MALAYSIA LAW DIGEST REVISER

Raslan Loong Level 3A Menara Manulife RB 6 Jalan Gelenggang Damansara Heights 50490 Kuala Lumpur, Malaysia Telephone: +60 3 2093 3939 Fax: +60 3 2093 4848 Website: http://www.raslanloong.com Other offces: Labuan: labuan.office@raslanloong.com; Singapore: sing.office@raslanloong.com; Germany: axelreeg@raslanloong.com; South Africa: frans@raslanloong.com Reviser Prole
Overview: Established in 1995, Raslan Loong is a niche corporate practice providing commercial advice with an international outlook. Since establishment, it has become one of the fastest growing law rms in Malaysia and has acquired a reputation as a top-end corporate law practice, competing aggressively for major projects with the more traditional players. The rm is consistently commended and ranked highly by key international directories. As Malaysias rst law rm with offices and associations overseas, the rm has been able to provide cross-border support for a variety of international transactions. Services: The rm has advised and continues to advise on major cross-border and international transactions primarily in mergers and acquisitions, capital markets work and cross-border investments. The rms areas of practice also include corporate banking, structured nance, corporate restructuring, technology & intellectual property and commercial arbitration & litigation. Client Base: The rms client base includes foreign companies, international nancial institutions and multinationals such as AC Nielson, AXA Insurance, AIG, Barclays Capital, Bauer, BlueScope Steel, Citigroup, Deutsche Bank, Dyson, Ernst & Young, McKinsey & Co., OCBC, PWC, Schering Plough and Sumitomo Mitsui Banking Corporation.

MALAYSIA LAW DIGEST

(The following is a list of all Categories and Topics, including cross-references, covered in this Digest.) Category/Topic INTRODUCTION CURRENCY . . . . . . . . . . . . . . . . . . . . . . GOVERNMENT AND LEGAL SYSTEM . . . . . . . . OFFICE HOURS AND TIME ZONE . . . . . . . . . . BUSINESS ORGANIZATIONS AGENCY . . . . . . . . . . . . . . . . . . . . . . . . ASSOCIATIONS . . . . . . . . . . . . . . . . . . . . CORPORATIONS . . . . . . . . . . . . . . . . . . . . FOREIGN CORPORATIONS . . . . . . . . . . . . . . PARTNERSHIPS . . . . . . . . . . . . . . . . . . . . BUSINESS REGULATION AND COMMERCE BANKS AND BANKING . . . . . . . . . . . . . . . . BILLS AND NOTES . . . . . . . . . . . . . . . . . . BILLS OF SALE . . . . . . . . . . . . . . . . . . . . COMMERCIAL REGISTER . . . . . . . . . . . . . . CONTRACTS . . . . . . . . . . . . . . . . . . . . . FRAUDS, STATUTE OF . . . . . . . . . . . . . . . . INFORMATION TECHNOLOGY, INTERNET AND NEW INTEREST . . . . . . . . . . . . . . . . . . . . . . . LICENCES, BUSINESS AND PROFESSIONAL . . . . . MONEY LAUNDERING . . . . . . . . . . . . . . . . NEGOTIABLE INSTRUMENTS . . . . . . . . . . . . SALES . . . . . . . . . . . . . . . . . . . . . . . . . CITIZENSHIP ALIENS . . . . . . . . . . . . . . . . . . . . . . . . CITIZENSHIP . . . . . . . . . . . . . . . . . . . . . IMMIGRATION . . . . . . . . . . . . . . . . . . . . CIVIL ACTIONS AND PROCEDURE ACTIONS . . . . . . . . . . . . . . . . . . . . . . . DEPOSITIONS AND DISCOVERY . . . . . . . . . . . JUDGMENTS . . . . . . . . . . . . . . . . . . . . . LIMITATION OF ACTIONS . . . . . . . . . . . . . . PROCESS . . . . . . . . . . . . . . . . . . . . . . . COURTS AND LEGISLATURE COURTS . . . . . . . . . . . . . . . . . . . . . . . . LAW REPORTS . . . . . . . . . . . . . . . . . . . . LEGISLATURE . . . . . . . . . . . . . . . . . . . . . STATUTES . . . . . . . . . . . . . . . . . . . . . . . DEBTOR AND CREDITOR ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . ATTACHMENT . . . . . . . . . . . . . . . . . . . . . BANKRUPTCY . . . . . . . . . . . . . . . . . . . . EXECUTIONS . . . . . . . . . . . . . . . . . . . . . FRAUDULENT SALES AND CONVEYANCES . . . . . GARNISHMENT . . . . . . . . . . . . . . . . . . . . INSOLVENCY . . . . . . . . . . . . . . . . . . . . . LIENS . . . . . . . . . . . . . . . . . . . . . . . . . PLEDGES . . . . . . . . . . . . . . . . . . . . . . . RECEIVERS . . . . . . . . . . . . . . . . . . . . . . DISPUTE RESOLUTION ARBITRATION AND AWARD . . . . . . . . . . . . . MEDIATION . . . . . . . . . . . . . . . . . . . . . . DOCUMENTS AND RECORDS AFFIDAVITS AND STATUTORY DECLARATIONS . . NOTARIES PUBLIC . . . . . . . . . . . . . . . . . . SEALS . . . . . . . . . . . . . . . . . . . . . . . . . EMPLOYMENT LABOUR RELATIONS . . . . . . . . . . . . . . . . . ESTATES AND TRUSTS ADMINISTRATION . . . . . . . . . . . . . . . . . . DEATH . . . . . . . . . . . . . . . . . . . . . . . . . DESCENT AND DISTRIBUTION . . . . . . . . . . . . Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6 Category/Topic EXECUTORS AND ADMINISTRATORS . . TRUSTS . . . . . . . . . . . . . . . . . . WILLS . . . . . . . . . . . . . . . . . . . FAMILY ADOPTION . . . . . . . . . . . . . . . . DIVORCE . . . . . . . . . . . . . . . . . INFANTS . . . . . . . . . . . . . . . . . MARRIAGE . . . . . . . . . . . . . . . . FOREIGN TRADE AND COMMERCE CUSTOMS . . . . . . . . . . . . . . . . . EXCHANGE CONTROL . . . . . . . . . . FOREIGN EXCHANGE . . . . . . . . . . FOREIGN INVESTMENT . . . . . . . . . FOREIGN TRADE REGULATIONS . . . . HEALTH FOOD AND DRUGS . . . . . . . . . . . . PUBLIC HEALTH . . . . . . . . . . . . . IMMIGRATION ALIENS . . . . . . . . . . . . . . . . . . IMMIGRATION . . . . . . . . . . . . . . INTELLECTUAL PROPERTY COPYRIGHT AND REGISTERED DESIGNS PATENTS . . . . . . . . . . . . . . . . . . TRADEMARKS . . . . . . . . . . . . . . LEGAL PROFESSION ATTORNEYS AND COUNSELORS . . . . . MINERAL, WATER AND FISHING RIGHTS MINES AND MINERALS . . . . . . . . . MORTGAGES CHATTEL MORTGAGES . . . . . . . . . . COLLATERAL SECURITY . . . . . . . . . MORTGAGES . . . . . . . . . . . . . . . PROPERTY ABSENTEES . . . . . . . . . . . . . . . . DEEDS . . . . . . . . . . . . . . . . . . . LANDLORD AND TENANT . . . . . . . . PERPETUITIES . . . . . . . . . . . . . . . REAL PROPERTY . . . . . . . . . . . . . TAXATION ADMINISTRATION . . . . . . . . . . . . BUSINESS TAXES . . . . . . . . . . . . . CONSUMPTION TAX . . . . . . . . . . . CUSTOMS DUTY AND TAX . . . . . . . . ESTATE TAX . . . . . . . . . . . . . . . . EXCISE TAXES . . . . . . . . . . . . . . FOREIGN INVESTMENT TAXES . . . . . GASOLINE AND SPECIAL FUELS TAXES INCOME TAX . . . . . . . . . . . . . . . INHERITANCE TAX . . . . . . . . . . . . LOCAL GOVERNMENT TAXES . . . . . . MOTOR VEHICLE TAXES . . . . . . . . . PROPERTY TAXES . . . . . . . . . . . . SALES TAX . . . . . . . . . . . . . . . . STAMP TAX . . . . . . . . . . . . . . . . TAX INCENTIVES . . . . . . . . . . . . . TREATIES AND AGREEMENTS . . . . . . TRANSPORTATION MOTOR VEHICLES . . . . . . . . . . . . SHIPPING . . . . . . . . . . . . . . . . . TREATIES AND CONVENTIONS TREATIES . . . . . . . . . . . . . . . . . Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 7 7 7 7 7 8 8 8 8 9 9 9 9 9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MEDIA . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11 11 11 11 11 11 11 11 11 11 11 11 11 12 12 12 12 12 12 12 12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . 12 . . . . . . . . . . . . . . . . 12 . . . . . . . . . . . . . . . . 13

MALAYSIA LAW DIGEST

Revised for 2007 edition by RASLAN LOONG, Advocates and Solicitors, Kuala Lumpur, Malaysia. See category Courts and Legislature, topic Statutes. Note: This revision incorporates legislation through June 30, 2006.

INTRODUCTION
CURRENCY: Local currency is Ringgit (RM). See categories Business Regulation and Commerce, topic Banks and Banking; Foreign Trade and Commerce, topics Exchange Control, Foreign Exchange. GOVERNMENT AND LEGAL SYSTEM: Malaysia is Federation consisting of: nine Sultanate States: Kedah, Perlis, Kelantan, Terengganu, Perak, Pahang, Selangor, Negeri Sembilan and Johor; Pulau Pinang and Melaka; Borneo states of Sabah and Sarawak; and Federal Territory of Kuala Lumpur; Federal Territory of Putrajaya and Federal Territory of Labuan. The nine Sultanate States, Pulau Pinang, Melaka, Federal Territory of Kuala Lumpur and Federal Territory of Putrajaya comprise West Malaysia; and Borneo States of Sabah and Sarawak, and Federal Territory of Labuan comprise East Malaysia. Malaysia has written constitution (Federal Constitution). Any law, whether State or Federal, inconsistent with Constitution is to that extent void. See also category Courts and Legislature, topic Statutes. The Monarch.Yang di-Pertuan Agong is constitutional Monarch. Monarchs position is both hereditary and elective. Only Sultans of nine Malay States are eligible for election under system of rotation done every ve years whereby each Sultan has chance of being elected unless he declines. Executive authority of Federation is vested formally in Yang di-Pertuan Agong but he must act in accordance with advice of Cabinet. Cabinet comprises members of Parliament, and is headed by Prime Minister. Parliament.Legislative power of Federation is vested in Parliament. Parliament consists of Yang di-Pertuan Agong, Dewan Rakyat (House of Representatives) and Dewan Negara (Senate). Members of Dewan Rakyat are directly elected by citizens. Each Dewan Rakyat lasts for maximum of ve years, after which general election must be called. Dewan Negara is lled partly by appointees of Yang di-Pertuan Agong, and partly by members elected from State Legislative Assemblies for term of three years (with one re-election). Parliament meets from Mon. to Thurs. when in session. Parliamentary year is broken up into three sessions and time between date of last sitting in one session and date appointed for rst meeting in next session must not be more than six months. Dewan Rakyat and Dewan Negara can have different start and end dates for each session. Meetings can be convened by Yang di-Pertuan Agong; speaker of Dewan Rakyat or President of Dewan Negara; or by motion passed by simple majority in relevant house. Enactments are presented to Yang di-Pertuan Agong for assent. If enactment is not assented after 30 days of representation, it becomes law as if Yang di-Pertuan Agong had assented it. Dewan Negara only has powers to delay legislation, allowing Dewan Rakyat to reconsider its policies. Where Money Bill is passed by Dewan Rakyat and is not passed by Dewan Negara within 30 days (one month), Bill must be presented to Yang di-Pertuan Agong for his assent. Money Bills include bill or amendment making provision for imposing, increasing, abolishing or reducing tax. State Legislative Assemblies.Legislative power of each State is vested in State Legislative Assembly. Each State has unicameral assembly consisting of ruler or governor, and members directly elected by people of that State. Ruler or governor acts on advice of Executive Council of that State, which is headed by Menteri Besar or Chief Minister. Bills passed by Assembly become law only upon assent of ruler or governor. If bill is not assented to by ruler or governor within 30 days bill will become law as if he had assented to it. Judiciary.Judiciary has four tiers comprising Federal Court, Court of Appeal, two High Courts (Malaya and Sabah and Sarawak), and Subordinate Courts. Judiciary is headed by Chief Justice of Federal Court, President of Court of Appeal and Chief Judges of High Courts of Malaya and Sabah and Sarawak. Judges of High Court and above are appointed until retirement at age 65, by Prime Minister in consultation with Chief Justice Malaysia. See also category Courts and Legislature, topic Courts. OFFICE HOURS AND TIME ZONE: Malaysia is in the + 08:00 GMT time zone. Office hours are generally from 9 a.m. to 5 p.m. (Mon. to Fri. except for Kelantan, Terengganu and KedahSun. to Thurs.) and from 9 a.m. to 1 p.m. (Sat.). Government offices and banks are closed on rst and third Sats. of every month.

