding eligible organisational forms. While the statutory wording remains broader, the regulatory position is now clear: only companies limited by guarantee may operate as CMOs. The requirement also ensures structured governance, defined constitutional documents and corporate accountability.
2. Licensing Scheme and Tariff Transparency
A frequent source of concern in collective licensing regimes internationally is tariff clarity.
The 2025 Guidelines address this directly.
Under the 2025 Guidelines, CMOs must operate strictly within the scope of rights permitted under the Act. Each class of licensing scheme and its tariff rate must be published as a public document. Any revision of tariff rates must be informed to and approved by the Controller before publication. Tariffs published without approval are not enforceable.
CMOs must also provide users with clear written explanations of the licensing schemes offered and transparent procedures for collection.
This reform enhances predictability for commercial users of music, including hospitality operators, event organisers, broadcasters and digital platforms. It also promotes consistency within the licensing ecosystem. For businesses such as restaurants, event organisers, broadcasters and digital platforms, this enhances regulatory certainty and reduces the risk of disputed charges.
3. Licensing Agents and Payment Safeguards
Where a CMO appoints a licensing agent, the organisation must notify the Controller and publish the agent’s details on its official website.
Users are prohibited from paying licensing fees to any person other than the CMO or its officially disclosed licensing agents.
This reform strengthens safeguards against unauthorised collection practices and enhances commercial protection for businesses using music.
4. Administrative Cost Cap and Royalty Protection
For many composers and performers, royalties represent a primary income stream. Administrative deductions can significantly affect actual earnings.
One of the most notable reforms introduced by the Guidelines is the cap on administrative costs.
The administrative cost imposed by a CMO is capped at a maximum of ten percent of the total licensing scheme collected for administration purposes.
Any additional costs exceeding ten percent, including social or cultural activities or international membership fees, must be approved by a majority vote of members at the annual general meeting.
For new CMOs declared on or after 16 January 2026, administrative costs may be capped at up to forty percent for the first three years of operation, subject to member approval. From the fourth year onwards, the ten percent cap applies.
This reform is expected to enhance transparency and ensure a greater proportion of royalties is distributed to rights holders.
5. Distribution Policy and Financial Transparency
CMOs must establish and maintain a formal distribution policy governing royalty allocation.
The policy must address:
Detailed financial records must be maintained, including collections, distributions and undistributed amounts. Members are entitled to inspect records relating to their own portfolios at least once per financial year.
CMOs must also publish key information on their official websites, including constitutions, tariff rates, distribution policies, administrative deductions and complaint procedures.
These measures collectively enhance transparency and strengthen confidence in the royalty management system for musical works.
Exceptions and Limitations
The 2025 Guidelines reaffirm that licensing schemes must not override statutory exceptions under the Copyright Act 1987.
Permitted uses include fair dealing for research and review, parody, incidental inclusion, certain educational uses, non-profit performances and specific government uses.
Businesses should assess whether a statutory exception applies before entering into licensing arrangements.
Revocation Risk for Non Compliance
Failure to comply with the Guidelines may result in revocation of a CMO’s declaration under the Act.
Revocation removes the organisation’s authority to operate and collect licensing fees. This underscores the enhanced regulatory supervision introduced under the 2025 framework.
The Supervisory Jurisdiction of the Copyright Tribunal
CMOs are given significant authority to license musical works and collect royalties on behalf of rights holders. While this centralised system promotes efficiency, it also concentrates licensing power within a small number of entities. For that reason, the Copyright Tribunal plays an important supervisory role within Malaysia’s copyright framework and plays a central role in balancing the interests of copyright owners and users.
Under the Act, the Tribunal may:
This oversight function is especially important in the music industry. Licensing tariffs for public performance, broadcasting, events or digital use can affect wide sectors of the economy, including restaurants, hotels, shopping centres, broadcasters and online platforms. The Tribunal provides a structured and independent avenue for resolving disagreements where parties are unable to reach an amicable solution.
The 2025 Guidelines reinforce that CMOs must inform members and users of their right to refer disputes to the Tribunal and provide information regarding jurisdiction and procedures
The Tribunal therefore operates not merely as a dispute forum, but as a regulatory check on collective economic authority. It helps maintain balance between the legitimate interests of copyright owners and the practical realities faced by music users.
Conclusion
The regulation of musical works in Malaysia is underpinned by a structured interplay between collective management and statutory oversight.
CMOs facilitate efficient licensing in a complex rights environment. The Copyright Tribunal ensures that this centralised authority remains subject to review. The 2025 Guidelines now embed measurable governance, transparency and financial discipline within that system.
As Malaysia’s music industry continues to expand across live performance, broadcasting and digital platforms, the legal framework aims to ensure that copyright owners are properly compensated while businesses operate with greater certainty.
Stakeholders across the music value chain should review existing practices in light of the 2026 commencement date to ensure alignment with the enhanced compliance architecture.
Malaysia’s collective management regime for musical works has entered a new era of regulatory sophistication.
** This article is intended for general information of the clients of our Firm. It should not be regarded as legal professional advice. If you require advice based on specific facts, please feel free to contact us.
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