Dear valued clients and business partners,
We are pleased to highlight the following legal news and updates for October 2019.
CORPORATE/M&A
Companies (Amendment) Act 2019
The Companies (Amendment) Act 2019 (“Act”) has been gazetted on 9 October 2019. The Act introduces certain amendments to the Companies Act 2016 (“CA 2016”), including amongst others, the deletion of the word “special” from section 84(1) of the CA 2016.
By virtue of this deletion, a company may by resolution alter its share capital, which read together with section 290(3) of the CA 2016 would mean that generally only an ordinary resolution is required. However, section 84(1) of the CA 2016 remains subject to any other requirements imposed in the constitution of the company in respect of the alteration of its share capital.
The Minister of Domestic Trade and Consumer Affairs has yet to appoint a date for the Act to come into operation.
For further information regarding corporate/M&A matters, please contact our Corporate/M&A Practice Group.
DISPUTE RESOLUTION
Noor Azman bin Azemi v Zahida bt Mohamed Rafik Federal Court [2019] 3 MLJ 141
Facts
The respondent, Zahida bt Mohamed Rafik (“Zahida”), was an actress and the appellant, Noor Azman bin Azemi (“Azman”), was her personal driver. Zahida had instructed Azman to deposit RM200,000 in cash and a cheque to the amount of RM120,000 into her bank account. She was subsequently unable to contact Azman and lodged a police report to the effect that Azman had run away with her cash.
After making the police report and while leaving the police station, she was approached by reporters who wanted to know the reason for her visit to the police station. She informed the reporters that a police report was lodged against Azman and told them the contents of the police report. This was subsequently picked up by Harian Metro which published the contents of the police report. Azman then filed a claim for defamation against Zahida.
In rejecting Zahida’s defence of absolute privilege, the High Court Judge found that she failed to give any reasonable excuse that necessitated the regurgitation of the police report and “ … pandering to the press” was not an acceptable reasonable excuse.
However, the Court of Appeal reversed the High Court’s decision by allowing Zahida’s counterclaim and dismissing Azman’s claim. Hence, the present appeal.
Decision of the Federal Court
Following the decision of the Federal Court in Lee Yoke Yam v Chin Keat Seng [2013] 1 MLJ 145 it has been established that, for public policy considerations, absolute privilege is accorded to statements made in a police report irrespective of whether there is an element of malice on the part of the complainant. Therefore, an action in defamation will not lie against a maker of a police report.
However, the question that arises in the case being reported is whether subsequent publication of a police report (an absolutely privileged document) enjoys the protection of absolute privilege.
The Federal Court held that absolute privilege would NOT attach to the subsequent publication of the contents of the police report to the public at large save where the contents were made in or in connection with judicial or quasi-judicial proceedings.
Thene Arulmani Chelvi a/p Arumugam v London Weight Management Sdn Bhd (Court of Appeal) [2019] 1 LNS 1185
Facts
Thene Arulmani Chelvi a/p Arumugam (“Thene”), a lady of 43 years of age, undertook and paid for a package of services known as “Lavender Lipo Management Treatment” from London Weight Management Sdn Bhd (“LWM”), a company specialising in “slimming services”.
Upon signing the package, Thene was given a box of coffee and oat drinks which were to be consumed and a diet meal which she was required to follow strictly. Upon consumption of the first coffee sachet, Thene claimed that, amongst others, she fell sick and that her tongue became “stiff and swollen” and she had difficulty swallowing/chewing and was unable to talk properly. Thene further alleged that she reacted badly to the various treatment that she underwent and her skin broke out in ulcers, sores and redness. She had, amongst other effects, palpitations, weakness and constant pain.
Thene sued LWM in the High Court for suffering loss and damage caused by the negligence of LWM.
The claim was dismissed after a full trial.
Decision of the Court of Appeal
On appeal, the claim was allowed and judgment was entered against LWM. The Court of Appeal found that, contrary to the High Court’s findings, Thene had successfully proved the existence of a duty of care owed by LWM, a breach of that duty and damages as a result of the breach. The Court of Appeal also found that clause E in the slimming consultation card which precluded any party, including Thene, from enforcing his/her rights under the contract, is void under section 29 of the Contracts Act 1950.