CORPORATIONS: Governed by Companies Act (Act No. 125) and Companies Regulations 1966. Formation.Two or more persons (including body corporates) may incorporate company. Apart from issuance of two shares, no minimum amount of authorised or issued share capital. Limited/Unlimited.Companies may be limited (liability of shareholders limited by shares or guarantee, or both) or unlimited. Unlimited companies may be converted into limited companies but not vice versa. Private company by its Memorandum and Articles of Association must restrict transfer of its shares, limit members to no more than 50, prohibit invitation to public to subscribe for shares and prohibit invitation to public to deposit money. Private limited companies must have words Sendirian Berhad or abbreviation Sdn. Bhd. as part of its name. Public company must not have above restrictions and may invite public to subscribe for shares and debentures by issuance of prospectus. Limited liability companies must have word Berhad or abbreviation Bhd. as part of its name. Public companies may apply to be listed on Stock Exchange in accordance with listing requirements of Bursa Malaysia Securities Berhad. Listed companies are principally regulated by Bursa Malaysia Securities Berhad and Securities Commission, to whom applications have to be made for certain transactions such as injection of assets into listed company, public offerings and takeovers. Registrar of Companies administers Companies Act. All statutory documents including Memorandum and Articles of Association, and concerning details of registered office, directors, amount of share capital, charges created over assets of company, are to be lodged with Companies Commission of Malaysia who also approves intended names of companies. Company must also le with Companies Commission of Malaysia annual returns setting out specied information including audited accounts, names of members, details of directors and paid-up share capital. Administration of Company.Essentially run by Board of Directors in accordance with Articles of Association. Certain matters are stipulated by Act as requiring approval of 75% of shareholders (for example, alteration in restriction of share transfer and alteration of Memorandum and Articles). Reduction in share capital requires Court order. Company can purchase its own shares under circumstances set out in Companies Act 67A. Secretary and Directors.Company secretary and at least two directors must be locally resident. Prohibited Acts.Certain acts are prohibited by Act including provision of nancial assistance by company for purchase of its own shares and in case of public companies, making loans to persons (including companies) connected with directors. Foreign Companies.Part XI, Division 2 of Companies Act applies to foreign companies carrying on business in Malaysia and stipulates requirements including documents to be lodged with Companies Commission of Malaysia. Foreign companies must have registered office in Malaysia where all communications and notices may be served. FOREIGN CORPORATIONS: See topic Corporations. PARTNERSHIPS: Partnership Act.Partnership subsists between persons carrying on business in common with view of prot and is regulated by Partnership Act (Act 135) and Registration of Businesses Act (Act 197). Common ownership or sharing of prots does not of itself create partnership. Act governs nature of partnership, relationship of persons dealing with partners, relations of partners to one another and dissolution of partnership and its consequences. Formation of Partnership.Partnership of more than 20 members is forbidden if purpose is for acquisition of gain. Exception is when partnership is formed for purpose of carrying on any profession or calling which is declared by Minister for Domestic Trade & Industry to be profession or calling not customarily carried on by association or partnership incorporated under Companies Act (Act 125) or formed in pursuance of some other written law or letters patent. Partner is agent of rm and has power to bind rm. Partners of rm are bound by acts done on behalf of rm unless otherwise agreed upon between all partners. In such case, such acts will not be binding on rm with respect to persons having notice of agreement. Liability of Partners.Every partner is jointly liable with other partners of rm for all debts and obligations of rm incurred whilst he is partner; and after his death, his estate is also severally liable in due course of administration for such debts and obligations, so far as they remain unsatised but subject to prior payment of his separate debts. Taxation of Partners.Partnership is not recognised in law as separate legal persona distinct from individuals who constitute it. Hence, for tax purposes, individual partners will be assessed on their respective shares of income.

BUSINESS ORGANIZATIONS
AGENCY: Governed by Contracts Act (Act 136) and common law. Generally, principal is bound by his authorised agent. Agent may be authorised expressly, impliedly or by ratication, estoppel or necessity. Agent acting outside scope of authority may be liable for breach of warranty of authority. Agent acting for undisclosed principal also personally liable. See also topic Partnerships; category Property, topic Absentees. ASSOCIATIONS: See topic Partnerships.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 1

BUSINESS ORGANIZATIONS
PARTNERSHIPS . . . continued Common Law Provisions.Although Act contains provisions relating to creation and liability of partners, rules of equity and common law continue to apply save where inconsistent with Act.

MARTINDALE-HUBBELL LAW DIGEST - 2007

E-Commerce.There are no laws designed to regulate this area. Related laws are Communications and Multimedia Act (Act 588); Malaysian Communications and Multimedia Commission Act (Act 589); Digital Signature Act (Act 562); Computer Crimes Act (Act 563); and Telemedicine Act (Act 564). Provision of network services or facilities or applications services must be licensed from Ministry of Energy, Water and Communications. Applications services includes any voice service, data service, contentbased service or any service provided in connection with e-commerce or any other transaction or transmission service. Internet banking related services are governed by guidelines issued by Central Bank of Malaysia from time to time. INTEREST: General.Interest is payable only when allowed by statute or in accordance with contract. No general prohibition on rate of interest that can be charged. However, interest rates charged by those carrying on business of moneylending in West Malaysia are capped under Moneylenders Act (Act 400) at 12% per annum for secured loans and 18% per annum for unsecured loans. Prejudgment.Interest may be awarded by Court in respect of late payment of damages or debts. Normally not more than 8% per annum unless otherwise ordered by Court. Post-judgment interest is, subject to agreement of parties, at rate to be determined at discretion of Court. LICENCES, BUSINESS AND PROFESSIONAL: Licences are required for most businesses such as conducting remittance businesses, futures trading, stock exchange trading, carrying out nance business transactions, establishing restaurant and entertainment centres, massage parlours, conducting import and export trade, selling and distributing liquor, conducting certain manufacturing activities, acting as travel agents, driving motor vehicles and conducting businesses as moneylenders or pawnbrokers. MONEY LAUNDERING: Anti-Money Laundering Act (Act 613) which came into force on 15 Jan. 2002 puts Malaysias legislation against money laundering on par with international standards. Act imposes obligations for reporting institutions such as nancial institutions, solicitors, accountants and trust companies to verify identity, domicile, legal capacity, occupation or business purposes of its customers and to adopt, develop and implement sound internal policies, systems and control to detect any offence under Act. It also allows for seizing, freezing and forfeiture of properties that are proceeds of money-laundering activities. NEGOTIABLE INSTRUMENTS: See topic Bills and Notes. SALES: Sales relating to goods are governed by Sale of Goods Act (Act 382) and other related statutes. Act is modelled on English Sale of Goods Act 1893. Notices Required.Generally, notices are not required under domestic sales law. Applicable Law.Generally, contract of sale is governed by law expressly or impliedly chosen by parties, unless choice is illegal, not bona de, or against public policy. In absence of choice, contract is governed by law having closest and most real connection with transaction. Governing law applies to most contractual issues, including validity, interpretation and effect of terms. Warranties.Implied warranties are that: (a) Seller has right to sell goods free from undisclosed encumbrances; (b) goods sold are of merchantable quality, except if defect has been revealed to buyer or if buyer has examined goods and ought to have discovered it; (c) goods are t for buyers purpose, provided that seller sells goods in course of business, and buyer makes known to seller particular purpose, unless buyer did not rely, or it was not reasonable for him to rely, on seller; (d) in sale by description goods correspond to description; (e) in sale by sample, goods correspond to sample in quality, and that buyer will have reasonable opportunity to compare two; and (f) buyer shall have and enjoy quiet possession of goods. Hire-Purchase Act (Act 212).Act applies to hire-purchase of specied goods. Implied warranties are in respect of: (a) title; (b) merchantability; and (c) tness for purpose. Latter two terms will not be implied if goods are secondhand, and hire-purchase agreement expressly excludes warranties. Consumer Protection.Consumer Protection Act (Act 599) affords protection to consumers in relation to goods and services offered or supplied in course of any trade with exception of securities, futures contract, contract made before 15 Nov. 1999, land, services provided by professionals, healthcare provided by healthcare professionals or facilities and trade transaction effected by electronic means. Act is supplemental in nature and is without prejudice to any other law regulating contractual relations. Limited protection is provided by Price Control Act (Act 121) and Control of Supplies Act (Act 122). Under Standard of Malaysia Act (Act 549), Standards and Industrial Research Institute of Malaysia may provide safety standards (either mandatory or as guidelines) for specic products. It is offence under Trade Descriptions Act (Act 87) to apply false trade description to goods or to sell goods with false trade description.

BUSINESS REGULATION AND COMMERCE

BANKS AND BANKING: Principal objects of Bank Negara Malaysia (Central Bank of Malaysia), are to: (a) Issue currency in Malaysia and keep reserves safeguarding value of currency; (b) act as banker and nancial adviser to Government of Malaysia; (c) promote stability and sound nancial structure; and (d) inuence credit situation to advantage of Malaysia (Central Bank of Malaysia Act) (Act 519). It oversees licensing and regulation of all activities of banks and nancial institutions in Malaysia, other than offshore banks operating in international offshore nancial centre of Labuan which are regulated and licensed by Labuan Offshore Financial Services Authority. All institutions carrying on banking, nance company, merchant banking, discount house and money-broking businesses are required to obtain licences from Bank Negara Malaysia under Banking and Financial Institutions Act (Act 372). Banks operating in Labuan are licensed and regulated under Offshore Banking Act (Act 443). BILLS AND NOTES: Bills of Exchange Act (Act 204) is substantially similar to English Bills of Exchange Act 1882 and Cheques Act 1957. Common law applies except where inconsistent with Act. Conict rules are similar to those applicable in England. BILLS OF SALE: In general, chattel mortgages, other than mortgages and debentures registrable under Companies Act (Act 125), are governed by Bills of Sale Act (Act 268) which is applicable in West Malaysia only. Bill of sale as dened in Act is void unless for RM100 or more, made in prescribed form, truly sets forth consideration for which it was given and registered within seven clear days after execution thereof, or, if executed outside West Malaysia, registered within seven clear days after time at which it would, in ordinary course of post arrive in West Malaysia if posted immediately after execution thereof. Registration must be renewed at least once every 12 calendar months. Registered bills of sale are available for public inspection. See also category Mortgages, topic Chattel Mortgages. COMMERCIAL REGISTER: Persons wishing to carry on business (i.e. every form of trade, commerce or other activity conducted for purpose of prot or gain) in Malaysia must seek registration either under Registration of Businesses Act (Act 197) or Companies Act (Act 125). See also categories Business Organizations, topics Corporations, Partnerships; Intellectual Property, topics Patents, Trademarks; Mortgages, topic Chattel Mortgages. CONTRACTS: Applicable Law.Contracts Act (Act 136) is based on English law. Contracts must be made with free consent of parties competent to contract for lawful consideration with lawful object. Excuses for Nonperformance.Novation, rescission, alteration, dispensation, remittance, force majeure. Essentially same as English law. Government Contracts.Proceedings can be taken and enforced against Government. Such proceedings are governed by Government Proceedings Act (Act 359). Penalty.Damages may be stipulated in contract in event of breach but if stipulation is by way of penalty then aggrieved party is only entitled to such compensation as Court considers reasonable. Assignments.See category Debtor and Creditor, topic Assignments. Privity.Same as English law. FRAUDS, STATUTE OF: Fraud.English Statute of Frauds Act inapplicable in West Malaysia. Parts of Act are probably applicable in East Malaysia though precise position uncertain because present statutes do not provide clear guidance on this issue. Case law on issue contributes to uncertainty. INFORMATION TECHNOLOGY, INTERNET AND NEW MEDIA: Computer Programs.Copyright in computer programs protected as literary works under Copyright Act (Act 332). Computer programs dened as expression, in any language, code or notation, of set of instructions (whether with or without related information) intended to cause device having information processing capability to perform particular function either directly or after either conversion to another language, code or notation, or reproduction in different material form or both. Copyright vests initially in author but deemed to be transferred to person who commissioned work or authors employer, subject to any agreement between parties. Copyright is not infringed by making of reproduction of work or of computer program being adaptation of work if reproduction is made by or on behalf of owner of original copy or reproduction is made for purpose only of being used by or on behalf of owner of original copy in event that original copy is lost, destroyed or unusable. Digital Signature Act (Act 562) and Digital Signature Regulations 1998.Act provides that document signed with digital signature is legally binding as document signed with handwritten signature. Digital signature can be veried by reference to public key listed in valid certicate issued by licensed certication authority.

CITIZENSHIP
ALIENS: See category Immigration, topic Aliens. CITIZENSHIP: National Service.National Service Training Act (Act 628) compels all able-bodied citizens and permanent residents of Malaysia (male and female) between age 16 and 35

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 2

MALAYSIA LAW DIGEST

CITIZENSHIP . . . continued to undergo three-month national training service. Training program focuses on developing discipline and patriotism and boosting multi-racial living and is not form of military training. IMMIGRATION: See category Immigration, topic Immigration.

COURTS AND LEGISLATURE

service of writ on behalf of defendant or where defendant enters unconditional appearance in action. Writ commencing action in respect of contract may also be served in accordance with terms of contract if contract provides that court has jurisdiction to hear and determine action in respect of contract or apart from such term, court has jurisdiction to hear and determine such action; and contract provides that, in event of action in respect of contract being begun, process by which it is begun may be served on defendant, or on such person on his behalf as may be specied in contract. Above rules generally apply with necessary modications to originating summons, notice of originating motion and petition. Where action is against corporation, writ may be served: (a) by leaving copy of it at registered office (if any) of corporation; (b) by sending copy of it by registered post addressed to corporation at office, or, if there be more offices than one at principal office of corporation, whether such office be situated within Malaysia or elsewhere; (c) by handing copy of it to secretary or to director or other principal officer of corporation; or (d) for foreign company registered under Part XI of Companies Act (Act 125) by handing copy of it to, or sending same by registered post to, person authorised to accept service of process on behalf of foreign company. Document may be served on corporation by leaving it at or sending it by registered post to registered office of company. If it appears to court that it is impracticable for any reason to serve document personally on person, court may make order for substituted service of that document. Service of Process Out of Jurisdiction.Service of notice of writ and other originating process out of jurisdiction is permissible with leave of court in many instances provided in Rules of Court, i.e. essentially where defendant or claim has some connection with forum. Service of Foreign Process.Service of process required in connection with foreign civil proceedings may be initiated by letter of request from foreign court or tribunal requesting service on person in Malaysia lodged in Registry of High Court and received by Minister of Foreign Affairs and which is sent by him to High Court with intimation that it is desirable that effect should be given to request. If civil proceedings are pending before court or tribunal of foreign country, being country in which there subsists Civil Procedure Convention providing for service in Malaysia of process of tribunal of that country, letter of request may be from consular or other authority of that country requesting service on person in Malaysia of any such process received by Registrar. In both cases, letter of request must be accompanied by two copies in former case and one copy in latter case of English translation of process to be served.

