A director is an individual who is appointed to manage the affairs, business and operations of the company. Under the Companies Act 2016, the term “director” includes any person occupying the position of a director by whatever name called and includes a person in accordance with whose directions or instructions the majority of directors are accustomed to act and an alternate or substitute director. For context, an “alternate director” or “substitute director” is an individual that is nominated by a director of the company to, among others, attend board meetings or perform the fiduciary and statutory duties on that director’s behalf.
Directors have fiduciary and statutory duties and responsibilities towards the company, and must always act in the best interests of the company and with reasonable care, skill and diligence. It is important for a person, who intends or consents to be appointed or to act as a director, to understand the implications and responsibilities of doing so, regardless of the type of directorship.
Qualifications of a Person as a Director of a Company
An individual must satisfy the statutory requirements under the Companies Act 2016 to qualify as a director of a company in Malaysia. These requirements include the following:
- A director shall be a natural person who is at least eighteen years of age;
- A director must not:
- Be an undischarged bankrupt;
- Have been convicted of an offence related to the promotion, formation or management of a corporation;
- Have been convicted of an offence involving bribery, fraud or dishonesty;
- Have been convicted of an offence under Section 213, Section 217, Section 218, Section 228 and Section 539 of the Companies Act 2016; or
- Have been disqualified by the Court under Section 199 of the Companies Act 2016.
If an individual does not meet the requirements above, the said individual is disqualified from holding office as a director of a company. In addition to the above, where a company has more than its required minimum number of directors, the company must ensure that:
- its minimum number of directors shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia; and
- its minimum number of directors shall not include an alternate or substitute director.
Appointment of Directors
A company has a duty to notify its company secretary and the Registrar of the particulars of any director intended to be appointed. The appointment of a director must be set out in the prescribed forms, which must be supported by:
(a) In the case of the incorporation of a company, the resolution of the shareholders or, in the case of appointing a new director, the resolution of the board of the company; and
(b) The written notice from the individual consenting to his appointment as a director of the company.
Other supporting particulars include the individual’s personal information, contact details, and residential and service addresses of the individual. These documents must be submitted to the Companies Commission of Malaysia. A company can enlist the services of its appointed company secretary to prepare, advise on, complete and submit the relevant forms, documents and information to the Companies Commission of Malaysia.
Differences between Executive, Non-Executive and Alternate Directors
There are companies that classify their directors according to the different roles on the board of directors that they were appointed to contribute to the company. The most common classifications of directors made by companies are executive directors and non-executive directors. An individual who is called upon to act in place of a director for a particular matter is known as an alternate director. As each classification of directors involves a different role on the board of directors, it is essential to understand the roles and functions of executive directors and non-executive directors.
All directors have to adhere to and satisfy their fiduciary and statutory duties towards the company. The differences between executive directors and non-executive directors lie within their respective roles and functions. Executive directors are appointed to manage and run the operations of a company on a daily basis. While they sit on the company’s board of directors, they are also full-time employees of the company. In this regard, executive directors are paid salaries and benefits.
Non-executive directors are not employees of the company, and they are not involved in the daily management and operations of the company. Non-executive directors are commonly appointed for specific expertise, skill or knowledge that can contribute to the company’s board reserved matters, strategic plans and implementation. Such specific functions of non-executive directors often result in consultation on and criticism of, and opinion towards, the matters to be resolved by the company’s board of directors.
For their services and contributions rendered to the company, non-executive directors are remunerated in the form of fees and benefits that are different compared to those of executive directors. The remuneration of non-executive directors is typically lower than those of executive directors.
Alternate directors are persons who are called upon to act for and on behalf of the principal directors for a particular matter, such as attending a board meeting. Although alternate directors act only when called upon to do so, they are subject to the same fiduciary and statutory duties as a director when carrying out their functions as alternate directors. This is supported by the inclusion of alternate directors under the umbrella term of “directors” under the Companies Act 2016. It is worth noting that there is no specific provision in the Companies Act 2016 in relation to the appointment of alternate directors. Thus, the appointment of alternate shareholders can only be exercised if it is expressly provided in the company’s constitution (formerly known as the memorandum and articles of association).
As the saying goes, “with great power comes great responsibility.” Directors play a crucial role in promoting the success and good corporate governance of the company, and they all have fiduciary and statutory duties towards the company in which they are appointed. It is crucial for any person who intends or consents to, or is interested in, their appointment as a director of any company, whether executive, non-executive or alternate, to be aware of the degree of duties and implications of acting as a director.
By Tommy Wong
Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.
A software development contract is a legally binding agreement that governs the terms for developing a software product, typically between a software developer and its customer. Software products include programs, mobile applications and platforms, web applications and platforms , and online integration or upgrades of existing software. As companies and businesses seek to adopt digital technology and integration, the need for software development contracts is becoming increasingly common. Whilst it is important to understand standard terms in software development contracts, customers should ensure that legal requirements and/or clauses are drafted carefully in software development contracts to avoid ambiguity and future disputes.
The process of developing software is unique and each software development project or service may entail different timelines, milestones, testing requirements, specifications and obligations in the software development contract. There are also different types of services in relation to software development based on the needs of a client. For example, a software development contract will be prepared for a project to design and develop a software, and the services may include design, development, implementation, support and maintenance. In other instances, a software contract may only govern the terms for an update or upgrade of the software. Regardless, the terms under these software development contracts must be clear and concise to address the objectives of the contracting parties. These contracts bind the software developer and its customer, to ensure that service and payment obligations are fulfilled within the agreed time frame.
Importance of Software Development Contracts
Every software development project will undoubtedly face its own challenges. However, a contract setting out agreed timelines, milestones and obligations will afford parties the opportunity to reduce potential risks and disputes, ensure safeguards and manage expectations in a clear and concise manner. More importantly, it allows parties to define the way the project is to be delivered and its specifications.
