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DISPUTE RESOLUTION
VINCENT TAN CHEE YIOUN & ANOR V JAN DE NUL (MALAYSIA) SDN BHD & ANOR & ANOTHER APPEAL [2017] 1 LNS 1130
In this case, the Court of Appeal had the opportunity to consider the applicability of section 42 of the Arbitration Act 2005 (“AA 2005”). Section 42 allows a party to refer to the High Court any question of law arising out of an arbitral award. The AA 2005 provides that section 42 does not apply to an international arbitration where the seat of arbitration is in Malaysia, unless the parties to the arbitration agree otherwise in writing (section 3).
Whilst the High Court recognised that one of the parties to the arbitration was a company registered outside Malaysia, it held that the foreign party was only a nominal party and the arbitral award cannot be classified as international arbitration, therefore, the High Court held that section 42 was applicable.
The “nominal party” argument was rejected in the Court of Appeal on grounds that the phrase “nominal party” is not recognised under the AA 2005 and the foreign party was in fact a party to the Submission Agreement in question. The Court of Appeal allowed the appeal and held that section 42 was not applicable in this case.
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
(1) Securities Commission Malaysia issues caution on participation in Initial Coin Offerings
The Securities Commission Malaysia ("SCM") has issued a statement which highlights the risks associated with "initial coin offerings", "initial token offerings", "token pre-sale", "token crowd-sale" (collectively referred to as "ICO schemes"). The SCM notes that ICO scheme operators typically raise funds by selling digital tokens to investors paid for with virtual currencies such as Bitcoin or Ethereum.
The concerns highlighted by SCM include, among others:
- the difficulty of verifying the authenticity of the ICO scheme;
- the challenges regarding the recovery of the invested monies that may be subject to foreign laws or regulations in the event the ICO scheme operators are based outside Malaysia;
- fraud, money laundering and terrorism financing risks;
- digital tokens traded on a secondary market may give rise to risk of insufficient liquidity or volatile and opaque pricing;
- the absence of regulation and legal protection as well as recourse for investors.
(2) Bank Negara Malaysia ("BNM") plans to issue cryptocurrency guidelines
The Governor of BNM has indicated an intention to issue guidelines on cryptocurrencies by the end of the year. The process would also involve the reinforcement of existing regulations on money laundering and terrorism financing. Presently, BNM does not recognise bitcoin as legal tender in Malaysia and therefore does not regulate the operation of bitcoin.
(3) Issuance of Supplementary Notice (No 3) on Foreign Exchange Administration Rules
BNM had, on 11 September 2017, issued Supplementary Notice (No 3) on Foreign Exchange Administration Rules. Non-bank non-resident market participants are now permitted, when registered with BNM, to enter into forward contracts with licensed onshore banks or appointed overseas office for the purposes of managing its ringgit exposure arising from its ringgit denominated Crude Palm Oil Futures or Options on Crude Palm Oil Futures contracts undertaken on Bursa Malaysia Derivatives Berhad.
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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TAX & REVENUE
Income tax
The Income Tax (Accelerated Capital Allowance) (Automation Equipment) Rules 2017 have been gazetted on 30 August 2017 and are deemed to have come into operation from year of assessment 2015.
The Inland Revenue Board of Malaysia has issued a new public ruling on Taxation Of Real Estate Investment Trust Or Property Trust Fund (Public Ruling No 5/2017) on 8 September 2017.
Tourism tax
The Tourism Tax (Exemption) Order 2017 has been gazetted on 22 August 2017 and has come into operation on 23 August 2017.
The Tourism Tax (Rate of Tax) Order 2017 has been gazetted on 22 August 2017 and has come into operation on 1 September 2017.
Goods and Services Tax ("GST")
The revised versions of the following guides have been published on the Royal Malaysian Customs Department’s GST website:
- General Guide (revised as at 24 August 2017);
- Event Management Services (revised as at 13 September 2017); and
Lodging or Holiday Accommodation (revised as at 20 September 2017).
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