Dear valued clients and business partners,
We are pleased to highlight the following legal news and updates for September 2019.
Click here to download the PDF version: Legal Updates Sept 2019
FINANCIAL SERVICES
Bank Negara Malaysia issues policy document on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) — Money Services Business (Sector 3) (Supplementary Document No. 2)
Following the exposure draft issued by Bank Negara Malaysia (“BNM”) on 9 August 2019, BNM issued a policy document on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Money Services Business (Sector 3) (Supplementary Document No. 2) (“PD”) which took effect on 19 September 2019.
The PD sets out BNM’s requirements and expectations on money changers licensed under the Money Services Business Act 2011 which implements electronic Know Your Customer (“e-KYC”) for establishing business relationships and conducting consumer due diligence (“Reporting Institutions”).
The Reporting Institutions are required to comply with the requirements set out in the PD which includes, among others, to obtain the prior written approval of BNM to implement e-KYC for the provision of money changing business through online channel or mobile channel.
The PD supersedes paragraph 18 of the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) — Money Services Business (Sector 3), issued on 15 September 2013, insofar as it applies to the Reporting Institutions.
In addition to the foregoing, BNM has also issued a set of Frequently Asked Questions to provide clarification on the PD.
BNM issues policy document on Shariah Governance
BNM had, on 20 September 2019, issued a policy document on Shariah Governance (the “Shariah PD”), which are applicable to:
- Islamic banks licensed under the Islamic Financial Services Act 2013;
- takaful operators (including professional retakaful operators) licensed under the Islamic Financial Services Act 2013;
- banks and investment banks approved under paragraph 15(1)(a) of the Financial Services Act 2013 to carry on Islamic banking business;
- prescribed development financial institutions approved under subsection 33B(1) of the Development Financial Institutions Act 2002 to carry on Islamic financial business,
(collectively, “Islamic FIs”).
Pursuant to the Shariah PD:
- BNM seeks to further strengthen the effectiveness of Shariah governance arrangements of Islamic FIs. In particular, the Shariah PD sets out strengthened oversight accountabilities on the board of directors, Shariah committee and other key organs of the Islamic FI which are involved in the implementation of Shariah Governance.
- save for paragraph 12.5, the other provisions of the Shariah PD will come into effect on 1 April 2020.
- paragraph 12.5 will come into effect on 1 April 2023, pursuant to which a nine-year limit is imposed on the tenure of office for a Shariah committee member in a Islamic FI.
- the policy on Shariah Governance Framework for Islamic Financial Institutions issued on 22 October 2010 is amongst the superseded policy.
Securities Commission Malaysia registers first property crowdfunding operator
EdgeProp Sdn Bhd is the first company registered by the Securities Commission Malaysia as a recognised market operator to establish and operate a property crowdfunding platform in Malaysia. According to the announcement made by the Securities Commission Malaysia, EdgeProp Sdn Bhd was granted an approval, in principle, in September 2019.
Property crowdfunding provides an alternative source of financing for first-time homebuyers. The guidelines on recognised market issued by the Securities Commission Malaysia also sets out the eligibility and obligations of the homebuyers.
For further information regarding financial services matters, please contact our Financial Services Practice Group.
INTELLECTUAL PROPERTY
Any resemblance is entirely coincidental, or not?
It is not uncommon to see a disclaimer in a movie or drama, or even a book, stating that:
“This is a work of fiction. Names, characters, businesses, places, events and incidents are either the products of the author’s imagination or creation. Any resemblance is purely coincidental.”
The question which arises is whether the work is really purely coincidental or not. The Federal Court case of Mohd Syamsul bin Md Yusof & Others v Elias bin Idris[efn_note][2019] 4MLJ 788.[/efn_note] may shed some light on this question.
This is a case where the respondent Elias initially brought a copyright infringement action in the High Court against the appellants who were the filmmaker, director and distributor of a movie. The respondent contended that the appellants had infringed his copyright in his novel by allegedly making a movie based on the novel without his consent. The High Court dismissed the respondent’s claim.
The Court of Appeal allowed the respondent’s appeal and this case went on appeal to the Federal Court where the appellants were granted leave on the following questions of law:
- Is publication itself sufficient satisfaction to the legal requirement of casual connection in order to succeed in a claim on infringement of copyright (“Question 1”); and
- In carrying out the test in Megaway Enterprise Sdn Bhd v Soon Lian Hock (sole proprietor of the firm Performance Audio & Car Accessories Enterprise)[efn_note][2009] 3 MLJ 525.[/efn_note], is there a legal duty for the court to examine and evaluate both the distinct materials being the subject matter under the claim on infringement of copyright (“Question 2”).
The Federal Court in this case has reaffirmed the long established position in law that, in order to establish an act of infringement of copyright, the copyright owner must prove that:
- There is sufficient degree of objective similarity between the two works; and
- There is some causal connection between the copyright work and the alleged infringing work.
In deciding whether the alleged infringing work is similar or substantially similar to the copyright work, the Federal Court held that the degree of objective similarity in each case needs to be evaluated from the evidence to determine this issue. Put another way, determination of the degree of similarities between the works is essentially a question of fact.
The Federal Court in this case agreed with the findings of the trial judge that the alleged similarities between the book and the novel were not the result of copying, as both works discussed the “bohsia” phenomenon and the issue of “mat rempit” which were common social issues that existed even before the novel’s publication and continues to be relevant even today. Again, the Federal Court has also reaffirmed the basic principle that copyright protects the expression of idea but not the idea itself.
Question 2 has been answered in affirmative. The issue of causal connection (Question 1) arises only after the issue of substantial similarity between the two works has been established. As such, the appeal was allowed with costs.
In conclusion, whether two works are sufficiently similar is a question of fact. Unless the main ideas discussed in the two disputed works are common issues, the abovementioned disclaimer may not be able to save one from a potential liability for copyright infringement.
For further information regarding intellectual property law matters, please contact our Intellectual Property Practice Group.
TAX AND REVENUE
Income tax
The following public ruling and guidelines have recently been published on the Inland Revenue Board of Malaysia’s official website:
- Tax Treatment of Wholly & Partly Irrecoverable Debts and Debt Recoveries (Public Ruling No. 4/2019) issued on 24 September 2019;
- Operational Guideline No. 4/2019 on Procedure on Submission of Amended Return Form (to replace Operational Guideline No. 3/2019 dated 22 April 2019); and
- Guideline For Approval Of Director General Of Inland Revenue Under Subsection 44(6) of The Income Tax Act 1967 (to replace the Guidelines for Application of Approval under Subsection 44(6) of the Income Tax Act 1967 issued in January 2005).
Service tax
The following order and regulations have been gazetted on 30 August 2019 and have come into operation on 1 September 2019:
- Service Tax (Imposition of Tax for Taxable Service in respect of Designated Areas and Special Areas) (Amendment) Order 2019;
- Service Tax (Amendment) Regulations 2019; and
- Service Tax (Compounding of Offences) (Amendment) Regulations 2019.
The Royal Malaysian Customs Department has also recently published the following Service Tax Policies on its MySST website:
- Service Tax Policy on the Four Services which Implementation was Previously Postponed (Service Tax Policy No. 1/2019) dated 1 September 2019; and
- Service Tax Policy on Services Imported into Designated Area Pulau Labuan (Service Tax Policy No. 2/2019) dated 1 September 2019.
For further information regarding tax and revenue matters, please contact our Tax and Revenue Practice Group.
This Alert is issued for the information of the clients of the Firm and covers legal issues in a general way. The contents are not intended to constitute any advice on any specific matter and should not be relied upon as a substitute for detailed legal advice on specific matters or transactions.