Software development contracts should also include provisions to establish the ownership of the source codes created for the software. The intellectual property rights of the software created is an important aspect of these contracts to avoid future disputes in terms of ownership. Other key areas in software development contracts include variations and testing requirements for milestones depending on the project. By incorporating these elements, parties are able to gauge a rough timeline for completion, set out terms to address variations which may be requested during the project implementation, and set the criteria to determine whether the software is functional during testing in accordance with the agreed specifications before delivery of the final product.
Standard terms in a Software Development Contract
There are different types of software development contracts, the choice of which will depend on the type of software being developed and whether the contract is based on time and materials or is a fixed/lump sum contract. When it comes to clauses addressing termination, dispute resolution, governing law and other boilerplate clauses, these software development contracts are similar to a contract for service. Please see our article on boilerplate clauses which can be found here.
Below the clauses commonly found in a software development contract.
1. Services to be provided and obligations
- The type of service required of the software developer and type of software to be developed.
2. Cost and payment terms
- The total cost and payment terms will either be based on progressive milestone payments (time and materials) or a fixed/lump sum payment.
3. Project timeline
- The timeline sets out the commencement date of the project development and the term of the contract. It is also important to address whether extensions of time are allowed and the consequences of delays.
- Variation clauses address terms and conditions to cater for variations to the software required by the customer before completion of the project. These variations refer to changes to either the specifications, features or design of the software and usually come at an added cost to the customer by the software developer.
5. Testing – User Acceptance Test/ Final Acceptance Test
- User acceptance tests are based on user requirements and specifications to be carried out upon completion of the design, development and installation of the software which involve either a conditional trial run period or the client testing.
- Final acceptance tests are the final stages of testing the software (if required) after the user acceptance test, which involves testing of rectified bugs, errors or other defects highlighted in the user acceptance test (if any).
6. Liquidated Ascertained Damages
- Liquidated ascertained damages clauses are included to compensate the customer at predetermined rates in the event of any delay towards completion of the project.
7. Intellectual Property Rights
- To address ownership rights of the software and other intellectual properties developed in connection with the contract upon completion and, in some cases, ownership rights of property relating to the software before completion.
8. Confidentiality and Non-Disclosure
- Confidentiality clauses for software development contracts is an important element to ensure parties maintain confidentiality during the development and implementation phases. Confidentiality obligations typically survive the expiration or termination of the contract.
9. Support and Maintenance
- It is common for software development contracts to include pre-agreed service level agreements to be attached as annexures to cater for support and maintenance of operating the software after development by the same software developer. This would cover technical elements of when, how and where the support and maintenance services will be provided as well as cost for such services for a specified period of time.
AIAC’s Standard Form Contract
On 19 November 2021, the Asian International Arbitration Centre (AIAC) released a standard form contract for software development under its AIAC Technology Expert Committee (TEC) which aims to provide an easy-to-use template encompassing the technology industry practices to ensure the rights of stakeholders involved are balanced.However, whilst the standard form includes most standard terms, customers should be weary to follow the template without legal advice and/or amendment. Each customer and project requires different needs on how software development is to be developed and implemented. Review of the standard form should be sought to include specific terms and conditions to address the needs of parties and the project.
The above standard clauses are non-exhaustive and should be drafted or reviewed carefully to address the needs of each project between a customer and the software developer. It is always helpful to engage lawyers to effectively advise on, assist with negotiations and draft clauses in a software development contract to meet the project objectives and effectively record agreed terms between the parties.
Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.
Since the announcement by the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin on 16.3.2020 on the implementation of the Movement Control Order nationwide, many regulations have been implemented under the Prevention and Control of Infectious Diseases Act 1988 (“the Act”) to prevent and curb the spread of COVID-19.
This article explores and summarizes the regulations implemented by the Government since 18.3.2020, both new and revised, under the Act to restrict movement and gatherings nationwide from what the Government has termed as the Movement Control Order (MCO), then the Conditional Movement Control Order (CMCO) and finally, the Recovery Movement Control Order (RMCO).
This article also briefly discusses the enforcement of the regulations and standard operating procedures (SOPs) issued by the National Security Council of Malaysia.
Movement Control Order (MCO)
On 16.3.2020, the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin enforced the Movement Control Order nationwide beginning from 18.3.2020 until 31.3.2020 (“Movement Control Order (MCO)”). New regulations were passed under the Act to implement specific measures during the enforcement of the Movement Control Order (“Regulations No. 1”).
In essence, Regulations No. 1 restricts movement and gatherings nationwide. Restrictions on movement included travel bans nationwide (unless necessary to procure or supply essential goods and services such as food, daily necessities and healthcare) and international travel bans (except for residents returning to Malaysia). Gatherings for any purposes, whether religious, sports, recreational, social or cultural purposes were prohibited. Funerals were allowed to take place, but attendance was restricted to a “minimum” (note that “minimum” was not defined under the regulations).
All educational institutions, including schools, colleges, universities and kindergartens nationwide were required to close. All government and private premises were also closed (except those which were involved in supplying essential services such as food, water, electricity, oil, gas, fuel, banking, health, prisons, security and defence).
On 25.3.2020, the Movement Control Order was extended from 1.4.2020 to 14.4.2020.
On 31.3.2020, new and revised regulations were passed to implement new and revised measures for the extended Movement Control Order from 1.4.2020 to 14.4.2020 (“Regulations No. 2”).
Stricter travel restrictions were implemented, including among others, restricting travel for food, daily necessities and healthcare to only within a radius of not more than ten kilometres from a person’s residence, and such travel was restricted to only one person at a time, unless reasonably necessary to be accompanied by another person. Those who were involved in supplying essential services were allowed to travel from their residences to their workplaces. However, they were required to produce an authorization letter from their employers if so required by the police officer on duty. During this extended Movement Control Order, the Government allowed those who were involved in providing infrastructure-related services to carry out works if such services were necessary for the supply of essential services.
On 14.4.2020, the Movement Control Order was extended again from 15.4.2020 to 28.4.2020, followed with the implementation of new and revised measures which were essentially the same as Regulations No. 2 (“Regulations No. 3”).