Amongst other, the Court of Appeal interestingly held that:
“It is disquieting if not troubling to accept the Respondent’s proposition that because it is a slimming and not medical centre, it does not owe any duty of care to ensure that its customers, including the Appellant, are suitable, able or even safe to undertake any of their treatments. It cannot say that because it is a slimming centre, it is not able to conduct or is not responsible for making some inquiry into or about the health of the intending customer before it provides the slimming treatments or even design a combination or package of treatments suitable for any customer.”
Considering that one of the treatments undertaken by Thene involved the ingestion of supplements or other concoctions, the Court of Appeal found that such an intrusive treatment must, in its view, carry a corresponding duty of care to ensure that whatever it provided or recommended is in fact safe and suitable for the customer.
The Court of Appeal was of the view that the discounting of the price for the customised package does not in any way lessen, let alone absolve, LWM from its duty of care to ensure its treatment, as customised, does not harm Thene. LWM is under a duty to warn or alert its customers, regardless of the manner in which the slimming package is drawn up, of any adverse effects that its treatments may bring. More so, if these effects are known to LWM.
The Appeal was allowed and judgment was entered against LWM for negligence.
For further information regarding dispute resolution matters, please contact our Dispute Resolution Practice Group.
FINANCIAL SERVICES
Food Donors Protection Bill 2019
The Dewan Rakyat passed a Food Donors Protection Bill 2019 (“Bill”) on 9 October 2019 to encourage the public to donate food without the fear of being sued as well as to support the Government’s proposed Food Bank Programme.
The Bill seeks to provide for the protection from civil liability to any person who donates or distributes food without receiving payment or any form of consideration (“Food Donors”).
“Food Donors” are defined in the Bill to include any corporation, partnership, enterprise, association, government entity, manufacturer, supplier, wholesaler, retailer, hypermarket, supermarket, hotel, restaurant, caterer, agricultural producer, charitable institution, charitable organisation, foundation or other organisation or entity and its director, agent, or employee, or volunteer.
The protection afforded under the Bill is however not absolute and Food Donors can be liable if the following four conditions are proven:
- the personal injury, disease or death was caused by the negligence or wilful misconduct of the Food Donor;
- the Food Donor had not complied with any requirement in relation to food safety and food hygiene under any written law prior to donating or distributing the food;
- the food was not safe for consumption at the time it was donated or distributed to any person; and
- the donation or distribution of food was not made in good faith.
Highlights of Budget 2020 affecting financial services sector
On 11 October 2019, the Budget 2020 was tabled by the Minister of Finance before the Malaysian Parliament (the “Budget”). Amongst the highlights to the Budget relating to financial services sector are as follows:
- The Government will offer a one-time RM30 digital stimulus to qualified Malaysians, aged 18 and above with annual income of less than RM100,000, who own an identity-verified e-wallet account with selected service providers. This is to increase the number of Malaysians, participating merchants and Small Medium Enterprises (“SMEs”) who use e-wallets. The redemption can be made and used for a two-month period commencing from 1 January 2020 until 29 February 2020.
- Bank Negara Malaysia is finalising the licensing framework for digital banks to be issued by year end for public consultation. The final framework will be issued by the first half of 2020 to invite applications.
- The Government will further allocate RM50 million to My Co-Investment Fund (“MyCIF”) under the Securities Commission Malaysia to leverage equity crowdfunding and peer-to-peer platforms to help finance the underserved SMEs.
- Tax incentives given to venture capital and angel investors will be extended until year 2023 to encourage more alternative sources of funding for start-ups companies and attract more foreign investment to Malaysia.
- Bank Negara Malaysia is proposing a two-phase restructuring plan for development financial institutions to form a new financial institution through the merger of Bank Pembangunan Malaysia, Danajamin Nasional, SME Bank and the Export-Import Bank of Malaysia.
