Amendments to the LEAP Market Transfer and Recognised Approved Adviser Framework
The LEAP Market Transfer Framework, which facilitates the graduation of eligible Leading Entrepreneur Accelerator Platform (“LEAP“) Market-listed corporations to the ACE Market of Bursa Malaysia Securities Bhd, came into effect on 1 April 2023.
Key amendments were introduced in the Access, Certainty, Efficiency (“ACE“) Market Listing Requirements (“ACE LR“), including the introduction of a Recognised Approved Adviser Framework; and the expansion the pool of Sponsors/Advisers in the ACE Market on transfer listings and permitted corporate exercises.
Under the LEAP Transfer Framework, the transfer applicant must fulfil the following conditions:
- have been listed for at least two years on the LEAP Market at the time of application for the transfer of listing;
- be considered as suitable for listing on the ACE Market by a Sponsor, or both Sponsor and Recognised Approved Advisers as Joint Transfer Sponsors;
- comply with the admission criteria and transfer of listing requirements set out in the ACE Market Listing Requirements, including the moratorium requirements;
- undertake an issue of shares to the general public as part of its transfer of listing; and
- comply with the relevant admission procedures and requirements as may be prescribed by the Exchange.
A transfer applicant must first obtain its shareholders’ approval for delisting. This resolution must be approved by a majority of its shareholders in number – representing 75% of the total number of issued shares held by its shareholders, present and voting in person or by proxy at the meeting; and the number of votes cast against the resolution should not be more than 10% of the total number of issued shares held by the shareholders, present and voting in person or by proxy at the meeting.
The amendments also require the Sponsor (together with the transfer applicant and other key advisers) to consult the Exchange before submitting the transfer listing application.
The United Kingdom Joins the CPTPP: Enhancing Trade and Investment Relationship with Malaysia
On 31 March 2023, just slightly over two years since applying to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP“), the United Kingdom (“UK“) announced that it had concluded negotiations on its accession to the CPTPP.
This free trade agreement (“FTA“) between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam (“CPTPP Parties“), which was signed by these parties in March 2018, was ratified in Malaysia on 29 November 2022.
Before the UK can become CPTPP’s 12th member, each existing Party must complete its own domestic ratification procedures to approve the UK’s accession. The UK will also need to complete its own processes, such as conducting pre-ratification scrutiny and passing legislation to implement the FTA.
The result will be extensive tariff liberalisation between the UK and Malaysia – the first time the two nations will form a trade deal. As a consequence, it is anticipated, for example, that export tariffs for whiskey to Malaysia will be reduced from 80% to 0% within 10 years, while UK exporters of chocolate and sugar confectioneries will benefit from 0% tariffs on exports to Malaysia (current tariffs are between 10% and 50%). There will also be a side letter between the UK and Malaysia allowing more liberal rules of origin on automotive exports, giving UK car manufacturers better opportunities to export finished vehicles to Malaysia.
As part of negotiations leading up to its accession, the UK has agreed to eliminate import tariffs on Malaysian palm oil (currently ranging up to 12%). Both countries will issue a joint statement setting out their commitments on sustainable production and to protect forests in Malaysia.
The UK’s accession to the CPTPP is expected to boost its trade and investment relationship with Malaysia, offering further opportunities for deepening the economic relationship.
New General Code of Practice of Personal Data Protection Issued under the Personal Data Protection Act 2010
Under the Personal Data Protection Act 2010 (“PDPA“), there are 13 specified classes of data users (“Specified Classes“) that are subject to additional requirements under the PDPA, including the requirement to draw up binding Codes of Practice to set out data protection requirements that are tailored to their particular industries (e.g., banking, insurance, education, etc).
For the Specified Classes that have yet to establish Data User Forums and have yet to register their respective Codes of Practice with the Commissioner, the Personal Data Protection Commissioner (“Commissioner“) has since issued the General Code of Practice of Personal Data Protection (“General COP“), which came into effect on 15 December 2022.
The General COP clarifies certain PDPA provisions and introduces several new requirements for the Specified Classes. Key provisions include: (i) additional information to be included in privacy notices; (ii) minimum clauses for agreements with data processors; and (iii) guidance on using personal data for direct marketing.