CIVIL ACTIONS AND PROCEDURE

ACTIONS: Any person may sue or be sued as long as plaintiff is able to satisfy Malaysia courts that they have jurisdiction to hear matter. See category Courts and Legislature, topic Courts. If plaintiff resides outside Malaysia, he may be ordered by court to pay money into court as security for defendants legal costs should plaintiff eventually fail to prove his claim. Foreign Law.Particulars of foreign law must be given if pleaded. Foreign law is to be proved as facts during trial. Experts can give oral evidence of foreign law. In absence of such evidence, Malaysia law will be applied. Exception is that Malaysia courts take judicial notice of all Public Acts passed by Parliament of U.K. and all local and personal Acts directed by it to be judicially noticed. Pretrial Case Management.Actions begun by writ, Court may give directions on further conduct of matter including furnishing of further particulars or ordering interrogatories. DEPOSITIONS AND DISCOVERY: Obtaining Evidence for Local Courts Before Trial.Court may, in any cause or matter where it appears necessary for purposes of justice, make order for examination on oath before judge or registrar or some other person, at any place, of any person. Deposition of person examined pursuant to order of court may be received in evidence at trial of cause or matter if: (a) party against whom evidence is offered consents; or (b) court is satised deponent is dead, or beyond jurisdiction of court or unable from sickness or other inrmity to attend trial. Reasonable period of notice of intention to use such deposition must be given to other party before trial. Where person to be examined on oath is out of jurisdiction, assistance from judicial authorities of country in which that person is to be examined may be sought by applying to High Court to issue letter of request to judicial authorities for evidence of person to be examined. Obtaining Evidence for Foreign Courts.High Court may make orders for examination of witnesses and production of documents. Discovery.During summons for directions after pleadings have closed, Court will order service of list of documents providing for discovery of documents. JUDGMENTS: Foreign judgments obtained in superior court in any one of seven reciprocating Commonwealth countries may, with leave of Malaysia High Court, be registered in Malaysia and enforced in same manner as judgment given by Malaysia High Court under terms of Reciprocal Enforcement of Judgments Act (Act 99). Registration may be refused if judgment had been obtained by fraud, or if defendant had not been given sufficient opportunity to defend himself at foreign trial. For foreign judgments not falling within ambit of Act, fresh proceedings must be commenced against judgment debtor on judgment in which event procedural and substantive rules on establishing jurisdiction and service of documents must be satised. LIMITATION OF ACTIONS: Regulated by Limitation Act (Act 254) and Civil Law Act (Act 67). One Year.Action to recover any penalty or forfeiture recoverable by any written law. Three Years.Compensation to family of person for loss occasioned by his death. Six Years.Actions founded on contract or tort including claim for personal injuries; actions to enforce award; actions for account. Twelve Years.Actions to recover land; enforcement of any judgment. Disability.Limitation periods above are extended for varying periods in case of disability. Fresh accrual of action to recover debt or other liquidated pecuniary claim on acknowledgment or part payment of claim. Fraud or Mistake.Where action is based upon fraud of defendant, or right of action is concealed by fraud of defendant or action is for relief from consequences of mistake, period of limitation does not begin to run until plaintiff has discovered fraud or mistake, or could with reasonable diligence have discovered it. Arbitration.Above applies to arbitration. Maritime Actions.Limitation periods are provided for in Merchant Shipping Ordinance (FM Ord. 70/1952). See category Transportation, topic Shipping. Sabah and Sarawak.Limitation Ordinance Reprint (Cap. 72) of Sabah and Limitation Ordinance Reprint (Cap. 49) of Sarawak list specic limitation periods for different actions. PROCESS: Service of Process Within Jurisdiction.Writ must be served personally on each defendant or sent by prepaid A.R. registered post addressed to his last known address, rst service to be attempted no later than one month from writ. Writ is deemed to have been duly served if defendants solicitor indorses on writ, statement that he accepts

COURTS AND LEGISLATURE

COURTS: Superior Courts of Judicature.Courts of Judicature Act (Act 91) establishes High Court, Court of Appeal and Federal Court. High Court of Malaya and High Court in Sabah and Sarawak have jurisdiction to try all civil proceedings where cause of action arose, or defendant or one of several defendants resides or has his place of business, or facts on which proceedings are based exist or are alleged to have occurred, or any land, ownership of which is disputed, is situated within their respective local jurisdictions. Tribunals such as Industrial Court and Special Commissioners of Income Tax provide specialized adjudication of disputes of technical character. Industrial Court constituted under Industrial Relations Act (Act 177) deals with trade disputes concerning employers, employees and trade unions. Court of Appeal has appellate jurisdiction to hear and determine appeal against decision made by High Court in criminal matters, and in civil matters except where value of subject matter of claim is less than RM250,000 (unless with leave of Court of Appeal), where order is made by consent of parties; judgment or order relates to costs only, which by law are left to discretion of High Court (unless with leave of Court of Appeal) and where, by any written law judgment or order of High Court is expressly declared to be nal. Federal Court has jurisdiction to hear and determine appeals against decision made by Court of Appeal except for several non-appealable matters. Subordinate Courts.Subordinate Courts Act (Act 92) establishes Sessions Court, Magistrates Courts and, in West Malaysia only, Penghulus Courts. Sessions Courts and Magistrates Courts have power to stay proceedings unless instituted in District in which cause of action arose, or defendant resides or has his place of business, or one of several defendants resides or has his place of business, or facts on which proceedings are based exist or are alleged to have occurred, or for other reasons desirable in interests of justice that proceedings should be had. LAW REPORTS: Law reports published in Malaysia include Malayan Law Journal, All Malaysia Reports and Current Law Journal. LEGISLATURE: See category Introduction, topic Government and Legal System. STATUTES: Statute law in Malaysia comprises Federal law and State law. Federal law means: (a) any existing law relating to matter with respect to which Parliament has power to make law, being law continued in operation under Constitution; and (b) any Act of Parliament. State law means: (a) any existing law relating to matter with respect to which State legislature has power to make law, being law continued in operation under Constitution; and (b) law made by State legislature. Laws made by State legislature are called Enactments, including those made by Malay States (see category Introduction, topic Government and Legal System) before 1957 and

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 3

COURTS AND LEGISLATURE

STATUTES . . . continued Federal Territory of Kuala Lumpur. Laws in Sabah, Sarawak and Labuan are referred to as Ordinances. Generally, Laws of Sabah would include references to Labuan. All revised laws enacted after 1 Jan. 1993 are designated by chapter (Cap.) numbers. Laws that are enacted by Parliament are referred to as Acts but those made between 1946 and 1957 are called Ordinances. With effect from 1 Jan. 1969, continuing series of numbers omitting references to year is used, e.g. Promotion of Investments Act (Act 327). Amendment Acts carry letter A prexed to number, e.g. Promotion of Investments (Amendment) Act (Act A715). With coming into force of Constitution (Amendment)(No.2) Act (Act A206) on 1 Feb. 1974, Federal Territory of Kuala Lumpur ceased to be part of State of Selangor and all powers and jurisdiction in or in respect of Federal Territory vested in Federation. All written laws existing and in force in Federal Territory before 1 Feb. 1974 continue to be in force therein until repealed, amended or replaced by laws passed by Parliament. Similarly, coming into force of Constitution (Amendment)(No.2) Act (Act A585) on 16 Apr. 1984, Federal Territory of Labuan ceased to be part of State of Sabah and all powers and jurisdiction in or in respect of Federal Territory vested in Federation. All written laws, other than Constitution of State of Sabah, existing and in force in Federal Territory before 16 Apr. 1984 continued to have effect therein until repealed, amended or replaced by laws passed by Parliament. Constitution (Amendment) Act 2001 (Act A1095) which came into effect on 1 Feb. 2001, Federal Territory of Putrajaya ceased to be part of State of Selangor and all powers and jurisdiction in or in respect of Federal Territory vested in Federation. All written laws existing and in force in Federal Territory before 1 Feb. 2001 continue to be in force until repealed, amended or replaced by laws passed by Parliament. Written laws of Selangor in force in Federal Territory of Kuala Lumpur before 1 Feb. 1974 and written laws of Sabah in force in Federal Territory of Labuan before 16 Apr. 1984, in their application to Federal Territories of Kuala Lumpur and Labuan, respectively, became federal laws.

MARTINDALE-HUBBELL LAW DIGEST - 2007

Creditor cannot present bankruptcy petition against debtor unless: (a) debt owed by debtor to petitioning creditor or to two or more petitioning creditors aggregates at least RM30,000; (b) debt is liquidated sum payable either immediately or at some certain future time; (c) act of bankruptcy relied upon must have occurred within six months before presentation of petition; and (d) debtor has requisite connection with Malaysia. On courts issuance of receiving order, Official Assignee is appointed receiver of debtors property which becomes divisible among his creditors. EXECUTIONS: Writ of execution may be issued to enforce judgment. Most common form of execution proceedings is issuance of writ of seizure and sale of movable property of judgment debtor. Seizure and sale of immovable property are also available as form of execution of judgment. Seizure and sale of properties conducted by officers of Court. Where judgment debtor is individual, judgment debt must be at least RM30,000 before bankruptcy proceedings may be brought against judgment debtor. Where judgment debtor is company, winding up proceedings may be brought against judgment debtor, if execution or other process issued on judgment is returned unsatised in whole or in part. See topic Bankruptcy. Debts due to be paid to judgment debtor may be garnished as form of execution proceedings. Debt must be due and owing at time of garnishment. FRAUDULENT SALES AND CONVEYANCES: Conveyance of real property, to person or body (other than purchaser in good faith and for valuable consideration or person or body claiming through or under such purchaser), is generally liable to be set aside in case of fraud or misrepresentation to which person or body, or agent of person or body, was party or privy. Fraudulent conveyance constitutes act of bankruptcy and, if made within six months preceding presentation of bankruptcy petition, will be void against Official Assignee under doctrine of relation back, unless it is protected transaction under Bankruptcy Act (Act 360) (certain bona de transactions with third parties without notice of act of bankruptcy are protected). Voluntary settlements, although not fraudulent, may be void or voidable under certain circumstances. GARNISHMENT: See topic Executions. INSOLVENCY: Corporate Insolvency.Governed by Companies Act (Act 125). Companies incorporated in Malaysia may be wound up either voluntarily or compulsorily by order of court. Voluntary liquidation proceedings may be carried out by members in which event company must be solvent in that it will be able to pay its debts in full within 12 months from date of commencement of winding up company. Compulsory winding up proceedings usually brought by creditors against company on grounds that company unable to pay debts of RM500 or more. Individual Insolvency.See topic Bankruptcy. LIENS: Generally, liens may arise from common law, equitable, contractual or statutory sources. Common Law Lien.Legal lien is unassignable personal right of security exercisable by person in possession of goods against owner of goods, but with no power of sale. General lien entitles person in possession to retain goods until all claims or accounts against owner are satised. These liens arise only by general usage or by express agreement. Particular lien is right to retain chattels until owner pays charges incurred in respect of those chattels. Equitable lien is equitable right to charge real or personal property of another until certain specic claims are satised. It does not depend on possession and holder of lien has power of sale. Equitable liens arise in particular relationships, e.g., partners, vendor and purchasers, or from course of conduct or express agreement of parties. Equitable liens arising from contract are registrable under Bills of Sale Act (Act 268). Contractual Lien.It is matter of interpretation of contract what rights and obligations parties intended to arise from lien. Statutory Lien.It is question of statutory interpretation when such lien arises and what rights and obligations attach thereto. Maritime Lien.See category Transportation, topic Shipping. PLEDGES: Bailment of Pledges.Under Contracts Act (Act 136), bailment of goods as security for payment of debt or performance of promise is called pledge. Bailor is called pawnor, and bailee is called pawnee. Pawnee may retain goods pledged, not only for payment of debt or performance of promise, but also for interest on debt, and all necessary expenses incurred by him in respect of possession or preservation of goods pledged. Pawnee may not, in absence of contract to that effect, retain goods pledged for any debt or promise other than debt or promise for which they are pledged; but such contract, in absence of anything to contrary, is presumed in regard to subsequent advances made by pawnee. Rights Relating to Pledge.If pawnor makes default in payment of debt or performance, at stipulated time of promise in respect of which goods were pledged, pawnee may bring suit against pawnor upon debt or promise, and retain goods pledged as collateral security, or may sell goods pledged by giving pawnor reasonable notice of sale. If proceeds of sale are less than amount due in respect of debt or promise, pawnor is still liable to pay balance. If proceeds of sale exceed amount so due, pawnee is to pay over surplus to pawnor.

DEBTOR AND CREDITOR

ASSIGNMENTS: Assignment of Contractual Rights.Law on legal and equitable assignment of contractual rights similar to English law. Many such rights have been made assignable by specic statutes, such as Bills of Exchange Act (Act 204negotiable instruments), Copyright Act (Act 332copyrights) and Companies Act (Act 125shares in companies). Apart from such specic statutory provisions, law on legal (i.e. statutory) assignments is contained in Civil Law Act (Act 67). Assignment of debt or other legal chose in action must be absolute, in writing, made under hand of assignor and must not purport to be by way of charge only. Express written notice of assignment must also be given to debtor, trustee or other person from whom assignor would have been entitled to receive or claim debt or chose in action. Assignment takes effect from date of notice. Such assignment is subject to all equities which would have been entitled to priority over right of assignee under law before 7 Apr. 1956 (for West Malaysia)/1 Apr. 1972 (for East Malaysia). Failure to comply with formalities of Civil Law Act renders assignment void as legal assignment, but it may still be valid as equitable (that is, non-statutory) assignment. No particular form is required for valid equitable assignment. Transaction upon which assignee relies need not even purport to be assignment or use language of assignment. If intention of assignor clearly is that contractual right is to become property of assignee, then equity requires him to do all that is necessary to implement his intention. Generally, assignee under legal assignment may sue upon assignment in his own name without joining assignor as party, whereas assignee under equitable assignment has to join assignor as co-plaintiff or co-defendant (except for absolute equitable assignment of equitable chose in action, where assignee can sue in his own name without joining assignor). Rights that are incapable of assignment include rights under contracts which involve personal skill or condence. Assignment of Contractual Liabilities.Similar to English law. Contractual liabilities cannot be assigned. See also Contracts Act (Act 136) regarding person by whom promise is to be performed. ATTACHMENT: Attachment of property before judgment and after judgment made available under Debtors Act (Act 256). Seizure of property before judgment may be sought after issuance of writ of summons, and order for seizure may be made in West Malaysia, Sabah or Sarawak (State) if court is satised by evidence on oath that plaintiff has good cause of action against defendant and that: (a) defendant is absent from State and his place of abode cannot be discovered; (b) service of writ of summons cannot without great delay or difficulty be effected; or (c) defendant, with intent to obstruct or delay execution of judgment has, inter alia, removed, concealed, made away or about to remove, conceal or hand over to others his movable or immovable property. BANKRUPTCY: Law is contained in Bankruptcy Act (Act 360). Bankruptcy proceedings may be brought against individuals under various grounds, most common where creditor serves bankruptcy notice and debtor has not complied with notice within prescribed time or is unable to resist notice. (Bankruptcy notice may be issued by creditor who has obtained nal judgment or nal order against debtor for any amount and execution thereon has not been stayed; notice must be in prescribed form.) Debtor includes any person who at time when act of bankruptcy was committed: (a) was personally present in Malaysia; (b) ordinarily resided or had place of residence in Malaysia; (c) was carrying on business in Malaysia either personally or by means of agent; or (d) was member of rm or partnership which carried on business in Malaysia.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 4

