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CORPORATE & COMMERCIAL
As announced by the Companies Commission of Malaysia (“CCM”), the new Companies Act 2016 (Act 777) (“2016 Act”) came into force on 31 January 2017 except for section 241 (which is in relation to the requirement for company secretaries to be registered with the Registrar of Companies) and Division 8 of Part III (which is in relation to corporate rescue mechanisms on corporate voluntary arrangement and judicial management).
With the enforcement of the first phase of the 2016 Act, the Companies Act 1965 is repealed. Some of the salient changes under the 2016 Act are as follows:
- Introduction of single member/director company;
- Change of “certificate of registration” to “notice of registration”;
- Abolition of the authorised capital concept;
- Abolition of concept of shares with nominal value;
- Companies are no longer required to have constitution or memorandum & articles of association;
- Companies are not required to have a common seal;
- Abolition of the requirement for annual general meeting for private companies; and
- Decoupling of lodgement of Annual Return and Financial Statements.
In line with the development of an electronic filing system, the Companies Regulations 2017 which provide that all documents required to be lodged with CCM shall be lodged through the electronic filing system also came into operation on 31 January 2017.
The relevant statutory forms have been made available at www.ssm.com.my/en/companies_act_2016.
In addition to electronic filing, the Malaysia Corporate Identity Number (“MyCoID”) 2016 portal will enable incorporation of companies to be done on-line in accordance with the 2016 Act and can be accessed starting 31 January 2017 via https://mycoid2016.ssm.com.my/.
The services offered on the MyCoID 2016 portal are as follows:
- Registration of user;
- Company name application;
- Incorporation of company limited by shares;
- Post-incorporation: a) Appointment of the first company secretary; b)Submission of the constitution of the company (M&A) and e-stamping;
- Return of allotment of shares; and
- Change in the register of members.
With MyCoID, the incorporation number assigned by the CCM can be used as a single source of reference for registration and transaction purposes with other participating Government agencies.
The Interest Schemes Act 2016 (Act 778) also came into effect on 31 January 2017. The Interest Schemes Act regulates the offering of interest schemes as an alternative to fundraising activities for companies. The provisions in the Interest Schemes Act were previously contained in the Companies Act 1965.
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
Recently the Court of Appeal had the occasion to consider whether a purchaser has the right to rescind a sale and purchase agreement on the ground that there is a total failure of consideration five years after vacant possession of the property is delivered.
The plaintiffs ("purchasers") in this case accepted vacant possession of the property and after inspecting the same, submitted a complaint form detailing 160 defects to the defendant ("housing developer"). After holding on to the property for about five years, the purchasers sought to rescind the sale and purchase agreement and sought a refund of the purchase price ("SPA").The purchasers argued that no architect certificate was issued and the defects were not rectified by the developer.
The Court of Appeal, in refusing to grant the remedy of rescission in favour of the purchasers, rejected the argument that there was a total failure of consideration and held that the purchasers, in deciding not to reject the property and having the property registered under their names, were estopped from denying vacant possession had been delivered.
In delivering the judgment, the Court held that a reasonable purchaser would have rejected the property at the outset and required a rescission then. They would not have waited for several years to elapse before deciding to rescind the SPA or complain about the defects.
Dr Dzul Khaini bin Haji Husain & 38 Others vs Pengarah Tanah dan Galian Wilayah Persekutuan (Kuala Lumpur) & 2 Others
The Court of Appeal had on 18 January 2017 unanimously dismissed the Appeals by the Appellants to challenge the legality of the compulsory acquisition of the land on which the Ampang Park Shopping Centre is located. The Appellants are some of the registered holders of the strata titles to the lots in the Ampang Park Shopping Centre.
In dismissing the Appeal against the decision of the Learned High Court Judge regarding the substantive judicial review proceedings, the Court of Appeal held that the decision maker in relation to the decision to compulsorily acquire the land is the Land Executive Committee in respect of lands located in the Federal Territory of Kuala Lumpur. However, on the facts of the instant case, as there were representations by the Attorney General’s Chambers during the ex-parte hearing of the application for leave to apply for judicial review, the Attorney General’s Chambers should not object to the judicial review proceedings on the ground that the Appellants had cited the wrong party.
The Court of Appeal further held that there was due compliance with the procedures stipulated under the Land Acquisition Act 1960. The Court of Appeal also held that it was necessary to compulsorily acquire the land and, in this regard, the Court of Appeal found that there was no mala fide on the part of the decision maker. The Court of Appeal concluded that, as the acquisition of the land was done in accordance with the requisite procedures, the rights of the Appellants as enshrined in Article 13 of the Federal Constitution had not been infringed.
FINANCIAL SERVICES
On 16 January 2017, Securities Commission Malaysia (“SCM”) had revised the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (“LOLA Guidelines”).
