[this article will be published in an upcoming issue of SKRINE’s Legal Insights]
By Lee Shih and Khong Siong Sie
The Companies Act 2016 (“Act”) has come into force on 31 January 2017, except for the provisions on registration of company secretaries and corporate rescue. This article will highlight five tax implications on companies as a result of the Act.
(1) SME OR NON-SME
The Act’s introduction of no-par value shares may have an impact on the preferential tax rates enjoyed by certain small and medium enterprises (“SMEs”).
Resident SMEs with a paid-up capital in respect of ordinary shares of RM2.5 million and below at the beginning of the basis period for a year of assessment are taxed at a preferential tax rate of 18% (instead of the normal rate of 24%) for the first RM500,000 of its chargeable income. Such SMEs must not be part of a group of companies where any of their related companies have a paid-up capital of more than RM2.5 million.
With the introduction of no-par value shares, the moneys in the share premium account and capital redemption reserve become part of the company’s share capital, subject to a transitional period of 24 months. This merging of share premium and capital redemption reserve may result in some SMEs losing the preferential tax rate once their merged share capital in respect of ordinary shares exceeds RM2.5 million.
Losing such preferential tax rate may translate into liability for an additional tax of up to RM30,000.00. Further, there may be a loss of other benefits such as the unlimited claim on special allowances for small value assets and exemption from having to provide an estimate of tax payable for the first two years of operations. Continue reading →
Guest writer Pang Jo Fan—Head of Marketing & Communications at legaltech lawyer-discovery service CanLaw—presents his views on why Malaysia’s Bar Council should be encouraging the development and introduction of legaltech to ensure access to justice.
Of late, there has been a spike in legal technology startups in the Malaysian market providing innovative tech solutions to assist both the public and lawyers in their day-to-day legal needs. Other than the more veteran players such as eLawyer and OfficeParrots who have been tirelessly serving Malaysian law firms with their human resource needs, there are also recent players such as Lesys Tenancy (tenancy agreements), BurgieLaw (legal directory), Dragon Law (document drafting), EasyLaw (calculators for lawyers), Locum Legalis (MOB app) and, of course, CanLaw (lawyer-discovery).
Much has been said about the Bar Council’s denial of Dragon Law’s entry to the Malaysian market and the infamous lawsuit against Answers-In-Law. The Malaysian Lawyer also provided an insightful update on the said matters based on the report by the Legal Profession Committee dated 1 December 2016 contained in the 2016/17 Annual Report of the Malaysian Bar. As it stands, it appears that the legal industry remains rather cautious of any form of tech innovations that are being introduced into the profession, mostly due to the general misconception that technological innovations pose a threat to the livelihoods of law practitioners in the country.
Our guest writer, Jillian Chia, shares her insight on the laws regulating the use of drones in Malaysia. Be aware of these laws.
You place an order for pizza on your smartphone. Minutes later you hear a ‘plop’ on your front lawn. Your pizza arrives! No ring of the doorbell, no pizza delivery man. Your late-night snack has arrived, delivered by an unidentified flying object. No, we are not talking about pizza delivery of an extra-terrestrial kind, but what could become a real possibility in the near future- food delivery by way of unmanned aerial vehicles (UAVs), or more commonly known as drones.
Guest writers Richard Wee, Lesley Lim and Vincent Lim write on the ground-breaking corporate sponsorship deal for the Axiata Arena. They share on the 4 sports law issues that arise in this deal.
Alongside the growth of the sports industry in recent times, there has been a trend for corporations and individuals of means to invest in sport stadiums through naming rights, a form of collaboration between two parties resulting in a company name being synonymous with a sporting team for a set period of time in exchange for a financial payment.
England has the 02 Arena while Shanghai has the Mercedes Benz Arena. Now, Malaysia has its very own multi-sport stadium, the Axiata Arena. Axiata Group Berhad has secured the exclusive sponsorship to work jointly with the Malaysia Stadium Corporation (Perbadanan Stadium Malaysia) on the redevelopment, modernisation as well as the rebranding of the Putra Indoor Stadium to Axiata Arena, making a mark in history as Malaysia’s first corporate named stadium.
A 10-year agreement worth RM55 million between the Malaysia Stadium Corporation and Axiata Group Berhad has been reached. The Malaysia Stadium Corporation will continue to be responsible for the maintenance while other upgrades will be to the extent of which Axiata had agreed upon as per the terms and conditions of the agreement.
Guest writer Lee Quin shares her thoughts of having moved from being an intellectual property lawyer in a law firm to a regional in-house legal counsel role. She gives advice on the 8 things to consider if you are thinking of making the move in-house.
I started my career as an intellectual property and data protection lawyer in one of the top tier law firms in the country. My career path officially began when I was called to the Malaysian Bar aptly on the day the Malaysian Personal Data Protection Act 2010 came into force. On a day-to-day basis, I assisted with advising GLCs, FMCG companies, and Fortune 500 companies on intellectual property issues, IT and data protection matters, and everything else in between that largely dealt with technology.
One of the highlights of my career as a practising lawyer was the opportunity to advise a technology company on the viability and compliance of their business model in Malaysia, and to then go on to see it change the lives of Malaysians every day (this information is significant here, you’ll see why further along).
Immersing in Startup Culture
Sometime in 2015, I started to witness a trend amongst young lawyers. Many of my peers increasingly started to make the move from being a practising lawyer to either working in or building a startup. A black hole of curiosity with an unforgiving gravitational force started to emerge in my life and sucked me in.
Guest writers Richard Wee and Samuella Kong shed light on doping tests in sports. How does the international sports community monitor athletes and investigate doping cases?
The Rio Olympics 2016 have come and gone. Once again, the spirit of human passion to achieve greatness and to accomplish what was once deemed to be impossible, has been illustrated repeatedly at the Rio Olympics. In the midst of all this competition, a constant reference to fair play was made with regards to doping in sports. Due to the Russian doping scandal that first broke out in November 2014, a great suspicion has hovered over any athlete from Russia throughout the competition. Seeing a Russian athlete on the podium may have invoked suspicion among some spectators, an unfair situation for athletes not involved in the scandal. This highlights the importance of modern day athletes not only staying clean and above drugs but being perceived to be clean and above drugs.
The Malaysian Lawyer interviewed Richard Wee, sports lawyer and Deputy President of the Sports Law Association of Malaysia. We wanted to find out more about the area of sports law and of this new association. There are lots of exciting plans for the future and it looks like the development of sports law can only skyrocket.
First of all, congratulations on being elected as Deputy President of the Pro-Tem committee of the Sports Law Association of Malaysia (SLAM).
Can you share with us what factors led to the formation of SLAM?
Thank you for your warm wishes. It is indeed a great honour to be elected by my fellow peers to lead SLAM as deputy president. We hope to create a platform for interested parties to explore the frontiers of sports law in Malaysia. Under Datuk Dr Sundra Rajoo’s leadership, I am confident that the objectives of SLAM, particularly the aspiration that one day Malaysia becomes the sports law hub of this region, will be a reality.