MALAYSIA LAW DIGEST

PLEDGES . . . continued If time is stipulated for payment of debt, or performance of promise for which pledge is made, and pawnor defaults at stipulated time, he may redeem goods pledged at any subsequent time before they are sold, but he must also pay any expenses which have arisen from his default. Where person pledges goods in which he has only limited interest, pledge is valid to extent of that interest. Possession.Person in possession of goods, bill of lading, dock-warrant, warehousekeepers certicate, wharngers certicate, or warrant or order for delivery, or any other document of title to goods, may make valid pledge of goods or documents subject to provisions of Act. Suits by Bailee or Bailor against Wrongdoers.If third person wrongfully deprives bailee of use or possession of goods bailed, or does them any injury, bailee is entitled to use such remedies as owner might have used in like case if no bailment had been made; and either bailor or bailee may bring suit against third person for such deprivation or injury. Common Law and Equity.Although Contracts Act (Act 136) contains certain provisions relating to pledges, rules of common law and equity continue to apply save where same is inconsistent with provisions of Act. RECEIVERS: See topics Bankruptcy, Executions. Before me,

EMPLOYMENT
......................................... (Signature of Sessions Court Judge, Magistrate or Commissioner for Oaths) NOTARIES PUBLIC: Governed by Notaries Public Act (Act 115). Appointment.Attorney-General is vested with power to appoint t and proper persons to be notaries public to practise in West Malaysia or Sabah or Sarawak, or parts of these territories for such period as may be specied in appointment. Such persons must be practising advocates; or pleaders licensed before 1 Jan. 1956 under Pleaders and Petition Writers Enactment of State of Trengganu. Attorney-General may appoint public officers as notaries public if no advocates are available for appointment in particular place. If notary public is about to be absent from place of practice for more than one month, Attorney-General may appoint temporary notary public for up to 12 months. Temporary appointment lapses upon death or return to place of practice of notary public on account of whose departure temporary appointment was made. Functions.In general, notary public has and may exercise within place of practice all powers and functions ordinarily exercised by notaries public in England. But power of notary public to administer oaths or affirmations in connection with affidavits or statutory declarations, or to take or attest such affidavits or statutory declarations, is limited to certain situations as prescribed by Act. SEALS: Agreement under Seal.For agreement under seal to be valid, there must either be consideration for execution of deed or agreement must come within 26 of Contracts Act (Act 136) which provides that agreement made without consideration is void, unless: (a) it is expressed in writing and registered under law (if any) applicable for time being in force for registration of such documents and is made on account of natural love and affection between parties standing in near relation to each other; (b) if agreement is promise to compensate for something done; or (c) if agreement is promise to pay debt barred by limitation law. Practice Relating to Company Seals and Seal Books.Company secretary usually has custody of company common seal. Directors usually pass resolution each time common seal is to be affixed to document; usually common seals are affixed and attested to by two directors or director and company secretary or director and another person authorised to attest such affixation. Name of company (whether or not it is carrying on business under business name) must appear on its seal. Where seal is frequently used, particulars of documents sealed may be entered in Seal Book. See also category Property, topic Deeds.

DISPUTE RESOLUTION
ARBITRATION AND AWARD: Arbitration Act (Act 646) which is based on UNCITRAL Model Law on International Commercial Arbitration regulates all domestic and international arbitration conducted in Malaysia from 15 Mar. 2005. However, Part III of Act contains seven provisions which apply only to domestic arbitrations unless parties to international arbitrations have opted in for provisions to apply to their arbitrations. One of key provisions in Part III of Act is 42 which provides for references to High Court on points of law arising during and after arbitration. Substantive law for international arbitrations will be decided based on common law principles for determining proper law. Parties are free to determine number of arbitrators but in absence of determination, arbitration tribunal shall consist of three arbitrators in case of international arbitration. Where party fails to appoint or agree on arbitrator, or where there is no agreed procedure in arbitration agreement or where agreed procedure has failed, any party to arbitration may apply to Kuala Lumpur Regional Centre for Arbitration, an inter-governmental organization, established under auspices of Asian-African Legal Consultative Committee to act as appointing authority for arbitrator. Party may, before taking steps in legal proceedings commenced by other party brought in respect of matter which is subject of arbitration, apply to court to stay proceedings and refer parties to arbitration. Court may not stay proceedings if it nds that: (a) Agreement is null and void, inoperative/incapable of being performed; or (b) there is in fact no dispute between parties with regards to matters to be referred. Subject to certain exceptions, award on arbitration agreement may, with leave of court, be enforced by entry as judgment in terms of award or by action. MEDIATION: Mediation has yet to be widely adopted by business community in Malaysia but Malaysian Mediation Centre and Mediation Committee under auspices of Bar Council of Malaysia are actively promoting mediation as alternative method of dispute resolution. Mediators do not generally refer to any legal authorities and play facilitating role in assisting conicting parties to reach agreement. As mediators decision is not binding, parties still have option of resorting to legal action in court.

EMPLOYMENT
LABOUR RELATIONS: Trade unions governed by Trade Unions Act (Act 262) and Trade Unions Regulations 1959. Act requires trade unions to be registered and conne membership to employees within particular establishment, trade, occupation or industry. No trade union can organise strike unless at least two-thirds of its total members consent by secret ballot. Relations between trade unions and employers governed by Industrial Relations Act (Act 177). Trade unions may claim recognition by employers and, upon being accorded recognition, may negotiate for collective agreements. Collective agreements cannot contain more favourable terms of employment than those specied under Employment Act (Act 265) unless approved by Minister of Human Resources. Trade disputes can be referred to Industrial Courts and once referred strikes and lockouts are prohibited. Employment governed by Employment Act (Act 265) for West Malaysia and Labour Ordinance (Cap 67) for Sabah and Labour Ordinance (Cap 76) for Sarawak and common law principles. Scope of Act.Act affords protection for employees dened as persons who have entered into contracts of service with employers and: (a) their wages do not exceed RM1,500 per month, irrespective of their occupations; or (b) they are engaged in occupations as listed in Act (generally involving manual labour, including artisans, apprentices, drivers, seamen and domestic workers) irrespective of monthly wages earned. In above cases, employees rights would be governed by contract of service, collective agreement with relevant trade union (if applicable), and Act. Terms or conditions in contract which are less favourable than those prescribed in Act or related subsidiary legislation are regarded as void to that extent, and more favourable terms and conditions of Act or related subsidiary legislation will be substituted for terms and conditions struck out. Where person is not protected by Act, he must look to contract of employment and collective agreement (if he is trade union member) for rights under terms of his employment. Termination of Contracts.Contract of service for unspecied period of time is deemed to run until terminated by either party by written notice in accordance with Act. Period of notice required to be given is prescribed and varies depending on length of service with employer. Either party may waive requirement on notice. If contract of service is terminated without notice or adequate notice, either party is entitled to wages in lieu of notice or unexpired term of notice, as case may be. In event of wilful breach of contract of service by any party, other party may terminate contract without notice. Employer can dismiss employee without notice on grounds of misconduct only after due inquiry. Employer also has option of downgrading employee or imposing other lesser punishment as employer deems just and t. If employee is not covered by Act and contract of employment is silent, termination is usually by reasonable notice following common law.

DOCUMENTS AND RECORDS

AFFIDAVITS AND STATUTORY DECLARATIONS: Affidavit may contain only such facts as deponent is able of his own knowledge to prove. Affidavit sworn for purpose of being used in interlocutory proceedings may contain statements of information or belief with sources and grounds thereof. Any document referred to in affidavit must be exhibited by attaching copy of document to affidavit. Affidavit purporting to have affixed or impressed thereon or subscribed thereto, seal or signature of court, judge, notary public or person having authority to administer oaths in Commonwealth country (and in case of any other country, seal or signature of consular officer of Commonwealth country in testimony of affidavit being taken before it or him) may be admitted in evidence without proof of it being seal or signature of that court, judge, notary public or person. Statutory Declarations.Any Session Court Judge, Magistrate, Commissioner for Oaths and Notary Public (subject to 4 of Notaries Public Act [Act 115]) may take or receive declaration of any person voluntarily making same in Malay or English in prescribed form. False declaration punishable under Penal Code (Act 574). Form of declaration is as follows: I, ... do solemnly and sincerely declare that ... and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared ) by the abovenamed ... at ..... in ) the State of ... this ... day of... ) 20... )

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 5

EMPLOYMENT
LABOUR RELATIONS . . . continued Absence without Reasonable Excuse.Employee is deemed to have broken contract of service if he continuously absents himself for more than two consecutive working days without employers prior leave, unless he has reasonable excuse and has informed or attempted to inform employer beforehand or at earliest opportunity during his absence. Payment of Wages.Generally, wages must be paid within seven days after last day of wage period in question. Employer is deemed to have broken contract of service if he fails to pay wages in accordance with Act. Hours of Work, Holidays and Other Conditions of Service. (1) Hours of Work.Subject to certain exceptions, employee has right not to work for more than: (a) ve consecutive hours without period of leisure of at least 30 minutes; (b) eight hours a day; (c) spread over period of ten hours in a day; (d) 48 hours a week. Legal limit of working hours may be exceeded in emergencies. If overtime work is carried out, employee is entitled to overtime pay of at least 1.5 times his hourly rate of pay irrespective of basis on which his rate of pay is xed. (2) Holidays.Employee is entitled to paid holiday at ordinary rate of pay on ten gazetted public holidays in any one calendar year. (3) Rest Days.Employee is entitled to one rest day per week. Before commencement of month in which rest days fall, employer must give roster informing employee of rest days in that month. Employer may require employee to work on rest day in emergencies. Employee working on rest day is entitled to be paid at various rates of pay as set out in Act. (4) Annual Leave.Entitlement to annual leave commensurates with length of service. Employee who does not complete 12 months of continuous service in any year is entitled to prorated annual leave. (5) Sick Leave.Upon examination by doctor (whether appointed by employer or not, as case may permit) or dental surgeon, employee is entitled to paid sick leave as stipulated in Act and which varies depending on duration of service with employer, if no hospitalisation is necessary. If hospitalisation is necessary, employee is generally entitled to 60 days paid sick leave in each year. (6) Termination, Lay-off and Retirement Benets.Employment (Termination and LayOff Benets) Regulations 1980 enables employee to claim termination and lay-off benets under certain conditions and prescribes method of calculating quantum of benets. Minister may make regulations allowing for retirement benets. Employment of Non-Malaysian Citizens.Under Employment (Restriction) Act (Act 353), non-Malaysian citizen must apply for and obtain valid employment permit before commencing employment, business, industry or undertaking in Malaysia. Workmens Compensation for Injury.In general, Workmens Compensation Act (Act 273) enables compensation to be claimed if workman (as dened therein) suffers personal injury by accident arising out of and in course of employment; or contracts prescribed occupational disease or injury either during employment or within specied time frame after cessation of employment, and disablement or death of workman results from disease.

MARTINDALE-HUBBELL LAW DIGEST - 2007

in case any of them is dead, their descendants are entitled to share which he or she would have taken. Grandparents will take whole estate in equal portions if no surviving spouse, descendants, parents, brothers and sisters or children of such brothers and sisters. Uncles and aunts take whole estate in equal portions if no surviving spouse, descendants, parents, brothers and sisters or children of such brothers and sisters or grandparents. If deceased leaves no spouse, issue, parents, grandparents, brothers and sisters, uncles or aunts, then granduncles and grandaunts take in equal shares. Government is entitled to whole estate in default of distribution under foregoing rules. Distribution provided under Act may be affected by Inheritance (Family Provision) Act (Act 39) which provides for maintenance of dependants in testacies and intestacies. Law of Islamic Inheritance.Rules of intestate succession set out above do not apply to Muslims and natives in East Malaysia. Distribution takes place only after legacies and debts, including funeral expenses, are paid out of property left behind by deceased. If deceased is husband, and leaves no issue and no parent, widow gets onequarter. If deceased is wife and no issue and no parent, widower gets one-half. If deceased husband leaves issue and no parent, spouse is entitled to one-eighth of estate. On other hand, widower is entitled to one-half of deceased wifes estate. Remaining share is distributed amongst children of deceased. Female childrens share is generally half of male childrens share. If deceased leaves surviving spouse and no issue but parents, widower entitled to one-half of estate, and father and mother get two-thirds and one-third of remaining estate respectively. As for widow, she will be entitled to one-quarter share of husbands estate, and father and mother get two-thirds and one-third of remaining estate respectively. If deceased leaves parents but no surviving spouse and no children, mother will get one-third and father will get remaining two-thirds. If deceased leaves parents and children but no spouse, each parent takes one-sixth share while remaining share will be distributed among children. EXECUTORS AND ADMINISTRATORS: Upon death of person, whole of his real and personal property devolves to his personal representatives, who in case where he has left will are his executors and in case where he has died intestate are his administrators. Appointment.Executors are normally appointed by will. Such appointment may either be express or implied. Administrators are appointed by court in case of intestacy, and in case of testacy where executor is not named in will. Authority of Administrator and Executor.Administrator obtains authority solely from grant of letters of administration. Until grant is obtained, administrator has no authority. Executors authority stems from will. He has authority to conduct affairs of deceased, moment deceased dies. It is purely to lend authority and vest proper title that letters of probate are obtained. Grant of Probate on Testacy.Executors appointed under will can apply for Grant of Probate. Letters of Administration on Intestacy.Number of administrators who may petition for letters of administration cannot exceed four. If there is minority or life interest, then minimum of two persons required as administrators. If no such interest, one administrator will suffice. If trust corporation applies for letters of administration, then requirement of additional person is dispensed with. Letters of administration are usually granted to next-of-kin in accordance with priorities to entitlement of estate under Distribution Act (Act 300) (West Malaysia and Sarawak) and Intestate Succession Ordinance (Ord. 1/1960) (Sabah). Official Administrator may also administer estate if no application for letters of administration has been made, provided estate is worth less than RM50,000. Renunciation.Executor or administrator may renounce his right to apply for letters of representation. Grant of Probate and Letters of Administration.Grant of Probate and Letters of Administration are normally given as matter of course once petition is led. Domicile.Before granting letters of representation, court requires proof of domicile. Deceaseds domicile will determine validity of his will or right of his personal representatives to apply for letters of representation and question of priorities between persons contending for letters of representation. General Powers and Duties.In addition to powers conferred by deceaseds will, personal representative is also conferred certain powers in his capacity as trustee under Trustee Acts (Act 208). Duties of personal representatives revolve around calling in estates assets, determining beneciaries and shares entitled to and thereafter distributing assets. Assets and Liabilities.Inventory of assets and liabilities of estate is rst step to be taken by personal representatives to determine amount of estate duty payable and for purposes of distribution. Creditors.After calling in all assets of deceased and payment of funeral and testamentary expenses and estate duty, executor or administrator must ensure that debts of deceased are paid. Where estate is large, executor or administrator must place advertisement in Gazette or newspapers to give notice to all creditors that they ought to submit their claims within period stipulated, after which distribution will be made. If claim is not presented within time limited in advertisement, personal representative may distribute estate without being personally liable for debts which he had no knowledge of, but creditor may follow assets to beneciaries. Accounts.Executor or administrator in winding up administration of estate must submit accounts for beneciaries perusal and approval before distribution. Distribution.It is duty of administrator in case of intestacy to distribute estate in accordance with laws on intestate succession, Distribution Act (Act 300) (West Malaysia and Sarawak) and Intestate Succession Ordinance (Ord. 1/1960) (Sabah). In case of testacy, duty of personal representative to carry out terms of will. No distribution of estate until debts of estate are disposed of.