On 28.4.2020, the Movement Control Order was yet again further extended from 29.4.2020 to 12.5.2020, followed with the implementation of new and revised measures which were slightly less restrictive compared to the earlier regulations (“Regulations No. 4”). Single-traveller restrictions were lifted, and those who were travelling to procure food, daily necessities or healthcare could be accompanied by one family member staying in the same house.
Conditional Movement Control Order (CMCO)
Five days later, on 3.5.2020, the Government revoked Regulations No. 4 and issued new and revised regulations effective from 4.5.2020 to 12.5.2020 (“Regulations No. 5”). The Government then termed such period as under the enforcement of the “Conditional Movement Control Order”.
Effective from 4.5.2020, a person was allowed to travel for work purposes (in addition to buying or procuring food, daily necessities and healthcare). Most of the activities prohibited by Regulations No. 4 were still prohibited such as religious, cultural and art, entertainment, leisure and recreational activities and business activities which may cause a crowd to gather. Barbershops and beauty salons, filming activities, and tourism services also remained prohibited.
However, “crowd” was not expressly defined in the regulations.
Under Regulations No. 5, no person was allowed to travel to places which were enforced under the “Enhanced Movement Control Order” except for those who provide healthcare and medical services or permitted by the police to do so.
“Enhanced Movement Control Order”, according to Regulations No. 5, refers to “a direction given by an authorized officer under subsection 11(3) of the Act”. Subsection 11(3) of the Act is reproduced as follows:
(3) During the continuance in force of an order made under subsection (1), it shall be lawful for any authorized officer to direct any person or class or category of persons living in an infected local area or in any part thereof to subject himself or themselves-
(a) to treatment or immunization;
(b) to isolation, observation or surveillance, the period of which being specified according to circumstances; or
(c) to any other measures as the authorized officer considers necessary to control the disease.
Similar to earlier regulations, a person was required to obtain written permission of the police officer in charge of the police station nearest to his/her house if he/she needs to travel for any other purposes allowed under the regulations. Regulations No. 5 also expressly stated that if any person is stranded at any place due to the Conditional Movement Control Order, he/she has to return home.
Regulations No. 5 also allowed funeral attendance with a limit of 20 people. Instead of travelling together in pairs only, Regulations No. 5 allowed a private vehicle to carry a maximum of four persons but was restricted to those staying in the same house only. Public transportation was also allowed to operate but was prohibited from carrying more than half of the total maximum capacity of passengers. However, hire cars, taxi cabs, airport taxi cabs, limousine taxi cabs or e-hailing vehicles were not allowed to carry more than two passengers.
Recovery Movement Control Order (RMCO)
On 10.5.2020, the Prime Minister announced that the Movement Control Order was extended from 13.5.2020 to 9.6.2020, during which movement and gathering restrictions were less strict compared to Regulations No. 5.
New and revised measures were implemented through new and revised regulations (“Regulations No. 6”) which were gazetted on 12.5.2020.
A significant change included allowing travel from one place to any other place within Malaysia for work purposes, except to and from places which were under the implementation of the “Enhanced Movement Control Order”.
House visits and gatherings were also allowed for Hari Raya Puasa, Pesta Kaamatan and Gawai Dayak Day celebrations but “subject to such directions of the Director-General”. Further, attendance at funerals was no longer limited to “a minimum” but to be kept to less than twenty people.
Regulations No. 6 included a new provision which dealt with “directions of the Director-General”. The new provision is reproduced as follows:
“The Director General may issue any direction in any manner, whether generally or specifically, to any person or group of persons to take such measures for the purpose of preventing and controlling any infectious disease including any direction to any person or group of persons carrying out, organizing, undertaking, or who is otherwise involved in, any other than a prohibited activity”.
In addition to the above, travel by air to and from Peninsular Malaysia, and Sabah and Sarawak were allowed for work and supply of essential services. Flights from Peninsula Malaysia to Sabah and Sarawak were allowed to carry the total maximum capacity of passengers on board. However, flights from Sabah and Sarawak to Peninsula Malaysia were only allowed to carry not more than 66.6% of the total maximum load factor.
To prevent and curb the spread of COVID-19 in Sarawak, where cases were on a rising concern at the material time, Regulations No. 6 prohibited a person to travel from one district to another district within the State of Sarawak, unless with the written permission of the police officer in charge of the police station nearest to that person’s residence.
Another significant point to note is that Members of the Parliament and State Assemblies were allowed to attend parliamentary sittings and state assemblies. Prohibited activities which were previously listed in Regulations No. 5, such as entertainment, leisure, sports, recreational and business activities which may cause a crowd to gather, and barbershops and beauty salons were still not allowed to take place.
On 22.5.2020, Regulations No. 6 were amended (“Amended Regulations No. 6”) by which congregations at places of worship were allowed and no longer categorized as “prohibited gatherings” under the earlier regulations. However, such congregations and gatherings were subject to directions issued by the Director-General under the regulations.
The restriction on the number of passengers allowed on board for public air transport from Peninsula Malaysia to Sabah and Sarawak was also lifted. Tourism services were also allowed to operate as they were no longer on the list of prohibitory activities under the Amended Regulations No. 6.
On 9.6.2020, the Government extended the Movement Control Order from 10.6.2020 to 31.8.2020 with new and revised measures to the existing measures in the Amended Regulations No. 6 (“Regulations No. 7”) and such period was termed as the “Recovery Movement Control Order”.
Public transport was allowed to operate at full capacity as long as it was “in accordance with the directions issued by the Director-General”. Significantly, barbershops were no longer listed on the list of prohibited activities, and only contact sports (instead of what used to be termed as “entertainment, leisure, sports and recreational activities which may cause crowds”) were still prohibited. Swimming pool activities for the training of national athletes participating in the Tokyo Olympic Games 2020, in private residences and tourist accommodation premises, were also allowed.
Notably, “Any activity with many people in attendance at a place making it difficult to carry out social distancing and to comply with the directions of the Director-General” was added to the list of prohibited activities under Regulations No. 7.
However, “many people … making it difficult to carry out social distancing and to comply with the directions of the Director-General” was not defined or explained.