SCM had issued a summary of amendments made to the revised LOLA Guidelines, providing the summary of key amendments made to the LOLA Guidelines. Some of the key highlights of the LOLA Guidelines, in particular, in relation to corporate bonds and sukuk are as follows:
- The term “private debt securities” has been substituted with the term “corporate bonds” throughout the LOLA Guidelines.
- Following the removal of mandatory credit rating, credit rating of ringgit-denominated corporate bonds or sukuk is no longer a requirement under the LOLA Guidelines and the section on credit rating only applies to ringgit-denominated corporate bonds or sukuk that are rated or to be rated.
- Consent of the bondholders or sukukholders must be obtained prior to changing the transferability and tradability status of a corporate bond or sukuk.
- The issuer must lodge a duly executed trust deed with the SCM either prior to or on the (a) date of issuance of the corporate bond or sukuk, or (b) date of the first issuance under a debt or sukuk programme.
- Any debt or sukuk programme previously approved or authorised by the SCM must be issued within two years from the date of SCM’s approval.
- For any debt or sukuk programme previously approved or authorised by the SCM but not yet issued and subsequently upsized in accordance with LOLA Guidelines, the first issuance under the programme must be issued within 60 business days of the issuer’s lodgement of all information and documents in relation to the upsizing.
INTELLECTUAL PROPERTY
Domain name dispute between NAOS and Relax Beauty House
The Complainant is NAOS and the Respondent is Relax Beauty House. The domain name in dispute is esthederm.com.my (“the disputed domain name”). One of the grounds of the complaint was that the disputed domain name is identical or confusingly similar to two registered marks (“the Registered Marks”).
The complaint was denied by the Panel despite the following findings:
- The disputed domain name registered by the Respondent is confusingly similar to the Registered Marks;
- The Respondent has no rights or legitimate interests in the disputed domain name; and
- The Respondent has registered the disputed domain name in bad faith.
This is because the Complainant had failed to establish that it has rights to the Registered Marks which the disputed domain is claimed to be identical or similar to.
It is therefore pertinent for the Complainant to ensure that the elements in Paragraph 5.2 of the MYNIC Domain name Dispute Resolution Policy are established, particularly the phrase "a trade mark or service mark to which the Complainant has rights" which had been overlooked by the Complainant.
For further information regarding intellectual property law matters, please contact
Karen Abraham
karen@shearndelamore.com
Indran Shanmuganathan
indran@shearndelamore.com
TAX & REVENUE
TAX CASE
Ketua Pengarah Hasil Dalam Negeri v United Malacca Berhad [unreported]
In this case, the High Court has recently dismissed the appeal of the Director General of Inland Revenue (“DGIR”) and affirmed the decision of the Special Commissioners of Income Tax as follows:
- the late payment charges received by the taxpayer on the payment of the additional compensation for the compulsory acquisition of the taxpayer’s lands by the Land Administrator under the Land Acquisition Act 1960 are not subject to tax under the Income Tax Act 1967 (“ITA”);
- the retrenchment benefits which were reimbursed by the Land Administrator to the taxpayer are not subject to tax under the ITA; and
- the penalties imposed by the DGIR upon the taxpayer under section 113(2) of the ITA are discharged
There is no further appeal to the Court of Appeal.
FINANCE ACT 2017
The Finance Act 2017 (“Act”) has been gazetted on 16 January 2017 and the dates of commencement of its provisions are set out in section 3 of the Act.
INCOME TAX
The Income Tax (Deduction for Expenditure on Issuance of Retail Debenture and Retail Sukuk) Rules 2016 have been gazetted on 22 December 2016 and shall come into effect from year of assessment 2016 to year of assessment 2018.
Further, the following rules and orders have been gazetted on 23 December 2016:
- Income Tax (Convention of Mutual Administrative Assistance in Tax Matters) Order 2016;
- Income Tax (Automatic Exchange of Financial Account Information) Rules 2016 these -- rules have come into operation on 1 January 2017
- Income Tax (Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information) Order 2016;
- Income Tax (Country-By-Country Reporting) Rules 2016 -- these rules have come into operation on 1 January 2017; and
- Income Tax (Multilateral Competent Authority Agreement on the Exchange of Country-By-Country Reports) Order 2016.
GOODS AND SERVICES TAX (GST)
The Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) Regulations 2016 have been gazetted on 22 December 2016 and have come into operation on 1 January 2017.
Further, the Goods and Services Tax (Imposition of Tax for Supplies in respect of Free Zones) Order 2016has been gazetted on 28 December 2016 and has come into operation 1 January 2017.
The revised versions of the following Specific Guides have been published on the Royal Malaysian Customs Department’s GST website:
- Designated Area (revised as at 1 January 2017);
- Input Tax Credit (revised as at 4 January 2017);
- Tax Invoice and Records Keeping (revised as at 6 January 2017);
- Transfer of Business as a Going Concern (revised as at 6 January 2017); and
- Valuation (revised as at 18 January 2017).
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