ESTATES AND TRUSTS

ADMINISTRATION: See topic Executors and Administrators. DEATH: Person is presumed dead if proved that he has not been heard from for seven years by persons who would have naturally heard from him if he had been alive. Where two or more persons die in circumstances where uncertain who survived other, such deaths, subject to order of Court and for all purposes affecting right to title to property, are presumed to have occurred in order of seniority, so younger is deemed to have survived elder. Married person may petition to Court to declare other party to marriage as presumed dead if petitioner has reasonable grounds for believing so. Party to marriage is presumed dead if continually absent for seven years and petitioner has no reason to believe that other person is living. Executor or administrator of deceased may on behalf and for benet of dependants commence action in name of executor or administrator within three years of death against person who by reason of his wrongful act, neglect or default caused death to deceased person. If no executor or administrator of deceased or no action is brought within six months after death by and in name of executor or administrator of deceased, action may be brought by and in name of all or any of persons for whose benet executor or administrator could have brought it. This includes spouse, parent, grandparent, greatgrandparent, child, grandchild or great-grandchild of deceased or person who is, or is issue of, brother, sister, uncle or aunt of deceased. Damages recoverable would include pecuniary loss to estate, bereavement and funeral expenses. DESCENT AND DISTRIBUTION: In testacy cases, distribution of deceaseds estate governed by properly executed will. In intestacy cases, distribution of movable property of deceased regulated by law of country in which he was domiciled at time of his death while that of his immovable property is regulated by Distribution Act (Act 300) (West Malaysia and Sarawak) and Intestates Succession Ordinance (Ord. 1/1960) (Sabah). Sabah Ordinance is modelled on Intestates Estates Act 1952 of England. In effecting distribution in intestacy, if deceased is husband and leaves spouse but no issue, spouse gets half share of estate and balance half share will be distributed to parents if alive; if not, to brothers and sisters; if no brothers or sisters, then to grandparents. If there are no parents, brothers, sisters and grandparents, then spouse takes all. If deceased is wife and leaves spouse but no issue, spouse takes all. If deceased is husband and leaves spouse and issue, wife gets one-third of estate and remaining share distributed equally between children. If deceased is wife and leaves spouse and issue, spouse takes all. If deceased leaves no surviving spouse, descendants or parents, estate will be distributed equally amongst deceaseds brothers and sisters and

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 6

MALAYSIA LAW DIGEST

EXECUTORS AND ADMINISTRATORS . . . continued Resealing of Letters of Representation.Grant of probate or letters of administration by Commonwealth country may be resealed by High Court. Once such grant is resealed, it has same effect as grant of probate or letters of administration of High Court. TRUSTS: Number of Trustees.Trustee Act (Act 208) limits number of trustees to four, except in case of property vested in trustees for charitable, religious or public purposes where there is no restriction on number of trustees. Powers of Trustee.These include powers expressly given by trust instrument and (generally, subject to any contrary intention expressed in trust instrument) powers conferred by Act, including following: (a) trustee for sale has power to sell or concur in selling all or any part of property; (b) trustees can give receipt which is good discharge. However, sole trustee other than trust corporation cannot give valid receipt for proceeds of sale or other capital money arising under trust for sale of land; (c) trustees can insure against loss or damage by re any building or other insurable property to any amount, including amount of any insurance already on foot, up to full value of building or property, except where trust instrument forbids it or they are bound forthwith to convey building or property absolutely to any beneciary upon being requested to do so. Trusts under Torrens System.Torrens System of registered conveyancing cannot be used to create trust over real property. This means that document creating trust cannot rely on registration to give effect to settlement. However, valid trust created outside register in conformity with trust principles may be protected by caveat or other means available under system. WILLS: Wills Act (Act 346) governs. Any person of sound mind and of age of majority may make will. Infant cannot make will, unless he is soldier in actual military service, or mariner or seaman at sea. See category Family, topic Infants. Formalities of Execution.Every will must be in writing, signed at foot or end thereof by testator, or by some other person in his presence and by his direction, and signature must be made or acknowledged by testator as signature to his will in presence of two or more witnesses present at same time, and those witnesses must subscribe will in presence of testator. Gift to attesting witness or his spouse is void. Alterations, including obliteration and interlineation, made after execution must be executed by placing signature or initials of testator and witnesses on will. Revocation.Will or part thereof may be revoked by another will or codicil duly executed, or by declaring intention to revoke it and duly executed as will or by burning, tearing or otherwise destroying will by testator, or by some person in his presence and by his direction, with intention of revoking it. With certain exceptions, will is revoked by testators marriage. Foreign Wills.Will is treated as properly executed if its execution conforms to manner required by Act or law in force in: (a) place where it was executed; or (b) place where testator was domiciled, either at time of execution or at death. Allowance for Maintenance of Dependants.Dependant of deceased may apply to Court for share of deceaseds net estate for maintenance of that dependant under Inheritance (Family Provision) Act (Act 39). If Court is satised that disposition of deceaseds estate effected by his will is not such as to make reasonable provision for maintenance of that dependant, Court may order such provision to be made out of deceaseds net estate as it thinks t. Act applies throughout Malaysia except estates of deceased Muslims or natives in East Malaysia. Act is not restricted to provisions in wills: application may be made in cases of intestacies as well. However, if surviving spouse had been provided for with not less than two-thirds of income of net estate and where only other dependants are children, then no application can be made. Persons for whom provision may be made are spouse, unmarried daughter, infant son or daughter or son who is, by reason of some mental or physical disability, incapable of maintaining herself or himself. Court will on application made under Act have regard to any past, present or future capital or income from any source of dependant of deceased to whom application relates. Application under Act must be made within six months from date on which representation in regard to deceaseds estate is rst taken out. However, Court will allow extension of time if Court feels that strict compliance with requirements of Act may prejudice interests of dependant. Wills Made by Muslims.In Islamic law, testator can bequeath only a third of his property with consent of his lawful beneciaries. No one, however, can make bequest in respect of any legal Quranic heir. In other words, one cannot increase or decrease portions of those relatives whose portions are xed in Quran nor can one deprive legal heir through bequest.

FAMILY
neglected or persistently ill-treated child; (b) in case of person liable to contribute to support of child, he has persistently neglected or refused to contribute; (c) in any case, person whose consent is required cannot be found, is incapable of giving consent or his consent is unreasonably withheld; or (d) in any case, in accordance with any written law relating to adoption of children for time being in force in any country any competent authority has given permission or granted licence authorising care and possession of child to be transferred to applicant (West Malaysia) or if court is of opinion that consent ought in all circumstances of case be dispensed with (Sabah). In Sarawak, any person may adopt child. Consent of parent/guardian of child may be dispensed with if District Officer is satised that parent of child is not t and proper to have care and custody of child. Upon making of adoption order, all rights, duties, liabilities and obligations of parent or guardian of child are extinguished and vest in, and are exercisable by and enforceable against, applicant. Adopted child is treated in law as if child were child born in wedlock to adopting parents and has all rights and privileges of legitimate child in respect of rights of inheritance, right for provision under Inheritance (Family Provisions Act) (Act 39) (Act not applicable to East Malaysia or estates of deceased Muslims) and right to be considered child of marriage for purposes of Law Reform (Marriage and Divorce) Act (Act 164). Malaysia has not ratied 1965 Hague Convention of Jurisdiction, Applicable Law and Recognition of Decrees and does not recognize inter-country adoption. DIVORCE: Governed by Law Reform (Marriage and Divorce) Act (Act 164). According to Act, court has jurisdiction to entertain proceedings for divorce, presumption of death and divorce, judicial separation or nullity of marriage if: (a) Marriage has been registered under Act; or (b) marriage is deemed to be registered under Act, or was solemnised under law which expressly or impliedly provides that marriage must be monogamous; or (c) either of parties to marriage is domiciled in Malaysia at commencement of proceedings. Court has right to restrict petition of divorce within rst two years of marriage with exception of hardship cases and conversion to Islam. Grounds for divorce are: (a) After three months from date of conversion to Islam, other party not so converted may petition for divorce; (b) after two years of marriage, both husband and wife freely consent to divorce and present joint petition; or (c) either party to marriage may petition for divorce on ground that marriage has irretrievably broken down. In its inquiry on breakdown of marriage court will have regard to one or more of following facts: (a) Respondent has committed adultery and petitioner nds it intolerable to live with respondent; (b) respondent has behaved in such way that petitioner cannot reasonably be expected to live with respondent; (c) respondent has deserted petitioner for continuous period of at least two years immediately preceding presentation of petition; or (d) parties to marriage have lived apart for continuous period of at least two years immediately preceding presentation of petition. Married person who alleges that reasonable grounds exist for supposing that other party to marriage is dead may present petition to Court to have it presumed that other party is dead and to have marriage dissolved. See category Estates and Trusts, topic Death. Decree nisi will be granted in rst instance and will not be made absolute until expiration of three months unless court xes shorter time. When granting decree of divorce, Court has power to order division of assets acquired by them during marriage, payment of maintenance and custody of children of marriage. Divorce in Islam.Divorce in Islam, although permitted, is not encouraged. Divorce can be effected by Talak, Khulu or Fasakh. Divorce by Talak may be effected once husband utters words of divorce. Where husband does not agree to divorce wife but agrees to divorce by Khulu (redemption), Syariah Court may assess amount of payment to be made by wife according to her status and means. Husband will then have to pronounce divorce by redemption. Either party may apply for and obtain decree of Fasakh (Divorce or Rescission by judicial decree) on any ground which is recognised as valid for dissolution of marriage by Fasakh in Islamic law which includes defects in either spouse such as insanity (whether intermittent or permanent), leprosy, vitiligo and dangerous contagious disease or apostasy of either spouse. When registering divorce, President of Syariah Court has power to order: (a) division of harta sepencarian (assets acquired by them during marriage); (b) payment of maintenance during Iddah (period of continence) and payment of mutaah (consolatory gift) which wife is entitled to in event of divorce by Talak and Fasakh; and (c) custody of children of marriage. INFANTS: Age of Majority.Age of majority is 18 years. Actions By or Against Infant.Subject to certain exceptions, can only be commenced by next friend and defended by guardian ad litem. Contracts with Infants.Following common law, contracts generally unenforceable as against infant and voidable at option of infant, except contracts for necessaries (necessary goods and services supplied to infant) and contracts of apprenticeship, education and service. Such voidable contracts may be of two types: (a) binding on infant unless repudiated during minority within reasonable time of infant attaining majority; or (b) not binding on infant unless and until ratied after attaining majority. Child (below 14 years) or young person (14 years and above but below 16 years) is competent to enter into contract of service otherwise than as employer and may sue without next friend or defend action without guardian ad litem. However, damages and indemnity not recoverable from child or young person for breach of contract of service. MARRIAGE: All marriages contracted in Malaysia and of persons domiciled in Malaysia after Mar. 1, 1982 must be monogamous and must comply with formalities laid down in Law Reform (Marriage and Divorce) Act (Act 164). Act does not apply to Muslims or person married under Muslim law, any native of Sabah or Sarawak or any aborigines of West

FAMILY
ADOPTION: Governed by Adoption Act (Act 257) in West Malaysia and Adoption Ordinance (Ord. 23/1960) for Sabah and Adoption Ordinance (Cap 91) for Sarawak. Adoption of Muslim is governed by different provisions. Court or District Officer in case of Sarawak may, subject to provisions of Act or Ordinance, make order authorising applicant to adopt child. Child is dened as unmarried person under age of 21 (no denition of child in Adoption Ordinance (Cap 91) for Sarawak and in West Malaysia child includes female under that age who has been divorced). In West Malaysia and Sabah, applicant must: (a) Have attained age of 25 and be at least 21 years older than child; (b) must have attained age of 21 and be relative of child; or (c) be father or mother of child and consent must be obtained from person who is parent/guardian of child or who is liable to contribute to support of child. Consent can be dispensed with by Court if: (a) In case of parent/guardian of child, he has abandoned,

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 7

FAMILY
MARRIAGE . . . continued Malaysia whose marriage and divorce is governed by native customary law unless he elects to marry under Act. Person cannot marry: His/her (a) grandparent, parent, child or grandchild, sister or brother, great-aunt or great-uncle, aunt or uncle, niece or nephew, great-niece or greatnephew as case may be; (b) grandparent or parent, child or grandchild of his/her spouse or former spouse; (c) former spouse of his/her grandparent or parent, child or grandchild; or (d) person whom he or she has adopted or by whom he or she has been adopted. However, Hindu can marry under Hindu law or custom his sisters daughter or her mothers brother. Relationships of half blood are equivalent to relationships of full blood. Person under age of 21 years old must obtain written consent of: (a) His/her father; (b) if his/her father is dead or is illegitimate, his/her mother; (c) if adopted, his/her adopted father or if adopted father is dead, his/her adopted mother; or (c) if parents (natural/adopted) are dead person standing in loco parentis. Each party intending to marry in Malaysia must notify Registrar of Marriages in district in which parties have been resident for period of seven days immediately preceding notice. Notice is to be posted by Registrar of Marriages until he grants his certicate or until three months have elapsed, whichever is earlier. Any person may lodge caveat against marriage. Registrar of Marriages only issues marriage certicate upon expiry of 21 days notice of intended marriage. If notice does not take place within six months after date of publication of notice, fresh notice will be required. Chief Minister may, if he thinks t, dispense with notice and grant special marriage licence authorising solemnisation of marriage between parties named in that licence. However he may only exercise his discretion if there is urgent need and good reason. Special licence is valid for one month from date of issue. Solemnisation of marriage can take place any time during validity of marriage certicate. Solemnisation of marriage may be conducted only by Registrar and in presence of at least two credible witnesses. Either party to marriage can petition for decree of nullity of marriage on ground that marriage is void in that: (a) either party was already lawfully married at date of marriage; (b) male under 18 years of age and female between ages of 16 and 18 years marries without special licence; (c) parties are within prohibited degrees as stated above; or (d) parties are not respectively male and female. Marriage is voidable on following grounds: (a) non-consummation due to incapacity of either party; (b) non-consummation due to wilful refusal of respondent; (c) either party did not validly consent to marriage due to duress, mistake, unsoundness of mind or otherwise; (d) either party was suffering from mental disorder within meaning of Mental Disorders Ordinance (FM Ord. 31/1952) or of such kind or to such extent as to be unt for marriage; (e) respondent was suffering from venereal disease in communicable form at time of marriage; or (f) respondent was pregnant by some person other than petitioner at time of marriage. Marriage will not be avoided where it will result in injustice to respondent, or petitioner with knowledge that it was open to him to have marriage avoided, led respondent reasonably to believe that he would not seek to petition to do so. Muslim Marriages.For marriage to be valid in Islam, there must be offer of marriage by one party which offer must be accepted by other party. Words must indicate with reasonable certainty that marriage has been contracted. There must be two witnesses who are sane and adult male Muslims. Marriage may be solemnised by Wali, Kathi or Naib Kathi. Where Wali refuses his consent to marriage, bride may apply to Kathi who, if satised after due inquiry that consent was unreasonably withheld, may solemnise marriage and act as brides Wali.