On 30.6.2020, Regulations No. 7 was amended (“Amended Regulations No. 7”) by which the following activities were allowed and removed from the list of prohibited activities:
(a) water theme park and water park activities;
(b) swimming pool activities;
(c) activities in karaoke centres, children’s playground in shopping malls and family entertainment centres;
(d) clothes fitting rooms; and
(e) reflexology and massage activities in health and beauty establishments.
On 14.7.2020, the Amended Regulations No. 7 was amended again (“Amended Regulations No. 7 (2nd Amendment)”) to allow sports events and tournaments but without the presence of spectators or participants from overseas. Contact sports and cruise ship activities were also no longer prohibited.
On 28.7.2020, the Amended Regulations No. 7 was amended for the third time (“Amendment Regulations No. 7 (3rd Amendment)”) by which those who enter Malaysia from overseas and are directed to undergo home quarantine are required to wear a wristband provided by the authorized officers.
On 30.7.2020, the Amended Regulations No. 7 was amended for the fourth time (“Amendment Regulations No. 7 (4th Amendment)”) which imposed stricter travelling restrictions within the State of Sarawak from 1.8.2020 to 14.8.2020. No one was allowed to move from one zone to another except with the written permission of the police officer in charge of the police station nearest to his/her residence. The “zones” were determined and categorized as “red”, “yellow” and “green” by the Director of Health of the State of Sarawak.
On 29.8.2020, the Government extended the Recovery Movement Control Order from 1.9.2020 to 31.12.2020, together with the implementation of new and revised measures implemented (“Regulations No. 8”) (which are still enforced as at the date of this article).
Under Regulations No. 8, travel and gathering bans are removed except travel to and from places under the “Enhanced Movement Control Order”. The earlier regulations governing health examination upon arrival in Malaysia, home quarantines and processions still apply. More significantly, only the following activities remain prohibited:
(a) Sports event and tournament with spectators in attendance, and sports event and tournament involving participants from overseas entering Malaysia;
(b) Outbound tour activities by a citizen and inbound tour activities involving foreign tourists entering Malaysia except for foreign tourists from countries specified by the Minister of Health;
(c) Activities in pubs and nightclubs, except restaurant business in pubs and nightclubs; and
(d) Any activity with many people in attendance at a place making it difficult to carry out social distancing and to comply with the directions of the Director-General.
On 1.10.2020, due to the rising number of COVID-19 infections at the material time, the Government amended Regulations No. 8 to tighten travel restrictions in Sabah (“Amended Regulations No. 8”). No person is allowed to travel from one district to another district in Sabah except with the written permission of the police officer in charge of the police station nearest to that person’s residence.
As COVID-19 cases increased at an alarming rate, on 7.10.2020, the Government made further amendments to the Amended Regulations No. 8 (“Amended Regulations No. 8 (Second Amendment)”). With the new amendments, from 12.10.2020 to 25.10.2020, no person is allowed to travel from the State of Sabah to the State of Sarawak, Federal Territory of Labuan or any state in Peninsula Malaysia except with the written permission of the police officer in charge of the police station nearest to that person’s residence.
On 27.10.2020, as the number of COVID-19 infections continued to rise, the Government extended the period from 27.10.2020 to 9.11.2020 (“Amended Regulations No. 8 (Third Amendment)”) to restrict travel from the State of Sabah to the State of Sarawak, Federal Territory of Labuan or any states in Peninsula Malaysia.
Consequences of breaching the regulations
We have previously laid out the consequences of breaching the Movement Control Order in our article here.
As set out in our article, if a person is convicted for breaching any of the regulations, that person will be liable to a fine of not exceeding RM1,000 or to imprisonment for a term not exceeding 6 months, or to both. The same penalty applies to a company that fails to comply with the regulations.
To our knowledge, the penalty for breaching the regulations enforced during the Movement Control Order, Conditional Movement Control Order or Recovery Movement Control Order remains the same to date.
Arrests for failing to comply with the regulations
It is widely reported in the news reports and press statements by the Senior Minister of Defence, Datuk Seri Ismail Sabri Yaakob that hundreds of people are arrested each day for allegedly breaching regulations and/or SOPs enforced during the MCO, CMCO, and RMCO.
On 15.4.2020, it was reported that a total of 14,922 individuals were arrested and detained for breaching regulations and/or SOPs enforced during the MCO, CMCO, and RMCO. According to the Federal Criminal Investigations Department director Commissioner, Datuk Huzir Mohamed, a total of 5,830 individuals were charged in Court. On 24.4.2020, it was reported that a total of 19,049 individuals were arrested for defying the Movement Control Order and/or for obstructing public servants from discharging their duties.
Recently, on 26.10.2020, it was reported that the Royal Malaysia Police (Polis Diraja Malaysia/PDRM) arrested 857 individuals for breaching regulations and/or SOPs enforced during the Recovery Movement Control Order. According to the Senior Defence Minister of Malaysia, Datuk Seri Ismail Sabri Yaakob, most of them were issued a compound, whereas 10 of them were arrested and remanded.
According to him, those individuals were found to have breached the RMCO by failing to wear a face mask (196 individuals), participating in activities in entertainment centres (183 individuals), failure to provide materials or devices for contract tracing registration (175 individuals), failure to practise “social distancing” (172 individuals), and premises which operated beyond permitted hours (53 individuals).
A few days later, on 31.10.2020, it was reported that 456 individuals were arrested for committing the same offence.
What does the law say about arrest?
Pursuant to the third column of the First Schedule to the Criminal Procedure Code (“CPC”), offences which are punishable with an imprisonment term of less than 3 years are “non-seizable” offences. A person cannot be arrested without a warrant for allegedly committing a non-seizable offence.
The offence for breaching the Regulations is a non-seizable offence because it is an offence which is punishable with a fine not exceeding RM1,000, or to imprisonment for a term not exceeding 6 months, or to both. Therefore, in our opinion, police officers are not allowed to arrest individuals for breaching the regulations and/or SOPs without a warrant. They are, however, empowered under the regulations implemented under the Act to, among others, issue a compound notice requiring the offender to attend Court on a specified date, or to pay a fine not exceeding RM1,000.
