Case Update: Priority of Wages under the Employment Act over Debenture Holder Debts

The High Court issued its grounds of judgment dated 18 July 2019 in the case of Perwaja Steel Sdn Bhd (in receivership) v RHB Bank Berhad & 789 Others. Justice Darryl Goon delivered the decision.

The main issue was whether wages under section 31 of the Employment Act 1955 (Employment Act) would have priority over the debts owed to the debenture holder.

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Case Update: Federal Court Decides on Final Payments Claimed in Adjudication

The Federal Court in its grounds of judgment dated 1 August 2019 in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd decided on important points of law on adjudication and final payments under a construction contract. The Federal Court had to decide whether the Construction Industry Payment and Adjudication Act 2012 (CIPAA) could apply. Further, it was also determined whether CIPAA could apply to payment disputes between an architect and client. The grounds of judgment were written by Justice Mohd Zawawi Salleh FCJ.

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Beneficial Ownership of Companies: Out of the Shadows

Recent headlines have carried the news that the Malaysian Anti-Corruption Commission wants to have its own provision on beneficial ownership in the MACC Act 2009 to identify real owners of businesses or properties to further eradicate corruption. This is also against a backdrop of the Panama Papers, and the Paradise Papers.

There is already an existing provision in the Companies Act 2016 (CA 2016) that deals with beneficial ownership. But perhaps, it does not go far enough.

It is important to identify the beneficial owner of a legal entity such as a company, a trust or a partnership. This will ensure tax transparency, and help to fight against tax evasion and financial crimes such as money laundering or terrorism financing. The true controllers of companies will be brought out of the shadows.

I set out some global trends, and I explain the existing Malaysian provision under the Companies Act 2016 (CA 2016) and the possible direction going forward.

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Case Update: Court of Appeal Revives the Issue of Liquidated Ascertained Damages Clause

The Court of Appeal in its grounds of judgment dated 26 July 2019 in Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui & Another has revived the question of whether there is a need to prove actual loss where there is a liquidated ascertained damages clause.

The earlier Federal Court decision in Cubic Electronics had concluded that for liquidated damages clause, proof of actual loss is not mandatory. The onus was on the defaulting party to show that the liquidated ascertained damages clause was unreasonable.

In Macvilla, the Court of Appeal now sets out the method of interpreting section 75 of the Contracts Act 1950 in applying the liquidated ascertained damages clause. Continue reading

Seven Key Changes of the Companies Amendment Bill 2019

The Companies Amendment Bill 2019 was tabled for First Reading before the Dewan Rakyat (i.e. the House of Representatives) on 8 July 2019.The amendment Bill was passed by the Dewan Rakyat on 10 July 2019 and by the Dewan Negara (i.e. the Senate) on 31 July 2019.

The amendment Bill will make amendments to the Companies Act 2016 (CA 2016). I have since updated this article to take into account the Parliamentary debate of the amendment Bill.

I highlight seven of the more significant amendments. There will be welcome clarification of the effect of section 66 on the execution of what sort of documents, as well as the redemption of preference shares out of capital. But I can see issues relating to the appointment of receivers or receivers and managers after liquidation. There is a severe dilution of the ability to apply for judicial management.

#1: Section 66 to Only to Apply to Specific Types of Documents

I had earlier written about the possible uncertainty of validity of signed documents under section 66 of the CA 2016. Would all documents executed on behalf of the company require at least one director to sign that document? Under the CA 2016, the term document meant a document referred to under the Evidence Act. Continue reading