MARTINDALE-HUBBELL LAW DIGEST - 2007

Approval of Controller is required for all lending in Ringgit by nonresident to resident. Nonresident may extend foreign currency credit facilities to resident as long as residents total foreign currency credit facilities do not exceed equivalent of RM50 million on corporate basis or equivalent of RM10 million for individual. Any foreign currency credit facilities exceeding said limits would require prior approval of Controller. Where aggregate foreign currency credit facilities exceeds equivalent of RM1 million, resident must register credit facility with Controller prior to drawdown. Entities incorporated under Offshore Companies Act (Act 441) are declared as nonresidents for exchange control purposes. See also topic Foreign Investment. FOREIGN EXCHANGE: Local currency, Ringgit peg at rate of RM3.80 against USD 1 removed on 21 July 2005. See also topic Exchange Control. FOREIGN INVESTMENT: Acquisition of Assets, Mergers and Takeovers.Foreign Investment Committee (FIC) was established in 1974, inter alia, to: (a) formulate policy guidelines on foreign investment in Malaysia; (b) monitor foreign investment, including foreign private investment; (c) coordinate and regulate acquisition of assets or mergers and take-overs of companies and businesses in Malaysia; and (d) advise Government on all matters concerning foreign investment. Generally, guidelines issued by FIC on acquisition of interests, mergers and take-overs by local & foreign interests state that prior approval of FIC is required for: (a) Proposed acquisition of interest in local company or business in Malaysia worth RM10 million or more; (b) proposed acquisition of interest of local company or business in Malaysia by any means, which will result in ownership or control passing to foreign interests; (c) proposed acquisition of 15% or more of voting power by foreign interest, or acquisition of 30% or more of voting rights in aggregate by associated or non-associated groups of foreign interests in local company or business in Malaysia; (d) control of local company or business in Malaysia through joint-venture agreement, management agreement etc.; and (e) merger or take-over of local company or business in Malaysia whether by Malaysian or foreign interests. Acquisition of interest in manufacturing companies licensed by Ministry of International Trade and Industry (MITI), acquisition of interest in Multimedia Super Corridor (MSC) status companies and acquisition of interest in companies granted status of International Procurement Centre Operational Headquarters, Representative Office, Regional Office and Labuan offshore company or other special status by Ministry of Finance, MITI and other ministries are exempted from FIC approval. Guidelines on acquisition of interests also impose equity, share capital and employment conditions. Real Property.Prior approval of relevant State Authorities is required before noncitizen or foreign company may acquire land or interest in land, other than industrial land, by way of disposal or effecting dealings with respect to alienated land or interest in land. However, no approval is required in respect of taking of charge or lien or lease by noncitizen or foreign company in respect of alienated land or undivided share in land. Where order for sale is made under National Land Code (Act 56/65), noncitizen of foreign company is not entitled to bid at sale where land is categorised agriculture or building or subject to condition that it be used for agriculture or building purpose without approval of State Authority. Generally, guidelines for acquisition of properties by local & foreign interests issued by FIC amongst others state that prior approval of FIC is required for: (a) Acquisition of property by foreign interest including permanent resident; (b) transfer of property to foreigner based on love and affection; (c) leasing of property for ten years and above by foreign interest; (d) disposal of property by foreign interest to another foreign interest; and (e) charging of property in Malaysia to foreign interest. Foreign interests are restricted from acquiring: (a) All properties under category of low and medium low cost determined by State Authority; (b) all properties built on Malay reserve land; (c) properties allocated to Bumiputera in any property development project determined by State Authority; (d) stall and service workshop; and (e) agricultural land developed on basis of homestead concept. Guidelines also impose conditions for acquisition of property by foreign interests, including equity, share capital, property development and employment conditions. Apart from being subject to conditions for acquisition, foreign interests must be registered under local company if they acquire: (a) One unit or more contiguous properties with total value of RM10 million and above; (b) entire building or property development project, irrespective of value; and (c) land or land with building for redevelopment on commercial basis. Exchange Control.Foreign exchange administration rules have been progressively liberalized to make Malaysia attractive and competitive investment destination. See also topic Exchange Control. Tax Incentives.Foreign investment is encouraged. Various tax incentives are given for manufacturing, agriculture and tourism sectors. General incentives include granting of Pioneer Status and Investment Tax Allowance (ITA) to eligible companies. Eligibility is determined according to priorities termed as promoted activities or promoted products as determined by Minister of International Trade and Industry. Reinvestment Allowance is granted to manufacturing companies which incur qualifying capital expenditure for expansion of production capacity, modernisation and upgrading of production facilities and diversication into related products. Specic incentives are also granted for high-technology industries, strategic industries, export, research and development, training, industrial adjustment, small-scale companies, storage, treatment and disposal of toxic and hazardous wastes and Operational Headquarters status. In agricultural sector, incentives include agricultural allowance and deduction for capital expenditure on approved agricultural projects. Generally, other incentives include incentives for forest plantation projects, Infrastructure Allowance for projects located in Sabah, Sarawak and Eastern Corridor of Peninsular Malaysia, tariff protection, exemption from import duty and raw materials/components, drawback of excise duty on parts, ingredients

FOREIGN TRADE AND COMMERCE

CUSTOMS: Customs duty is levied on certain categories of goods, including tobacco, liquors, motorcars and certain electrical goods. Applicable rates of customs duty and types of dutiable goods are found in Customs Act (Act 235) and its regulations. See also topics Foreign Investment; Foreign Trade Regulations. EXCHANGE CONTROL: Legal basis for exchange control is Exchange Control Act (Act 17) and Exchange Control Notices (known as ECMs) issued from time to time by Bank Negara Malaysia (Central Bank of Malaysia). Exchange control regulations are applied uniformly to transactions with all countries except Israel, for which special restrictions apply. Capital Controls.Nonresidents can bring in any amount of foreign currency notes and/or travellers cheques provided that any amounts in excess of equivalent of US$10,000 must be declared. Nonresidents would need to seek permission from Controller of Foreign Exchange (Controller) if amount of foreign currency notes to be carried out of Malaysia exceeds amount brought in and is more than equivalent of US$10,000. Nonresidents must obtain permission from Controller and declare Ringgit exceeding RM1,000 being brought in or out of Malaysia. All payments, including repatriation of capital and remittance of prots, dividends, royalties, fees and commissions are freely permitted subject to completion of statistical exchange control forms for each payment in excess of RM100,000 or its equivalent in foreign currency. Any authorised bank may approve these forms without reference to Controller except for: payments to Israel; payments of interest or repayment of capital to nonresidents where such payments are inconsistent with approved terms and conditions; payments exceeding RM10 million in aggregate for purchase of securities or immovable properties made by resident who has domestic credit facilities; payments for purpose of extending credit or placing deposits with nonresidents, and payments for commodity futures; spot or forward contract or interest rate futures not transacted at exchanges in Malaysia. There is no restriction on payments to nonresidents for import for goods and services but such payments must be made in foreign currency (except for Israel, for which prior permission is required).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 8

MALAYSIA LAW DIGEST

FOREIGN INVESTMENT . . . continued or packaging materials, drawback on sales tax on materials used in manufacture and exemption from import duty and sales tax on machinery and equipment. FOREIGN TRADE REGULATIONS: Customs duty is levied on some categories of goods, including tobacco, cigarettes, liquor and petroleum products imported into or exported from Malaysia. Applicable rates of customs duty and types of dutiable goods may be found in Customs Act (Act 235) and regulations made thereunder. Areas specially designated for manufacturing establishments producing or assembling products essentially for export are known as Free Zones (FZ). Goods exported abroad from FZs are not liable to customs duty. Labuan, Langkawi and Tioman are also designated free-trade zones. No export duty is payable upon goods exported from Labuan, Langkawi or Tioman and no import duty is payable upon goods imported into Labuan, Langkawi or Tioman other than petroleum and petroleum products and goods gazetted from time to time as dutiable by relevant Minister. However, customs duty is payable in respect of dutiable goods exported to Labuan, Langkawi or Tioman from principal customs areas and dutiable goods imported from Labuan, Langkawi or Tioman into principal customs areas in Malaysia, as if they were exports to or imports from abroad.

INTELLECTUAL PROPERTY
Dependants Pass.Wife and dependant children of Employment Pass holder may apply for Dependants Passes to enable them to remain with him in Malaysia. Holder of Dependants Pass is not allowed to engage in any form of paid employment in Malaysia without Controllers written consent. Visit Pass.May be issued to person wishing to enter Malaysia on social, business or professional visit, for temporary employment or as tourist. Dependant children may also apply for Visit Passes to accompany or join Work Pass holder in Sabah. Unless Minister has consented otherwise in writing, person holding Visit Pass as tourist or for purpose of social visit or as dependant child of Work Pass Holder cannot engage in any form of paid employment or in any business or professional occupation and cannot give political lectures, speeches, talks or engage in any political activity in Malaysia. Students Pass.May be issued to person who has been accepted as student by recognised university or approved educational institution in Malaysia; or who possesses certicate issued by Minister charged with responsibility for education stating that it is desirable that he should be accepted as student at specied educational institution in Malaysia and that he has been so accepted. Transit Pass.May be issued to any person desiring to enter country for purpose of passing through country to destination outside it and that he is in possession of or in position to obtain such valid documents required to permit entry to his destination country. Entitles holder to enter and remain in country for such period not exceeding one month. Special Pass.May be issued to any person if Controller considers desirable to afford opportunity of making enquiry for purpose of determining whether such person is entitled to Entry Permit or whether such person is prohibited immigrant or for any other special reasons. Landing Pass.May be issued to any through passenger travelling in, or any member of crew of any vessel or aircraft on arrival; in any port or airport. Permanent Residence.Entry Permits may be issued to foreigners wishing to acquire permanent residence in Malaysia. Re-entry Permits may be granted to Malaysian Permanent Residents who intend to re-enter Malaysia. Permanent residence granted to applicants on case-by-case basis in accordance with immigration policies of government. Security Deposit.Security by deposit or otherwise may have to be furnished as condition for issue of Pass, to ensure compliance with immigration provisions or conditions imposed in respect of Pass.

HEALTH
FOOD AND DRUGS: Food and Drug Regulation and Control.This empowers Ministry to search premises and seize products and to take action against persons liable for offences under various Acts. Sale of Drugs Act (Act 368).Drugs dened to include any substance, product or article intended to be used or capable or purported or claimed to be capable of being used on humans or any animal whether internally or externally for medicinal purposes. Offences under Act include person who sells adulterated drug, false or misleading statements on label of drug sold in package, drugs containing prohibitive substance, drugs containing greater proportion of any substance than permitted. Dangerous Drugs Act (Act 234).Act to make further and better provisions for regulating importation, exportation, manufacture, sale and use of opium and certain other dangerous drugs and substances; to make special provisions relating to jurisdiction of courts in respect of offences and their trial. Certain restrictions on importation, exportation and possession of raw opium, coca leaves, poppy straw and cannabis. Informants evidence relating to drug cases as agent provocateur is admissible in court and protection of informants from disclosing names and addresses is given under Act. Food Act (Act 281).Act to protect public against health hazards and fraud in preparation, sale and use of food. Empowers Ministry officials/inspectors to examine, obtain, enter any premises for purposes of inspection for sanitary and hygienic conditions. It is offence for false labeling or description of food or preparing or selling adulterated food. PUBLIC HEALTH: Regulated and supervised by Ministry of Health. Ministrys functions are to improve health delivery system and develop and expand medical health; dental services in respect of public health; research and identify epidemiology of important diseases and its prevention; establish proper system for supply of pharmaceutical and other requirements for health programmes; ensure that importation, management and sales of pharmaceutical products including traditional medicine and cosmetics are properly handled and according to regulations; and to monitor registration of medical practitioners in Malaysia. Wide-ranging statutes govern different areas of health issues including Dental Act (Act 51), Food Act (Act 281), Human Tissues Act (Act 130), Dangerous Drugs Act (Act 234), Medical Act (Act 50), Private Hospitals Act (Act 43), Mental Disorders Ordinance (FM Ord. 31/1952), Nurses Act (Act 14), Prevention and Control of Infectious Diseases Act (Act 342), etc.

INTELLECTUAL PROPERTY
COPYRIGHT AND REGISTERED DESIGNS: Copyright. Statute.Copyright Act (Act 332). Treaties.Malaysia is signatory to Berne Convention and TRIPS, hence nationals and residents of member countries enjoy copyright protection in Malaysia. Protection.Works covered under Act comprise literary (which includes dramatic works and computer programmes), musical and artistic works, sound recordings, lms, broadcasts, and typographical format of published editions of work. Derivative works derived from these subject matters are protected as original works. No registration is required. Copyright in literary, artistic and musical works (works), sound recordings and lms extends to: (a) Making reproductions in material form; (b) communicating, performing, showing or playing to public; (c) broadcasting; and (d) distributing copies to public by sale, rental, lease or lending, of whole work or substantial part thereof, either in its original or derivative form. For broadcasts, copyright extends to recording, reproduction and rebroadcasting of whole or substantial part of broadcasts, and performance in public of broadcasts before paying audience (for television broadcasts, includes right to take still photographs from such broadcast). For published editions of works, copyright shall subsist in every published edition of which either rst publication of edition took place in Malaysia or publisher of edition was qualied person at date of rst publication. For published editions, sound recordings, photographs, lms (including video lms) and broadcasts, term of copyright is 50 years from beginning of calendar year following year in which work was rst published or broadcast. Assignment.Copyright may be assigned, but assignment must be in writing and signed by or on behalf of assignor. Licence.Copyright may be licensed either on exclusive or non-exclusive basis, and must be in writing. Infringement of copyright takes place where, without permission of copyright owner, rights reserved exclusively to copyright owner is exercised by someone other than copyright owner. Person who imports article for purposes of selling, letting for hire or by way of trade offering or exposing for sale or hire, distributing article for purpose of trade or exhibiting article in public by way of trade or person who sells, lets for hire or by way of trade offers or exposes for sale or hire or exhibits article in public by way of trade and knows or reasonably ought to know that making of article was without consent of owner is liable for copyright infringement. Copyright infringement is criminal offence punishable with heavy penalties. Civil remedies include injunctions, damages or account of prots and delivery up of infringing articles and tools for making infringing copies. Registered Design. Statute.Industrial Designs Act (Act 552) in effect from 1 Sept. 1999. Industrial Designs Regulations 1999. Procedure.From 1 Sept. 1999, applications for registration of designs can be led locally. Designs registered in UK and in force immediately before 1 Sept. 1999 are deemed protected under Industrial Designs Act (Act 552). Applicant of design application led in UK under Registered Designs Act 1949 but which was still pending on 1 Sept. 1999 faces deadline of 1 Sept. 2000 to apply for industrial design application in Malaysia. Application will be accorded UK priority date.

