Case Update: Passing of a Members’ Written Resolution under the Companies Act 2016 with “More than Half of Such Members”

The High Court in the case of  Mohamed Zain Yon Bin Mohamed Fuad v Jason Jonathan Lo & Ors issued its Grounds of Judgment dated 6 March 2019. The case clarifies the interpretation of the new members’ written resolution provision of the Companies Act 2016 (CA 2016). More than half the number of shareholding of the members is required to pass the members’ written resolution. It is not more than half the number of the shareholders. Further, the case also emphasised how the CA 2016 applies even to companies which still retain the Table A Articles of Association under the Companies Act 1965 (CA 1965).

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Case Update: Federal Court Decides that Retention Sum in a Construction Contract is Not Held on Trust

The Federal Court in the Pembinaan Legenda case has decided on significant areas of law on whether retention sum monies under a construction contract are held on trust. There was uncertainty in light of two conflicting Court of Appeal decisions in Qimonda and Pembinaan Legenda.

In its grounds of judgment dated 13 March 2019, the Federal Court has held that there is no implication at law of retention sum monies being held on trust. The creation of a trust depends on the construction of the contractual terms and also the separation of the monies into a trust account. Continue reading

Case Update: Insufficient justification and improper handling of Voluntary Separation Scheme may give rise to unfair dismissal

In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Retrenchments are an ever-present issue in the Malaysian industrial relations landscape. The Malaysian Employers Federation has forecast that 30,000 employees will be laid-off this year. The proper handling of retrenchments is a constant challenge for employers, and disputes often arise. The Ministry of Human Resources recently announced that terminations due to retrenchment were the most common reason for unfair dismissal cases received by the Industrial Relations Department over the past 10 years, accounting for 30% of all cases.

Many employers make the mistake of assuming that implementing a retrenchment exercise is a straightforward way of getting rid of unwanted employees, or downsizing the workforce to cut costs. I’ve written about some of the legal issues related to retrenchment in two earlier articles:

  1. In “What you need to know about the law on retrenchment of employees”, I summarised the key Malaysian legal principles in relation to retrenchments. Essentially, it is the prerogative of the management to decide on the reorganisation of its business, and the courts will not intervene unless it is shown that the employer’s decision was not in good faith.
  2. In an earlier article in this Case Update series — “Case Update: Relevant issues when an employer uses financial difficulties as a reason for retrenchment” — I wrote about a case where the Industrial Court held that an employer relying on financial difficulties to justify retrenchment had to prove it was experiencing financial difficulties, and to show the financial savings it made through the retrenchment.

In the recent case of Suseela Devi Balakrishnan v. Inti International College Kuala Lumpur Sdn Bhd (Award No. 343 of 2019), the Industrial Court considered a scenario where the employment relationship ended based on a voluntary separation scheme (“VSS”) arising from a redundancy scenario, and the employee subsequently claimed that she was dismissed without just cause and excuse.

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Proposed Requirements for Fly-In-Fly-Out Foreign Lawyers in Malaysia

In January 2019, the Bar Council of Malaysia submitted to the Attorney General the proposed reforms to the Legal Profession Act (LPA). One area that will be amended will be the provisions involving foreign lawyers and foreign law firms entering Malaysia to advise clients. I have written about Malaysia’s liberalisation of legal services previously.

The UK Law Gazette highlighted some concerns of further restrictions on foreign lawyers being able to enter Malaysia to advise on non-Malaysian law aspects. I clarify this area of proposed reform under Malaysian law. Continue reading

Practising Certificate for Company Secretaries and the Duties of Company Secretaries

Section 241 of the Companies Act 2016 (CA 2016) has come into force today on 15 March 2019 (see P.U.(B) 138/2019). This is the last provision of the CA 2016 to be brought into force. Under this section, all qualified persons who wish to act as a company secretary must register with the Registrar of Companies.

With the coming into force of section 241, the Companies (Practising Certificate for Secretaries) Regulations 2019 and Guidelines Relating to Practising Certificate for Secretaries Under Section 241 of the Companies Act 2016 have also come into force on 15 March 2019. There is also a FAQ section on the Companies Commission of Malaysia website. Continue reading