- the existing tax deduction on the cost of issuance and additional deduction on sukuk issuance costs under the principle of Wakalah will be extended for a further five years until the year of assessment 2025.
- the existing tax deduction on the cost of issuing sustainable and responsible investment (“SRI”) sukuk will be extended for a further three years until the year of assessment 2023.
- it is proposed that the stamp duty remittance of 50% for instrument of transfer of real property between parent and child, and vice versa, is limited to Malaysian citizens only.
- it is also proposed that the maximum stamp duty on foreign currency loan agreements be increased from RM500 to RM2,000. This will apply to foreign currency loan agreements executed from 1 January 2020.
For further information regarding financial services matters, please contact our Financial Services Practice Group.
INTELLECTUAL PROPERTY
An update on the trademark regulations under the Trademarks Bill 2019
The long-awaited Trademarks Bill 2019 (“new Bill”) has also been tabled and passed by the Parliament on 23 July 2019 and is expected to enter into force on the same date. This new trademark legislation will, amongst others, expressly recognise non-traditional trademarks such as shape, colour, sound and scent, the availability of multi-class applications, collective marks, provisions related to criminal enforcement procedures as well as the provisions related to the monetisation of trade marks as a form of security.
To implement the new Bill, the Intellectual Property Corporation of Malaysia (“MyIPO”) has also recently published a consultation paper on the proposed changes/new provisions to the trademark regulations under the new Bill for public feedback, which sets out, amongst others, the following:
- procedure and conditions relating to international registration under the Madrid Protocol;
- conditions for submitting all supporting documentation (including the translation and transliteration of trademark of non-roman character) at the outset of the application in order to secure the filing date;
- effect of deficiency in application, including postponement of the date of filing to the date when the deficiency is remedied;
- procedures for submission against the Registrar’s provisional refusal, which can be done by way of either a written representation or an oral hearing;
- timeframe and conditions for which an applicant is entitled to a refund of the fees paid in relation to a refused application (subsequent to a preliminary advice or search by the Registrar);
- requirement of filing affidavits of services with the Registrar in relation to opposition proceedings;
- procedure and conditions for merging of applications or registrations with the same mark, filing date, status, owner, address and are classified under Nice Classification;
- procedure and conditions for division of application or registration, based on classes or specific goods or services; and
- recognition of Court and Registrar’s power to determine if use on internet constitutes use of a sign or trade mark.
Payment of official filing fees for the application process up to acceptance is now payable at the outset of the application, unlike the present Trade Marks Act 1976 where the official fee is payable in stages at the filing stage and subsequently upon acceptance.
We will keep you updated on further developments and changes to the trademark legislation and regulations in due course.
For further information regarding intellectual property law matters, please contact our Intellectual Property Practice Group.
TAX AND REVENUE
Income tax
The Income Tax (Capital Allowance) (Development Cost for Customised Computer Software) Rules 2019 were gazetted on 3 October 2019 and were stated to have have effect from the year of assessment 2018.
The Inland Revenue Board of Malaysia (“IRB”) has recently issued Operational Guideline No. 5/2019 on “Pengenaan Penalti Di Bawah Subseksyen 112(3) Akta Cukai Pendapatan 1967, Subseksyen 51(3) Akta Petroleum (Cukai Pendapatan) 1967 dan Subseksyen 29(3) Akta Cukai Keuntungan Harta Tanah 1976” (available in Malay language only) on 16 October 2019 to replace Operational Guideline No. 1/2015 dated 5 March 2015.
Service tax
The following regulations and order have been gazetted on 30 September 2019:
- Service Tax (Digital Service) Regulations 2019 – Parts II and V as well as Regulations 17 and 18 have come into operation on 1 October 2019 while Parts III, IV and VI except for Regulations 17 and 18 shall come into operation on 1 January 2020; and
- Service Tax (Rate of Digital Services Tax) Order 2019 – this Order shall come into operation on 1 January 2020.
Finance Bill 2019
The Finance Bill 2019 was tabled for first reading in Parliament on 15 October 2019. More details on the same will be set out in our next Tax Update.
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.
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