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COMPETITION LAW & ANTITRUST
Assessment by the Malaysia Competition Commission ("MyCC") on the Parking Surcharge by Touch 'n Go Sdn Bhd ("TNG")
A preliminary assessment was conducted by MyCC on TNG's conduct in imposing a surcharge over and above the parking fees that are being paid by TNG card users. TNG is currently the only service provider offering cashless transactions at parking facilities in Malaysia. The TNG facility offers cashless convenience to those who choose to use the service. MyCC concluded that there is no competition law concern because customers have the option to either enter the parking facilities via the cash ticketing system at no surcharge or use the TNG system with a surcharge. MyCC also concluded that the surcharge is justified because it is to recover the investment and maintenance costs of the TNG system.
The Competition (Appeal Tribunal) Regulations 2017 ("CAT Regulations 2017")
The CAT Regulations 2017 will come into operation on 2 May 2017 to regulate procedures of an appeal to the Competition Appeal Tribunal. The CAT Regulations 2017 will not apply to any appeal filed or proceedings commenced before or pending immediately before 2 May 2017.
For further information regarding competition law & antitrust matters, please contact
Dato' Johari Razak
jorazak@shearndelamore.com
K Shanti Mogan
shanti@shearndelamore.com
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As announced by the Securities Commission Malaysia ("SCM"), a new Malaysian Code on Corporate Governance ("MCCG"), came into effect on 26 April 2017. The new MCCG has 36 practices to support three principles namely:
- board leadership and effectiveness;
- effective audit, risk management, and internal controls;
- corporate reporting and relationship with stakeholders.
The new MCCG adopts a differentiated and proportionality approach in the application of certain best practices taking into account the differing sizes and complexity of listed companies. The new MCCG now identifies certain practices and reporting expectations to only apply to companies on the FTSE Bursa Top 100 Index and those with market capitalisation of RM2 billion or more ("Large Companies"). Other listed companies may consider adopting the practices identified for Large Companies if they aspire to achieve greater excellence in corporate governance.
A key feature of the new MCCG is the introduction of the Comprehend, Apply and Report (CARE) approach, and the shift from "comply or explain" to "apply or explain an alternative". This is meant to encourage listed companies to put more thought and consideration when adopting and reporting on their corporate governance practices.
Another new dimension in the code is the introduction of "Step Up" practices to encourage companies to go further in achieving corporate excellence. This includes the practice which requires an Audit Committee to comprise only of independent directors and the establishment of a Risk Management Committee.
The first batch of companies that will be required to report their application of the MCCG will be companies with financial year ending 31 December 2017. Where a company's financial year ends on 31 December 2017, disclosure will be required for activities from 1 January 2017 to 31 December 2017 and should be made in the annual report published in 2018. Where a company's financial year begins on 1 July 2017, disclosure will be required in relation to activities from 1 July 2017 to 30 June 2017 and should be disclosed in the annual report published in 2018. Companies will be required to provide meaningful explanation in its annual report on how it has applied each practice in the MCCG.
Date: 27 April 2017
Source: Securities Commission Malaysia
Issuing Authority: Securities Commission Malaysia
For further information regarding corporate and commercial law matters, please contact
Datin Grace C G Yeoh
gcgyeoh@shearndelamore.com
Dato' Johari Razak
jorazak@shearndelamore.com
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DISPUTE RESOLUTION
Instantcolor System Sdn Bhd v Inkmaker Asia Pacific Sdn Bhd [2017] 4 CLJ 1
In this case, the Federal Court held that the joinder of a party as a co-defendant in pending proceedings takes effect in law on the date of the joinder, that is, on the date of the court order allowing the joinder, not retrospectively to the date of the commencement of the action against the first defendant.
The significance of this is that the co-defendant would then be permitted to take a limitation defence if, at the time of his joinder, the cause of action against him/her is time barred. This happened in the above referenced case where the plaintiff filed a suit against the first defendant on 21 December 2001 for breach of contracts of employment and breach of fiduciary duty. The second defendant was added in the proceedings on 25 June 2009. The writ and the statement of claim was then amended to plead a cause of action against the second defendant which was linked closely or interrelated to the cause of action against the first defendant. The action against the second defendant was held to be time barred as at 25 June 2009.
For further information regarding dispute resolution matters, please contact
Datin Jeyanthini Kannaperan
jeyanthini@shearndelamore.com
Robert Lazar
rlazar@shearndelamore.com
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FINANCIAL SERVICES
Initiatives of Financial Markets Committee to Develop the Onshore Financial Market
The Financial Markets Committee together with Bank Negara Malaysia ("BNM") have announced a second series of development initiatives to develop the onshore financial market following measures introduced in December 2016.
The new measures will include, without limitation:
- Increase hedging flexibility to registered investors to fully hedge their exposure and permit FX risk management for hedging without documentary evidence up to an aggregate net open position of RM6 million per client per bank to include Pound Sterling, Euro and Japanese Yen;
- The introduction of five universal principles to be set out in a Principles for a Fair and Effective Financial Market document as guidance, and serve as an anchor, to promote fair and effective functioning of the market;
- The introduction of a new code of conduct, the Code of Conduct for Malaysian Wholesale Financial Markets, which will supersede and replace the existing code of conduct for principals and brokers in wholesale money and foreign exchange markets issued by BNM in 1994;
- The liberalisation of the existing regulated short-selling framework in the secondary government bond market to all resident entities. The existing framework only allows licensed banks and investments banks to conduct regulated short-selling.
These measures will take effect on 2 May 2017.