IMMIGRATION
ALIENS: See topic Immigration. IMMIGRATION: Governed by Immigration Act (Act 155). General.Non-Malaysian citizen can enter Malaysia only if he has valid Entry or Re-entry Permit or name endorsed on Entry or Re-entry Permit of accompanying husband/father or if he has valid Pass or if specially exempted by Ministers order. He must not be prohibited immigrant. Passes.Controller may issue following passes for purpose of entitling person to enter and remain temporarily in Malaysia: Employment Pass or Work Pass.Employment Pass is required if foreigner wishes to take up employment under contract of service with Federal or State government or City Council or Municipality, or to take up employment under contract with approved company or rm at monthly salary of at least RM3,000. Nonprofessionals are required to take up employment under contract for minimum period of two years. Foreign spouses of Malaysian citizens may apply for employment pass with evidence of their marriage and letter of appointment regardless of salary. Work Pass necessary for person intending to work in Sabah. Following conditions must be satised: (a) he must be qualied to work or undertake employment in that particular trade, business or calling; (b) there must not already be unemployment in Sabah of persons skilled in that particular class of trade, business or calling; and (c) his taking up of such work and employment will generally benet Sabah.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 9

INTELLECTUAL PROPERTY
COPYRIGHT AND REGISTERED DESIGNS . . . continued Registrability.To be registrable, design must: (a) Be new; (b) appeal to eye; and (c) not contradict public order or morality. Rights.Registered proprietor of design has monopoly over its use. No need to prove copying (cf copyright). Registration gives proprietor exclusive right: (a) To make or import: (i) for sale or hire, or (ii) for use for purposes of trade or business; or (b) to sell, hire or offer or expose for sale or hire, article to which registered design is applied. Duration.Rights granted last for ve years from date of registration but renewable for two subsequent periods of ve years up to maximum of 15 years from date of registration. Infringement.Person who does any of aforesaid acts reserved exclusively for registered proprietor without consent of proprietor is liable for design infringement. Civil remedies include injunctions and damages. Defence of innocence provided under Act i.e. registered proprietor of design is not entitled to recover damages or account of prots in respect of infringement of design from defendant who proves that at date of infringement he was not aware that design was registered and that he had taken all reasonable steps to ascertain whether design was registered. Innocence defence does not affect plaintiffs right to injunction. PATENTS: Statute.Patents Act (Act 291) and Patents Regulations 1986. Treaties.Paris Convention and TRIPS. Malaysia acceded to World Intellectual Property Organization Patent Cooperation Treaty on 16 May 2006. Procedure.For domestic application, there are four stages: (a) Filing application in requisite form with prescribed fee. Application must contain: (i) request for grant of patent including statement justifying applicants right to patent, (ii) specication containing description of invention, (iii) claim(s) dening matter for which applicant seeks patent protection and any supporting drawings, (iv) abstract which provides technical information concerning invention. If application is in order, ling date is given to application; (b) request for preliminary examination is led within six months from date of ling of application; (c) applicant les request for substantive examination within 18 months from date of ling of application. Examiner will examine whether application complies with requirements of Act; (d) nally, patent granted if all is well. Patent Cooperation Treaty and its rules are applicable to processing of international application during international phase of application. Duration of Protection.Grant of patent confers on owner exclusive right to exploit invention for 20 years from date of ling of application. Assignment/Licence.Rights under patent or patent application may be assigned provided assignment is in writing and signed by or on behalf of parties to transaction. Licence may also be granted for working invention which is subject of patent. Compulsory Licences.Under certain circumstances, e.g. where there is abuse of patent monopoly rights, Act provides for grant of compulsory licences. Owner will then lose exclusivity of exploiting patent. Examples are non-production of patented product or non-application of patented process without any legitimate reason, or if pricing is unreasonably high. Utility Innovations.Act also provides protection for utility innovations. Innovation is valid for only ve years from date of grant, extendable for two further periods of ve years. Utility innovation means any innovation which creates new product or process or any new improvement of known product or process, which is capable of industrial application, and includes invention. Infringement.Patent is infringed if anyone without consent of proprietor makes, disposes of, offers to dispose of, uses or imports patented product or keeps it whether for disposal or otherwise. Same applies to patented process if unauthorised person uses it or does any of above acts in relation to product obtained by means of process. Remedies include injunctions, damages or account of prots, and delivery up. TRADEMARKS: Statutes.Trade Marks Act (Act 175) and Trade Mark Regulations 1997 provide for, inter alia, registration of trademarks in respect of goods and services. These follow U.K. legislation closely. Treaties.Priority may be claimed for applications led within six months from date of rst application in prescribed foreign countries as approved by Minister of Domestic Trade and Consumer Affairs. Malaysia is also member of Paris Convention and TRIPS. Denition.Trademark is mark used or proposed to be used in relation to goods or services for purpose of indicating or so as to indicate, connection in course of trade between goods or services and person who has right, either as proprietor or as registered user, to use mark, whether with or without indication of identity of that person. Trademark may be device, brand, heading, label, ticket, name, signature, word, letter, numeral or any combination of these. Registrability.In order for trademark to be registrable, mark must have some intrinsic quality which makes it distinctive. Mark must also contain or consist of at least one of following: (a) Name of company, individual of rm represented in special or particular manner; (b) signature of applicant or predecessor of his business; (c) invented word or words; (d) mark which does not have direct reference to character or quality of goods or services and which is not in its ordinary meaning, geographical name or surname; and (e) any other distinctive mark. Protection.Upon registration of mark, it remains valid for initial term of ten years from date of ling of application, which term may be renewed indenitely for subsequent terms of ten years each. Assignment.Mark may be assigned with or without goodwill of business. Under Act, all assignments must be registered with Trade Marks Registry. If one or more marks are associated, they must be assigned as whole and not separately. Infringement.Plaintiff has recourse to civil remedies in form of damages, injunction, seizure of goods and discovery.

MARTINDALE-HUBBELL LAW DIGEST - 2007

Common Law Rights.Act specically preserves rights of action against person for tort of passing off and remedies in respect thereof. To succeed, plaintiff must show (a) goodwill or reputation in his mark or business; (b) misrepresentation made by defendant in course of trade which is calculated to injure plaintiffs goodwill or business; and (c) that damage has occurred or is likely to occur.

LEGAL PROFESSION
ATTORNEYS AND COUNSELORS: Governed by Legal Profession Act (Act 166). Act applies throughout West Malaysia and is made applicable to Sabah and Sarawak with such modications as Yang di-Pertuan Agong may, by gazetted order, make. Rulings are issued by Bar Council from time to time. Profession is fused, consisting of advocates and solicitors. Admission.To be admitted as advocate and solicitor of High Court of Malaya, person must be qualied person or articled clerk who has complied with conditions for admission stipulated in Act. Qualied person means person who: (a) has passed nal examination leading to degree of Bachelor of Laws of University of Malaya or National University of Singapore (or its predecessors, University of Malaya in Singapore and University of Singapore); (b) is barrister-at-law of England; or (c) is in possession of such other qualication as may be declared by Qualifying Board, established under Act, and gazetted. In addition, he must be at least 18 years old, of good character, citizen or permanent resident of Malaysia and must have satisfactorily served in Malaysia prescribed period of pupillage for qualied persons, and has passed or is exempted from Malay language qualifying examination set by Qualifying Board. Foreign Law Firms.Foreign lawyers are only allowed to practise in Malaysia provided they obtain certicate from Attorney-General. Many foreign lawyers who work with Malaysian law rms work on variety of cross-border transactions and projects. Malaysia has made commitments to liberalise legal services under Uruguay Round General Agreement on Tariffs and Trade (GATT). Bar Council is drafting rules on entry of foreign lawyers into Malaysia.

MINERAL, WATER AND FISHING RIGHTS

MINES AND MINERALS: Mines.Petroleum Mining Act (Act 95) makes provisions with regard to mining for petroleum. These include restrictions on petroleum exploring and mining, and application for exploration licence. Act applies throughout Malaysia but in its application to Sabah and Sarawak only with respect to off-shore land. Mining Enactments of various States regulate mining of minerals other than mineral oils in such states. Mining leases must not infringe Malay Reservations Enactments of various States which restrict sale, lease and disposal of State land included within Malay Reservation in such states. Minerals.Mineral Ores Enactments of various States restrict purchase, treatment and storage of mineral ores (which do not include gold) in such states. Gold Buyers Enactments of various States regulate purchase of raw gold in such states.

MORTGAGES
CHATTEL MORTGAGES: Mortgages of chattel, except mortgages and debentures registrable under Companies Act (Act 125), are registrable under Bills of Sale Act (Act 268). Floating charges over chattels, charge over land or any interest therein and charge over ship or aircraft or share in ship or aircraft are registrable under Companies Act. This applies to property wheresoever situate for companies incorporated under Companies Act and to property in Malaysia for foreign companies registered under Companies Act. Such charges must be registered within 30 days after creation of charge (with extension of seven days for documents executed overseas). Otherwise charge is void against liquidator and creditors of company. Mortgages of Malaysian-registered ships are also registrable under Merchant Shipping Ordinance (Ord. 70). No additional written provisions for registration of aircraft mortgages. See also categories Business Organizations, topic Corporations; Business Regulation and Commerce, topic Bills of Sale. COLLATERAL SECURITY: See category Debtor and Creditor, topic Pledges. MORTGAGES: In Malaysia, mortgages are created in form of charge. Under National Land Code (Act 56/65) (West Malaysia), one may create legal/statutory charge in prescribed form over: (a) Whole, but not part only, of alienated land; (b) whole, but not part only, of undivided share in alienated land; or (c) lease of alienated land, as security for repayment of debt, or payment of any sum other than debt, or payment of annuity or other periodic sum. Legal/statutory charge takes effect upon registration at appropriate land Registry. Subject to certain vitiating factors like fraud or forgery, registration confers indefeasible interest on chargee. Priority of charge may in appropriate circumstances be affected by device of tacking and postponement. Noncompliance with National Land Code (Act 56/65) does not affect contractual operation of transaction which may then take effect as equitable charge. Court in exercise of its equitable jurisdiction may grant creditor specic performance of contract by ordering debtor to execute valid and registrable document of charge. For lands in Sabah and Sarawak, registration provisions are contained in Sabah Land Ordinance (Cap. 68) and Sarawak Land Code (Cap. 81) respectively.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 10

MALAYSIA LAW DIGEST

TAXATION
erating expenses, capital expenditure, depreciation and amortisation, interest expenses attributable to nonbusiness investments, lease rentals for passenger cars exceeding RM50,000 per car with certain restrictions, contributions to unapproved pension, provident or saving schemes, employers contributions to approved schemes in excess of 19% of employers remuneration, non-approved donations, entertainment expenses except in limited circumstances and employees leave passages. CONSUMPTION TAX: This is value-added tax levied on supply of prescribed services and prescribed goods by prescribed establishments or professional establishments in Malaysia. Prescribed services include most services provided by service industries and various professional elds. Prescribed goods are food, drinks and tobacco provided by prescribed establishments. Provision of prescribed services to territories outside Malaysia is zero-rated. Service tax is levied under Sales Tax Act (Act 64) at rate of 5% ad valorem. CUSTOMS DUTY AND TAX: Customs duty and tax levied under Customs Act (Act 235) on dutiable goods imported into or exported from Malaysia. Custom duties are generally levied on ad valorem basis but may also be imposed on specic basis or composite basis. Rates specied in Customs Duties Order 1996. Raw materials, machinery, essential foodstuffs and pharmaceutical products are generally non-dutiable or subject to lower rates. Import duty on raw material used directly for manufacture of goods for export is exempted if such materials are not produced locally or if local materials are not of acceptable quality and price. There are special provisions in Customs Act (Act 235) to cater for special status of Labuan, Langkawi, Tioman and joint development areas. ESTATE TAX: This is not payable on estate of deceased who dies on or after 1 Nov. 1991. EXCISE TAXES: Fixed excise duties are levied and paid on selected range of goods manufactured and sold in country. Rates of excise duty or valuation (if any) is payable on day goods are removed from their place of manufacture or any other place under excise control. Certain classes of goods may be exempted from payment of whole or part of excise duty. Remission of whole or part of duty payable are available for dutiable goods which are damaged, destroyed or, by unavoidable accident, lost at any time before removal from excise control. Legislation governing excise taxes are Excise Act (Act 176) and Excise Regulations 1977. FOREIGN INVESTMENT TAXES: Nonresident companies are subject to payment of tax on royalties, rental of movable properties, technical or management service fees, interest, dividends, business and other income. However, where recipient is resident in country which has double tax treaty with Malaysia, tax rates may be reduced. Interest paid to nonresident bank or nance company in Malaysia or on approved loans (which are loans granted to or guaranteed by Malaysian Government) is exempt from tax. GASOLINE AND SPECIAL FUELS TAXES: Petroleum (Income Tax) Act (Act 543) embodies legislation entirely devoted to taxation of petroleum companies. Petroleum income tax is chargeable at rate of 38%. Dividends paid out of petroleum income are not liable to any other income taxes. INCOME TAX: Income tax is governed by Income Tax Act (Act 53) and payable by persons, including individuals, companies, trustees and bodies of persons, on income arising in or derived from Malaysia in respect of trade, business, profession, vocation or employment and dividends, interest, discounts, pension, charge, annuity, rents, royalties, premiums, and gains or prots from other sources. Resident companies engaged in banking, insurance, sea or air transport are taxable on their worldwide income. Company resident in Malaysia if management and control exercised in Malaysia. Unless exempted, payment of royalty and interest to nonresident person is subject to withholding tax of 10% and 15% respectively. However, no withholding tax is payable if royalty or interest is attributable to business carried on in Malaysia by such person. Payment to nonresident for technical services, advice, assistance or use of moveable property is subject to 10% withholding tax. However, payment to nonresidents for services performed outside Malaysia are not liable to withholding tax. Payment to nonresident contractor or professional under contract of service is subject to 13% withholding tax (10% for contract payment and 3% for tax payable by contractors employees), and for nonresident public entertainer, 15%. These withholding tax rates are not absolute and some may be varied by double taxation agreements or under certain other circumstances. Dividends paid to nonresident are not subject to withholding tax but are subject to imputation tax. Income tax rate for resident company is 28%. With effect from Year of Assessment 2004 companies with paid-up capital of RM2.5 million or less at beginning of basis period, tax is charged at 20% on rst RM500,000 of chargeable income. Any subsequent chargeable income exceeding RM500,000 is subject to 28% tax. Correspondingly, dividends distributed by these companies will be given tax credit of 20%. Malaysia adopts imputation system of taxation whereby tax paid on income of such company is imputed to benet of its shareholders. Nonresident company is also taxed at same rate as resident company. There are no major differences in tax treatment for two except that resident company is generally able to qualify for tax reliefs afforded by double taxation conventions entered into by Malaysia with other countries whereas nonresident company is not. Tax rate of 28% also applies to income of trust and nonresident unincorporated body. Approved institutions of public or charitable character are exempted from income tax. Individual income tax rate for resident individuals is based on graduated scale, with marginal rate from 0% to 28%. Various personal reliefs and rebates are available. Donations to approved charitable and public institutions are tax-deductible.