Therefore, it is questionable whether it is lawful to arrest and detain such individuals under the regulations and the Act.
Chin Chee Wei v Public Prosecutor  5 CLJ 640
This is the first reported case relating to committing an offence under the regulations.
On 2.4.2020, two individuals were arrested and jointly charged at the Sungai Siput Magistrates’ Court for breaching Regulations No. 2. They were found on a motorcycle carrying fishing rods near a fishing pond at Sungai Siput. Both the accused pleaded guilty and were convicted and sentenced to three months’ imprisonment.
Counsel for the accused applied to the Taiping High Court for a review of the sentence passed by the Sungai Siput Magistrates’ Court. The matter was then brought to the attention of the Taiping High Court Judicial Commissioner, Muniandy Kannyappan at the material time, and his Lordship decided to exercise its revisionary power provided under Section 323 of the CPC to review the sentence passed by the Sungai Siput Magistrates’ Court.
Upon perusing the Court’s records, his Lordship found that the law enforcement officials had not acted in excess of their powers nor abused it, but as part of policing, they had gracefully tendered their friendly advice to the duo. The accused would not have had to succumb to the arms of the law if they had heeded the police officers’ advice and returned home. Instead, they defied the police officers’ request, which then led to their arrest.
However, his Lordship found that the sentence of three months’ imprisonment was harsh and severely excessive. After taking into consideration the nature of the breach, the prevailing plea in mitigation advanced by the accused as well as public interest that needs to be protected, his Lordship exercised its powers to revise the sentence to a compulsory attendance order under s. 5(1) of Offenders Compulsory Attendance Act 1954, requiring both the accused to attend daily at the Perak Compulsory Attendance Centre and to undertake compulsory work for a period of three months for four hours each day. To ensure compliance with the order, both the accused were to enter into a bond with one surety for an amount of RM500.
The High Court held that a fine would be inappropriate, as the accused were daily wage earners who were not gainfully employed during the MCO. The High Court also opined that the revised sentence of compulsory attendance order would strike a balance between public interest which the regulations intend to preserve and protect and the interest of the accused persons. The following is an excerpt from the High Court’s grounds of judgment:
“Albeit, violation of the MCO by the accused persons, is the worst act of indiscipline, at this prevailing period of time, coupled with the act of defiance on their part, which the public in general cannot fathom, it is also unfathomable for the accused persons as violators to remain in an overcrowded prison, where social distancing is near to an impossibility. The prison doors shall remain closed shut behind for only prisoners who have committed heinous crimes. Under current circumstances, the public has no greater interest than that the accused persons who are violators of the MCO be “quarantined” at home pending compliance with the compulsory attendance order imposed.”
Based on the High Court judgment in Chin Chee Wei v Public Prosecutor above, it appears that a police arrest is lawful if a person is caught having breached the regulations and thereafter, defies the police officer’s order to return home, or to comply with the regulations implemented under the Act.
It appears that the regulations passed by the Government are not as detailed as many would expect them to be. Regulations which were implemented or amended since the implementation of Regulations No. 6 make many references to “subject to the directions of the Director-General” which confers a wide range of discretionary power on the Director-General.
“Director-General” in the Regulations refers to the “Director General of Health” as defined under the Act. Presently, the Director-General of Health of Malaysia is Tan Sri Dr Noor Hisham Abdullah.
However, to our knowledge, the Director-General of Health of Malaysia has not issued nor published any “specific directions” as the Regulations had stated (refer to the provision in the Regulations reproduced above) apart from the general directions relating to among others, wearing face masks in public places, and practising “social distancing” of staying 1-metre apart.
Further, the Regulations do not appear to have referred to directions issued by the National Security Council (“NSC”) and/or the Senior Defense Minister of Malaysia, Datuk Seri Ismail Sabri Yaakob.
To our knowledge, and to date, no regulations were passed for the recent enforcement of the Conditional Movement Control Order (CMCO) in Selangor, Kuala Lumpur and Putrajaya from 14.10.2020 to 27.10.2020 (and now extended to 9.11.2020). Such enforcement was only announced by the Senior Defense Minister of Malaysia, Datuk Seri Ismail Sabri Yaakob on 12.10.2020.
Hence, the question of whether the directions and “standard operating procedures (SOPs)” issued by the NSC through press statements or NSC’s official website are considered to be “directions issued by the Director-General”, remains to be answered. Similarly, it remains unanswered whether it is lawful to arrest, detain or charge a person who breaches such SOPs.
Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.
Wednesday, 7 Oct, 2020
3:00 pm – 3:45 pm Managing Poor Performance
About this talk
Employee’s performance at the workplace is a rising concern amongst most employers, particularly since the implementation of the Movement Control Order (MCO). The law allows an employer to terminate an employee if the employee’s performance is found to be unsatisfactory. However, there are certain criteria to be observed and fulfilled. Join us for this online talk in which our speakers will discuss the issues pertaining to employees’ poor performance and how employers should handle such situations.
The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.
- Overview of poor performance
- Performance improvement plan
- Does poor performance amount to misconduct?
- Managing poor performance
- Termination due to poor performance
- Janessa Kok, Associate, Dispute Resolution Practice Group
- Wong Sue Ann, Associate, Dispute Resolution Practice Group
Wednesday, 23 Sep, 2020
3:00 pm – 3:45 pm Preparing for the unexpected in wasiat drafting
About this talk
A Wasiat is the last testament of a Muslim. Do you know what needs to be included in a Wasiat? Risks and hurdles can be expected, but with practical tips in hand, much can be avoided. In this online talk, our speakers will guide you through the process of preparing your Wasiat from the beginning to end. The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.
- The concept of Wasiat in Syariah.
- Risks of not preparing your Wasiat
- Practical tips to avoid hurdles in the preparation of your Wasiat
- What is a residual clause?
- Sarah Kambali, Partner, Real Estate Practice Group and Syariah Estate Planning.