BNM will be working with Malaysian Electronic Clearing Corp Sdn Bhd ("MyClear") in enhancing the Real-time Electronic Transfer of Funds and Securities System ("RENTAS") to permit segregated securities account up to fund manager level and a local operating unit will be established to adopt and manage the Legal Entity Identifier system to promote greater transparency and to facilitate surveillance. These enhancement initiatives will be implemented on a gradual basis and is expected to be completed over a 12- to 18-month period.
For further information regarding financial services matters, please contact
Christina S C Kow
christina@shearndelamore.com
Pamela Kung Chin Woon
pamela@shearndelamore.com
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EMPLOYMENT & ADMINISTRATIVE LAW
Gender Discrimination
The proposal to update labour laws to curb gender discrimination in the workplace, including discrimination against pregnant women, has been met with strong opinions.
Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said the existing laws were adequate to tackle the problem. He was of the view that instead of enacting new laws there should be more efforts to promote awareness of gender discrimination.
On the other hand, Women's Aid Organisation executive director Sumitra Visvanathan hailed the proposal as a "positive" step for the country and suggested that a specific law like a Gender Equality Act should be introduced to address discriminations that women face at work.
www.thestar.com.my/news/nation/2017/03/31/mixed-reaction-to-proposal-some-hail-plan-to-amend-labour-laws-while-others-object/.
For further information regarding employment & administrative law matters, please contact
Sivabalah Nadarajah
sivabalah@shearndelamore.com
Vijayan Venugopal
vijayan@shearndelamore.com
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INTELLECTUAL PROPERTY
Directors’ Liability in Trade Mark Infringement
WA-22IP-20-05/2016/WA-22IP-21-05/2016/WA-22IP-22-05/2016/WA-22IP-23-05/2016
Quorum: YA Datuk Wong Kian Kheong
Plaintiffs: Chanel/ Burberry/ Louis Vuitton/ Guccio Gucci
Defendants: 1. Melwani2 International Sdn. Bhd.
2. LachMandas Ishwarlal Melwani
3. Ang Chong Leng
In these four suits, the plaintiff companies ("Plaintiffs") are the proprietors of registered trade marks for various goods in Classes 3, 9, 14, 18, 24, 25 and 35.
The first defendant is a company incorporated in Malaysia which sold goods bearing the Plaintiffs’ registered trade marks without authorisation of the Plaintiffs as distributor or retailer.
The Ministry of Domestic Trade, Co-Operatives and Consumerism ("MDTCC") had raided the first defendant’s premises on four occasions and seized items of infringing goods. These four suits were filed by the Plaintiffs against the first to third defendants based on infringement of the Plaintiffs' Registered Trade Marks under section 38 (1)(a) of the Trade Mark Act 1976 ("TMA").
This judgement concerns a novel question of whether an individual may be personally liable for a company’s infringement of a registered mark under section 38(1)(a) of TMA.
During the course of summary judgement proceedings against the defendants, the High Court was satisfied by way of affidavit evidence that the first defendant had infringed the registered trade marks of the Plaintiffs (“infringement”). The remaining question was whether the third defendant, being the director of the first defendant can be personally liable for the first defendant’s infringement.
The High Court was of the view that a "company is a legal person which is separate from its directors, shareholders and employee" and "the general principle is that a company’s directors, shareholders and employees should not be personally liable for the company’s act or omission". The court should only lift the corporate veil in exceptional circumstance provided by statute or case law.
The High Court then summarised the two cumulative conditions ("two conditions") to lift or pierce the corporate veil as laid down by the three Federal Court judgements, namely:
a. the piercing or lifting of a corporate veil is "in the interest of justice"; and
b. there exists "special circumstances" to pierce or lift the corporate veil, such as:
- there has been commission of actual fraud or common law fraud against the plaintiff;
- equitable fraud or constructive fraud has been committed against the plaintiff;
- to prevent the evasion of obligation or liability; or
- to prevent an abuse of corporate personality.
In holding the third defendant personally liable for the trade mark infringement committed by the first defendant, the High Court held that the two conditions above for applying the case law exception have been fulfilled in the Summary Judgment Application against the third defendant which can be briefly summarised as follows:
a. the piercing of corporate veil is in the interest of justice in that:
- the third defendant personally paid the fine of RM318,000 imposed by the Sessions Court against the first defendant in a criminal proceeding under the Trade Description Act 2011;
- the third defendant cannot be said to have resigned as a director of the first defendant;
- a company search report dated 28 April 2016 still showed the third defendant as a director; and
- there was no documentary evidence to show that the third defendant had already resigned.
b. there exists the following special circumstances as laid down by the Federal Courts:
- the third defendant should not evade statutory liability for trade mark infringement under section 38 (1) (a) of the TMA owed to the Plaintiffs; and/or
- the third defendant should not abuse the first defendant’s corporate personality.
The above judgement suggests that a director of a company could be personally liable for the trade mark infringement by a company. The High Court did however hold in the same case that the discretion to pierce or lift the corporate veil is a question of fact dependent upon the particular circumstances of the case in question and is not a binding precedent.
For further information regarding intellectual property law matters, please contact
Karen Abraham
karen@shearndelamore.com
Indran Shanmuganathan
indran@shearndelamore.com
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TAX & REVENUE
Customs duty
The Customs (Prohibition of Exports) Order 2017 and Customs (Prohibition of Imports) Order 2017 have been gazetted on 31 March 2017 and they have come into operation on 1 April 2017.
Excise duty
The Excise Duties Order 2017 has also been gazetted on 31 March 2017 and it has come into operation on 1 April 2017.
Stamp duty
The Stamp (Amendment) Bill 2016 which was tabled in Parliament on 23 November 2016 has been withdrawn.
For further information regarding tax & revenue law matters, please contact
Goh Ka Im
kgoh@shearndelamore.com
Anand Raj
anand@shearndelamore.com
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