PROPERTY
ABSENTEES: Generally, in absence abroad, person may delegate authority to any person of full capacity, usually by way of power of attorney. As for company, as long as permitted by and in accordance with companys Memorandum and Articles of Association, its directors may empower any person as companys attorney to execute deeds on its behalf abroad. Power may be limited or unlimited as donor wishes. Under Powers of Attorney Act (Act 424) (West Malaysia), in order for power of attorney to be valid, it must be authenticated in accordance with Act and copy of power of attorney duly certied as true copy by Senior Assistant Registrar of (West Malaysia) High Court, or where original power of attorney has been deposited in Registry of Supreme Court in Singapore, office copy of such power of attorney, must be deposited in office of Senior Assistant Registrar of (West Malaysia) High Court. DEEDS: Individuals.Deed must be signed in presence of witness by party to be bound or by his attorney. Not necessary for deed to be sealed, so long as deed makes it clear on face of itself that it is intended to be deed. Companies.Common seal of company must be affixed in accordance with companys articles of association (usually in presence of two directors, or one director and one secretary). Individual authorised by company pursuant to power of attorney to execute documents under seal may execute them by signing for and on behalf of company and affixing his seal. See also category Documents and Records, topic Seals. Attestation.Generally, no attestation clause required unless deed contains power of attorney. Consideration.See category Documents and Records, topic Seals. LANDLORD AND TENANT: National Land Code (Act 56/65) (West Malaysia), makes distinction between lease and tenancy. Lease refers to letting of land for term exceeding three years and is registrable interest. Maximum term for which lease may be so granted is 99 years if it relates to whole of alienated land, and 30 years if it relates only to part thereof. Every lease has to be in prescribed form and registered with appropriate land Registry. Lease which is not registered is void as lease but nevertheless good and valid as agreement for lease and may be enforceable in equity by decree of specic performance. Tenancy denotes letting of land for term not exceeding three years and is not registrable interest. It may, however, be protected by way of endorsement on register document of title. It can be granted orally or by way of written instrument in any form whatsoever. For leases in Sabah and Sarawak, reference may be made to Sabah Land Ordinance (Cap. 68) and Sarawak Land Code (Cap. 81) respectively. PERPETUITIES: See category Estates and Trusts, topic Trusts. REAL PROPERTY: National Land Code (Act 56/65) is main piece of legislation governing land matters in West Malaysia. It lays down law relating to land and land tenure, registration of title to land and of dealings therewith and collection of revenue therefrom. Dealings recognised and capable of being created may be divided into those which are capable of registration and those which are not. Former consists of transfers, charges, leases and easements. Latter covers tenancies exempt from registration and statutory liens which are protected by way of endorsement and entry of lien holders caveat respectively on register document of title. Noncompliance with requirements of Code does not affect contractual operation of transaction relating to alienated land or any interest therein. Persons or bodies who are co-owners but who are not trustees or personal representatives hold as tenants in common (no right of survivorship). Only trustees and personal representatives may hold land as joint tenants (with right of survivorship). Registered proprietors may subdivide, partition or amalgamate their lands. They may also apply for subdivision of certain kinds of buildings on their land into parcels, each to be held under separate strata or subsidiary title. Foreigners are only allowed to purchase local property worth more than RM150,000 subject to certain conditions and restrictions in Foreign Investment Committee Guidelines. Land Registration.Conveyancing system is registered (Torrens System). Title to property is registered at appropriate land Registry. Subject to certain vitiating factors, register is conclusive evidence of title. Legislation governing land matters in Sabah is Sabah Land Ordinance (Cap. 68) and in Sarawak is Sarawak Land Ordinance (Cap. 81).

TAXATION
ADMINISTRATION: Care and management of income tax is responsibility of Inland Revenue Board. Director General of Inland Revenue is empowered to delegate specied powers to Deputy Director General, Assistant Director General, Senior Assistant Director and Assistant Director of Inland Revenue. BUSINESS TAXES: Business prots are computed on basis of normal accounting principles as modied by certain tax adjustments. 33 of Income Tax Act (Act 53) embodies deduction rule. In general all outgoings and expenses wholly and exclusively incurred during that period in production of gross income are allowable for income tax purposes. Deductions which are specically disallowed include domestic or private expenses, preliminary or preop-

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 11

TAXATION
INCOME TAX . . . continued Nonresident employees, directors, partners, professionals, sole-proprietors, entertainers, artists, athletes and musicians are taxed at at rate of 28% with no personal reliefs given unless otherwise provided for in double taxation agreement. Nonresident employees exercising employment in Malaysia for not more than 60 days are, however, exempted from tax. Remittances of foreign-sourced income into Malaysia by nonresidents are not subject to tax. Income tax relief in respect of certain categories of income can be found in Income Tax Act (Act 53), and tax incentives for selected types of investments can be found in Promotion of Investments Act (Act 327). INHERITANCE TAX: See topic Estate Tax. LOCAL GOVERNMENT TAXES: These exist primarily in form of quit rent and assessment. MOTOR VEHICLE TAXES: Road tax is determined by engine power of car; in general car with higher engine power pays higher road tax. PROPERTY TAXES: This is capital gains tax levied on taxable gains from disposal of real property and shares in real property companies by residents and nonresidents under Real Property Gains Tax Act (Act 169). Real property is deemed to include any right, interest or option over land. Taxable gain is difference between acquisition price and disposal price of real property but allowance is given for acquisition and disposal expenses. Tax rates are as follows: Noncitizen And Not Permanent Resident Individuals 30% 30% 30% 30% 5%

MARTINDALE-HUBBELL LAW DIGEST - 2007

TRANSPORTATION
MOTOR VEHICLES: Governed by Road Transport Act (Act 333) and related subsidiary legislation. Classication of Motor Vehicles.Classication includes invalid carriages, motorcycles, tractors, motor cars and mobile machineries. Different requirements apply to various classes of motor vehicles. Third brake lights are compulsory for motor cars. Construction, (unladen) weight limits, equipment, use and age of motor vehicles regulated by Act. Registration and Licensing of Motor Vehicles.Any person possessing or using motor vehicle in Malaysia must register it subject to certain exceptions. Additionally, licence is required if motor vehicle is to be used in Malaysia. Valid third party insurance policy must, in absence of applicable exemptions, be in effect before licence can be issued. Grant of licence is also subject to condition that motor vehicle is roadworthy. Tax is payable regularly in respect of motor vehicles in Malaysia. Driving Licences.Every driver of motor vehicle must possess valid driving licence. Before application for driving licence can be granted, applicant must satisfy one of following: (a) Applicant must have held probationary driving licence for period of two years and application must be made within one year after expiry of two-year period; (b) within three years before date of application, must have held driving licence issued by competent authority in Malaysia or Singapore; or (c) within three years before date of application, must have held driving licence issued by competent authority in any other country which has tests of competence to drive comparable to that prescribed under Act. No driving licence will be granted to any applicant unless he satises Director-General that on date of application he has no outstanding matter with Road Transport Department or police relating to any contravention of Act. Driving licence issued under corresponding laws of country which is party, along with Malaysia, to treaty that purports to recognise domestic driving licences of contracting parties, is deemed to be driving licence granted under Act so long as such licence remains in force in that country. If drivers record, conduct or habits as driver establishes that it is not in interests of public safety for him to hold driving licence or that he is not competent to drive motor vehicle, then driving licence may be suspended for up to 12 months. Person below 16 years is not allowed to drive motor vehicle on road and person below 17 years is not allowed to drive motor vehicle other than motorcycle or invalid carriage. Use of Helmets and Safety Seat Belts.Drivers and pillion riders of motorcycles are required to wear protective helmets. Use of safety seat belts by drivers and front seat passengers is mandatory. Driving under Inuence of Intoxicating Liquor or Drugs.Driving while under inuence of intoxicating liquor or drugs is offence. Third Party Insurance.Subject to certain exceptions, it is compulsory to insure all motor vehicles in use with respect to third party risks in Malaysia. Person using, causing or permitting another to use motor vehicle without such insurance coverage commits offence. Third party victim although not privy to insurance contract, has direct claim against insurer after obtaining judgment against motorist, and after certicate of insurance has been delivered to insurer. Commercial Vehicles.Commercial Vehicles Licensing Board Act (Act 334) stipulates that licences have to be taken out for specied categories of commercial vehicles. Different conditions may be attached to various types of licences; in any event, all licences carry conditions that commercial vehicle must be maintained in t and serviceable condition and must comply with provisions on speed limits, unladen and laden weight limits and loadings. SHIPPING: Merchant Shipping.Merchant Shipping Ordinance (FM Ord. 70/1952) regulates registration, mortgages, control of shipping, safety of shipping, construction, equipment and survey, manning, certication, masters and seamen, wreck and salvage and limitation of actions. Relevant statutes for Sabah and Sarawak are Ordinance 11/1960 and Ordinance 2/1960 respectively. Ship Registration.Under Merchant Shipping Ordinance (FM Ord. 70/1952), Malaysia-registered ship must be owned by (a) Malaysian citizen; or (b) Malaysian company with majority Malaysian shareholding free of any trust or obligation in favour of nonMalaysian, and with principal office in Malaysia and management carried out mainly in Malaysia. Malaysia-registered ship must be insured with Malaysian insurer under Insurance Act (Act 553). Towage.Private contract between parties. Pilotage.Regulated by Merchant Shipping Ordinance (FM Ord. 70/1952). Collisions.Merchant Shipping (Collision Regulations) Order 1984 (PU.[A]438) gives effect to International Regulations for Preventing Collisions at Sea 1972 as amended. Liens.Maritime liens governed by common law. Statutory liens for rent and expenses of wharnger and warehouseman provided under Merchant Shipping Ordinance (FM Ord. 70/1952). Pollution.Regulated by Merchant Shipping (Oil Pollution) Act (Act 515), Environmental Quality Act (Act 127), Exclusive Economic Zone Act (Act 311) and Merchant Shipping Ordinance (FM Ord. 70/1952). Carriage of Goods.Carriage of Goods by Sea Act 1950 (Act 527) gives effect to Hague Rules. Limitation and Exclusion of Liability.Regulated by Merchant Shipping Ordinance (FM Ord. 70/1952). Admiralty.Courts of Judicature Act (Act 91) provides that Malaysia High Court has same admiralty jurisdiction as High Court of Justice in England under United Kingdom Supreme Court Act 1981.

Time of Disposition within 2 yrs of acquisition in 3rd yr of acquisition in 4th yr of acquisition in 5th yr of acquisition in 6th yr of acquisition and onwards

Individuals 30% 20% 15% 5% NIL

Companies 30% 20% 15% 5% 5%

SALES TAX: Governed by Sales Tax Act (Act 64). Generally levied on selected types of goods manufactured in Malaysia or which are imported for home consumption. Wide range of goods are exempted from imposition of sales tax including primary commodities, certain essential foodstuffs, medical and educational equipment, books, sports equipment, photographic equipment, lms and naturally occurring mineral substances. Tax is borne by manufacturers and importers at following rates depending on class of goods in question: Fruits, certain foodstuff, timber and building materials Cigarettes and tobacco Liquor and alcoholic drinks All other goods not specically exempted, except petroleum Rate (%) 5 25 20 10

STAMP TAX: Stamp duty is chargeable on certain instruments or documents. Rate of duty varies according to nature of instruments or documents and transacted values under First Schedule, Stamp Act (Act 378). Stamp duty of RM10 is imposed on all agreements and memorandum of agreements except cheques and Memorandum and Articles of Association. For conveyance of land, duty is payable at progressive rate of 0.1% to 0.3% of value; on transfer of stocks and shares, duty is payable at RM3 per RM1,000 or part thereof; on principal security documents for payment or repayment of money, duty is payable at RM5 for every RM1,000 or part thereof (except in certain instances); on stockbrokers contract note, RM1 for every RM1,000 or part thereof subject to maximum rate of RM200 in respect of transaction of listed shares by foreign investors. Exemptions from stamp duty are given for various specied transactions. TAX INCENTIVES: Companies and other bodies fullling certain conditions can apply for incentives under Promotion of Investments Act (Act 327). Major incentives are pioneer status, hotels can be deemed to be industrial buildings, investment tax allowance, industrial adjustment allowance, infrastructure allowance and deductions for promotion of exports. Other tax incentives are provided for under Income Tax Act (Act 53), and Labuan Offshore Business Activity Act (Act 445) for offshore companies in or from Labuan. TREATIES AND AGREEMENTS: Malaysia has largely adopted Organisation for Economic Cooperation and Development (OECD) Model, in form and in intention, in concluding double taxation agreements with other countries. Malaysia has signed Double Taxation (Relief) Agreements with 65 countries. There is limited Double Taxation (Relief) Treaty with U.S., Argentina and Saudi Arabia which provides for reciprocal tax exemption on income of shipping and air transport enterprises (for Saudi Arabia it refers only to income of air transport enterprises).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 12

MALAYSIA LAW DIGEST

TREATIES AND CONVENTIONS

Act [Act 392]). Malaysia has trade agreements and investment guarantee agreements with many countries. These agreements cover matters like protection against nationalisation and expropriation, and compensation in such events. There are also double taxation agreements with many countries (see category Taxation, topic Taxes). See also Part V of this volume for Selected Conventions to which U.S.A. and this country are parties.

TREATIES AND CONVENTIONS

TREATIES: Member of, inter alia, Association of South East Asian Nations (ASEAN) and World Trade Organisation (WTO). Malaysia has ratied International Centre for Settlement of Investment Disputes Convention (see Convention on Settlement of Investment Disputes

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume.

MLYS 13