- Anis binti Mohd Sohaimi, Associate, Dispute Resolution Practice Group
FAQ on Liquidated Damages for Late Delivery of Properties by Developer
1. What governs the rights and obligations of developers and purchasers of properties?
The sale and purchase agreement is the primary definitive document which governs the rights and obligations of developers and purchasers of properties.
2. How are purchasers’ rights safeguarded?
Sale and purchase agreements for the purchase of properties from a developer are prescribed by an act of Parliament.
When purchasing land and building, the statutorily prescribed sale and purchase agreement is found under Schedule G of the Housing Development (Control and Licensing) (Amendment) Regulations 2015 (“the Regulations”) made pursuant to section 24 of the Housing Development (Control and Licensing) Act 1996 (“the Act”).
For the purchase of a building or land intended for subdivision into parcels, the prescribed sale and purchase agreement is found under Schedule H of the Regulations.
The developer cannot contract out of the prescribed contracts under the Regulations.
3. When does the developer have to deliver vacant possession to the purchaser?
When purchasing land and building, the prescribed time for a developer to deliver vacant possession to the purchaser is 24 months from the date of the sale, which is in accordance with Clause 24(1) of Schedule G.
When purchasing a building or land intended for subdivision into parcels, the prescribed time for a developer to deliver vacant possession to the purchaser is 36 months from the date of the sale, which is pursuant to Clause 25(1) of Schedule H.
4. What if the developer fails to deliver vacant possession to the purchasers within the prescribed time?
The developer will be liable to pay liquidated ascertained damages, more commonly known as LAD, to the purchasers.
5. What are liquidated ascertained damages under a sale and purchase agreement for property?
Liquidated ascertained damages is a pre-agreed compensation amount to be paid by the developer to the purchaser in the event the developer fails to deliver vacant possession within the prescribed time under the sale and purchase agreement.
6. How much can the purchaser claim for late delivery of vacant possession of the property?
Liquidated damages is calculated from day to day at the rate of 10% per annum of the purchase price as set out in the sale and purchase agreement from the expiry of the prescribed time for the developer to deliver vacant possession to the date the purchaser takes delivery of vacant possession.
7. Where should the purchaser file his claim for liquidated damages?
Purchaser may either file a claim against the developer in court or with the Tribunal for Homebuyer Claims (“Tribunal”). However, if the purchaser’s claim exceeds RM50,000, the Tribunal does not have the jurisdiction to hear the matter. Under such circumstances, the purchaser will be required to file his claim in court.
8. What if an extension of time was given by the Controller of Housing?
The Controller of Housing does not have the power to grant an extension of time in relation to delivery of vacant possession and any extension of time given will not affect the purchaser’s right to claim for liquidated damages (See Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals  1 MLJ 281).
9. What else can a purchaser claim?
For purchasers of a building or land intended for subdivision into parcels, the purchaser may also be able to claim liquidated damages against the developer’s failure to complete the common facilities serving the housing development.
10. What is the prescribed time for the developer to complete the common facilities?
The prescribed time for the developer to complete the common facilities is 36 months from the date of the sale and purchase agreement.
11. How much can the purchaser claim for late completion of the common facilities?
Liquidated damages is calculated from day to day at the rate of 10% per annum of the last 20% of the purchase price as set out in the sale and purchase agreement.
12. What if the purchasers do not take actual possession of the property?
Upon the expiry of 14 days from the date of a notice from the developer requesting the purchaser to take possession of the property, whether or not the purchaser has actually entered into possession of the property, the purchasers are deemed to have taken delivery of vacant possession.
13. What is the prescribed time for purchasers to bring an action against the developer?
In the case of a claim in the Tribunal, the purchasers will need to file their claim against the developer within 12 months from either the date of the certificate of completion and compliance, the expiry of the defect liability period, or the date of termination of the sale and purchase agreement, whichever is the later.
In the case of bringing a claim in court proceedings, the purchasers have a limitation period of up to 6 years from the date of accrual of the cause of action to file their claims
Q1: What law governs inter-floor leakage and party wall damage in strata schemes?
A: Inter-floor leakage and party wall damage are specifically governed by Regulations 55 to 67 of the Strata Management (Maintenance and Management) Regulations 2015.
Q2: What is inter-floor leakage?
A: An inter-floor leakage occurs where there is evidence of dampness, moisture or water penetration on the ceiling or any furnishing material that is attached, glued, laid or applied to the ceiling (including plaster, panel and gypsum board) which forms part of the interior of a parcel, accessory parcel or common property.
Q3: What is a party wall?
A: A party wall is a wall between separate parcels or located between a parcel and common property.
Q4: What is party wall damage?
A: Party wall damage occurs where there is evidence of dampness, moisture, water penetration or other damage on the wall or any furnishing material that is attached, glued, laid or applied to the wall (including plaster, panel and gypsum board) that forms part of the interior of a parcel, accessory parcel or common property.
Q5: What should I do about inter-floor leakage/party wall damage in my strata parcel?
A: You must first give notice of the leakage/damage to the developer, joint management body (JMB) or management corporation (MC), as the case may be.
Q6: How should the notice be prepared?
A: Although the Strata Management (Maintenance and Management) Regulations 2015 does not provide a specific format for the notice, it is advisable that the notice is in writing with sufficient particulars and that acknowledgement of receipt of the written notice is obtained.
Q7: What happens after I give notice of the inter-floor leakage/party wall damage?
The developer, JMB or MC, as the case may be, has to carry out an inspection on the affected parcel, any other parcels or common property.
Q8: How soon will the developer, JMB or MC carry out the inspection?
A: As soon as practicable or within seven days from the date of receipt of the notice.
Q9: What is the purpose of the inspection?
A: The purpose of the inspection is to determine (i) the cause of the inter-floor leakage/party wall damage and (ii) the party responsible for rectifying any defect that has caused the leakage/damage.
Q10: Must parcel owners allow access to the persons carrying out the inspection?
A: Yes. Provided seven days’ written notice is given to the parcel owner or occupier, the persons carrying out the inspection shall be given access to the affected parcel or any other parcels. The seven days’ notice requirement will not be applicable in cases of emergency (including the likelihood of flooding or danger to life or property), and forcible entry is permitted in those cases.
Any parcel owner or occupier who fails to give access to the affected parcel or any other parcels to the persons carrying out the inspection commits an offence and shall, on conviction, be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding three years or to both.
Q11: What happens after the inspection?
A: Within five days from the date of the inspection, the developer, JMB or MC, as the case may be, shall issue a Certificate of Inspection (Form 28) which will state (i) the cause of the inter-floor leakage/party wall damage and (ii) the party responsible for rectifying it.
Q12: What are the possible causes of inter-floor leakage/party wall damage?
A: The Strata Management (Maintenance and Management) Regulations 2015 provides four possible causes/circumstances:
(i) Defective workmanship/materials or the parcel was not constructed in accordance with the plans and description approved by the authorities and the leakage/damage occurred within the defect liability period;
(ii) Defective workmanship/materials or the common property was not constructed in accordance with the plans and description approved by the authorities and the leakage/damage occurred within the defect liability period;
(iii) Caused by or is attributable to a parcel; and
(iv) Caused by or is attributable to common property and leakage/damage which occurred after the defect liability period.
Q13: What are the remedies for each of the causes/circumstances mentioned above?
A: For cause (i) above, the parcel owner may make a claim against the developer pursuant to the sale and purchase agreement entered into with the developer.
For cause (ii) above, the parcel owner may make a claim against the Common Property Defects Account.
For cause (iii) above, the parcel owner shall take all necessary steps and measures to rectify the inter-floor leakage/party wall damage within seven days of receipt of the Certificate of Inspection (Form 28). This will be without prejudice to his right to seek indemnity from any other party, including the developer in (i) above.
For cause (iv) above, the developer, JMB or MC, as the case may be, shall take all necessary steps to rectify the inter-floor leakage/party wall damage within seven days of the date of issue of the Certificate of Inspection (Form 28). This will be without prejudice to their right to seek indemnity from any other party, including the developer in (ii) above.
Q14: For cause (iii) above, what happens if the parcel owner fails or refuses to rectify the inter-floor leakage/party wall damage?
A: The developer, JMB or MC, as the case may be, shall immediately take all the necessary steps and measures to rectify the inter-floor leakage/party wall damage, and thereafter shall charge and recover all costs and expenses from the parcel owner responsible for the rectification.
Q15: What happens if the parcel owner refuses to give access to the developer, JMB or MC to carry out the rectification?
A: Similar to Q10 above, provided seven days’ written notice is given to the parcel owner or occupier, the persons carrying out the rectification shall be given access to the affected parcel or any other parcel. The seven days’ notice requirement will not be applicable in cases of emergency (including the likelihood of flooding or danger to life or property), and forcible entry may be effected in those cases.
Q16: What should I do if I do not agree with the findings/determination of the inspection stated in the Certificate of Inspection (Form 28)?
You may refer the dispute to the Commissioner of Buildings (COB) and the COB shall determine the cause of the inter-floor leakage/party wall damage and the party responsible for rectifying the leakage/damage.
Although the Strata Management (Maintenance and Management) Regulations 2015 does not provide a specific format for the reference to the COB, it is advisable that the reference is in writing with sufficient particulars and that acknowledgement of receipt of the written reference is obtained.
Q17: Can I skip all the procedures above and proceed to file a Strata Management Tribunal claim or civil suit?
A: That is not advisable. The High Court in the case of Badan Pengurusan Bersama Mahkota Parade v Pesuruhjaya Bangunan Majlis Bandaraya Melaka Bersejarah  1 LNS 1080 held that if the legislation provides the remedies for the resolution of the dispute, the aggrieved party must exhaust those remedies before seeking the assistance of the Court. This principle may apply to the Tribunal as well.
Wednesday, 9 Sep, 2020
3:00 pm – 3:45 pm Partnership Dissolution and Distribution of Partnership Assets
About this talk
Many small-medium enterprises (SMEs) are founded and operated as partnerships. In order to avoid surprises and disputes, partners should understand how a partnership is dissolved and its assets distributed. Join us for this online talk in which our speakers will explain the ways to dissolve a partnership under the Partnership Act 1961 and the legal principles involved in distributing partnership assets upon dissolution. The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.
- Definition of partnership
- Types of partnerships
- Dissolution of partnership under the Partnership Act 1961
- Distribution of partnership assets upon dissolution
- Gan Chong Chieh, Partner, Dispute Resolution Practice Group
- Diana Cheak, Senior Associate, Dispute Resolution Practice Group
It is common practice for employers to hire employees under fixed term contracts in Malaysia. A fixed term employment contract is a contract for a specific period of time only. An employer’s primary intention in offering a fixed term employment contract is usually so that the employer does not have to commit to the permanent employment of the incoming employee. However, employers should be mindful that the Courts may enquire whether a particular fixed term contract is in fact a permanent contract in the event of an unfair dismissal claim in the Industrial Court brought by the employee. This question and dispute usually arises when the employer does not renew the employee’s fixed term contract. This article will set out the industrial relations legal principles on fixed term employment contracts.
General principle: No dismissal when fixed term contract ends
The general legal principle is that the issue of unfair dismissal does not arise at all when a fixed term contract comes to an end and is not renewed by the employer. This is because there was no termination or dismissal by the employer in the first place.
In the case of Marsha Sdn Bhd  ILJU 142, the Industrial Court described a fixed term contract as follows:
“A fixed term contract is one which has a definite beginning and a definite end. In common law, when a contract for a fixed term expires, it terminates of itself: it has not been “terminated” by either party. In the conventional sense, there is neither dismissal nor resignation. This is implicitly affirmed in the Employment Act 1955, Section 11.”
The Industrial Court in Han Chiang School, Penang Han Chiang Associated Chinese Schools Association v. National Union of Teachers in Independent Schools, W. Malaysia  2 ILR 611, held that in the case of a conventional fixed term contract, “the workman may have a grievance that he has not been hired by his employer under a fresh contract, but ordinarily an employer is not under any obligation in law to enter into a contract. At common law, therefore, there is simply no remedy.”
Is the fixed term contract genuine?
The primary question that the Court will ask and determine is whether the employment contract in dispute is in fact a genuine fixed term contract OR a permanent contract disguised as fixed term instead.
The Industrial Court in Han Chiang School explained what are genuine fixed term contracts:
“… there are genuine fixed term contracts, where both parties recognise there is no understanding that the contract will be renewed on expiry. The Court realises that such genuine fixed-term contracts for temporary, one-off jobs are an important part of the range of employment relationships. Some such jobs are found in seasonal work, work to fill gaps caused by temporary absence of permanent staff, training, and the performance of specific tasks such as research projects funded from outside the employer’s undertaking. These are the types of work envisaged in Section 11 of the Employment Act 1955, which may be embodied in contracts of service for a specified period of time. This type of fixed-term contracts are therefore to be differentiated from the so-called fixed-term contracts which are in fact ongoing, permanent contracts of employment.”
Once it is established that there is a genuine fixed term contract, the dissolution of the contract upon the expiry of its fixed term would clearly spell the end of the employee’s tenure with the employer (see M Vasagam Muthusamy v. Kesatuan Pekerja-Pekerja Resorts World, Pahang & Anor  5 CLJ 448).
The Court of Appeal in Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong  3 CLJ 9 held that an employee in a genuine fixed term employment contract leaves at the expiration of the fixed term and that is just cause enough for the employer to formally bring an end to their employment relationship.
The Federal Court in the case of Ahmad Zahri Bin Mirza Abdul Hamid v Aims Cyberjaya Sdn Bhd  1 LNS 494 recently held that the question of whether an employer had a genuine need for the service of an employee for a fixed duration may be divided into the following three considerations:
(i) The intention of the parties;
(ii) The employer’s subsequent conduct during the course of the employee’s employment; and
(iii) The nature of the employer’s business and the nature of work which the employee was engaged to perform.
(i) Intention of the parties
In the case of Han Chiang High School, the school (employer) had employed teachers (employees) on fixed term contracts of two years. Some teachers had taught at the school for more than 20 years and had their fixed term contracts renewed repeatedly during that period. The school then informed a number of teachers, who were members of the Union of Teachers in Independent Schools, that their employment would cease upon the expiry of their fixed term contracts. After the expiry, the teachers proceeded to file representations that they were dismissed without just cause and excuse. The Industrial Court looked into the facts of the case and found that although there might have been a genuine need for fixed term employment contracts when the school was first established in 1951, there did not appear to be such a need when it had been successfully established that some teachers had taught in the school for more than 20 years and had their contracts renewed unfailingly during those years. As such, the Industrial Court held that the fixed term contracts were not applied out of genuine necessity but as a means of control and subjugation of the teachers.
(ii) Employer’s subsequent conduct
In determining whether a fixed term contract is genuine, the Courts will also consider the employer’s subsequent conduct during the course of the employee’s employment and the employee’s total duration of service with the employer.
In the case Sime UEP Development Sdn Bhd v Chu Ah Poi  1 ILR 256, the company employed a clerk under a fixed term contract of one year which was then renewed annually for three more years. At each expiration, the company renewed his contract automatically without requiring the employee to apply for such renewals. The Company also gave salary increments to the employee for each renewal of the contract. During his four years of employment, the clerk was involved in various projects. Thereafter, the company did not renew the employee’s contract for a fifth term because there was a slowdown in the company’s business and the last project in which the claimant was involved in had come to an end. The Industrial Court held that the fixed term contracts were not genuine and that the company’s subsequent conduct and the employee’s total period of service in fact show that his employment was permanent.
(iii) Nature of employer’s business and employee’s work
Other factors that can determine the true character of a genuine fixed term contract may include the nature of the employer’s business operations and the nature of work which the employee was engaged to perform.
In the case of Khairu Norliza Khairudin v Kool Fm Radio Sdn Bhd  2 LNS 0396, the Industrial Court held that the fixed term employment contract between the radio company and its radio announcer was not genuine. The Court took into account that there was no evidence that the multiple renewals of the employment agreement were intended for temporary purposes. The Court also scrutinized that the company was constantly creating new programmes signifying expansion that required the employee’s role as a radio announcer consistently for a long period of time. The company’s radio broadcasting business was also one that was continuous in nature. In any event, the employee was also doing office work for the company. The evidence also revealed that the employee’s work was taken over by another radio announcer employed by the company soon after and that this nature of work existed even whilst this case was ongoing in Court.
From the above, both employers and employees should always bear in mind that their rights and liabilities are not confined strictly to the terms and conditions of the employment contract alone. The Courts will ensure the protection of an employees’ security of tenure from sham, improper and intricate manoeuvres and devices. Employers should consider seeking legal advice and assistance in reviewing their existing fixed term employment contracts with their employees, especially when deciding whether to renew the said contracts. Similarly with new incoming employees, it is highly advisable for employers to ensure that there is a genuine need to enter into fixed term contracts taking into account the duration, nature of the business and work required of each particular employee.
By John Chan
Our partner, Puan Sarah Kambali, was invited to give a talk on the topic of Estate & Retirement Planning in Malaysia. The talk was held online on 11 August 2020 and was organised by Puan Nur Lalua from the Management and Science University of Malaysia (MSU).
Puan Sarah Kambali shared knowledge on estate planning in Malaysia in connection with conventional and Syariah perspectives. She touched on the two main elements, which were – Wills and Wasiat. In her talk, Puan Sarah stressed that the preparation of a Will or Wasiat is vital to each individual. The effect of not having a Will or Wasiat may cause hardship on the existing and surviving heirs.
Puan Sarah made reference to an article from UKM, which highlighted the position of inheritance of a Non-Muslim heir from a Muslim. In this article, in situations of intestacy, a Non-Muslim and a Muslim could inherit from each other. Hence, the importance of having a Will or a Wasiat is to ensure that the wishes of the testator in terms of bequeathing of assets are carried out accordingly.