Failure to comply with the General COP can result in a fine of up to RM100,000 or imprisonment of up to one year, or both, for representatives of organisations that belong to Specified Classes that must comply with the General COP.
While the General COP is not binding upon other data users, the provisions outlined in the General COP are instructive about the Commissioner’s latest expectations in relation to the minimum measures required to be implemented by data users under the PDPA.
For more information, click here to read our Legal Update.
Introduction of Sales Tax on Low Value Goods on Online Marketplaces
In the Malaysian Budget 2022, the Ministry of Finance announced its intention to ensure a level playing field and fair treatment between taxable goods manufactured in Malaysia and imported goods. In line with this, changes are being made to the Sales Tax Act 2018 (“STA“) pursuant to the Sales Tax (Amendment) Act 2022. This is being done in phases, to impose sales tax on low value goods (“LVG“), i.e. goods from outside Malaysia which have a sale value of not more than RM500 and which are brought into Malaysia by land, sea or air.
Amongst the key amendments introduced by the STA in respect of the LVG tax include the following:
- registration requirements on both foreign and local sellers of LVG which exceed RM500,000 in total sales value within 12 months;
- the rate of LVG sales tax is fixed at 10%; and
- LVG sales tax becomes payable when the LVG is sold by the registered seller who is required to issue an invoice or such document containing the prescribed particulars under the STA to the consumer.
The imposition of the LVG sales tax was originally scheduled to take effect on 1 April 2023; however, the Royal Malaysian Customs Department (“RMCD“) has recently announced the postponement of the effective date. As at the date of this write-up, RMCD has yet to provide a further update on the new effective date for the imposition of the LVG sales tax.
For more information, click here to read our Legal update.
Personal Data Protection Act 2010 under the New Government: Updates to the Proposed Amendments in 2023
Since 2018, the Malaysian Government has endeavoured to continuously review and update the Personal Data Protection Act 2010 (“PDPA“). However, the tabling of the draft amendments (“Draft Bill“) has been delayed for a variety of reasons.
The current Minister of Communications and Digital (“New Minister“) has now been tasked with overseeing the proposed amendments to the PDPA. Based on the information obtained from the Department of Personal Data Protection (“JPDP“), it is understood that the confirmed proposed amendments in the Draft Bill will most likely be retained, with the possibility of expanding the scope of the Draft Bill to include additional amendments on other aspects of the PDPA.
At this juncture, the New Minister and JPDP have not provided confirmation about the additional amendments; however, the New Minister has highlighted two areas that are being considered, namely (i) increased penalties for misuse of data or breach of the PDPA in general, and (ii) increased enforcement powers and the elevation of JPDP into a statutory commission.
The new Draft Bill is currently scheduled to be tabled at the end of 2023.
For more information, click here to read our Legal update.
Winding Up Court Directions Given to Liquidator that Affect Substantive Rights of Parties are Now Appealable
The role of the liquidator is to realise the assets of the company and to pay off creditors of the company from the proceeds of sale. If difficulty arises in the course of his administration of the winding up process, the liquidator may apply to the court for directions.
A decade ago, the Malaysian Federal Court (being the apex Court) held in Ooi Woon Chee & Anor v. Dato’ See Teow Chuan & Ors [2012] 2 MLJ 713 that such directions to the liquidator were non-appealable on the grounds that those directions were in the nature of advice only and were not a judgment or order.
Recently, the same issue (on the appealability of such directions) came up before the Federal Court in Tan Kim Chuan v. Tan Kim Tian & Ors and another appeal [2022] 6 MLJ 888. The Federal Court clarified and qualified its earlier decision and held that such directions given to the liquidator are appealable only if those directions affect the substantive rights of the parties involved in the liquidation, which was a question of fact.
With this Federal Court decision, the decade-long doubt about whether directions given to the liquidator pursuant to the liquidator’s application under section 487(3) of the Companies Act (section 237(3) of the repealed Companies Act 1965) are non-appealable – which was once thought to be a blanket ban on challenges to such directions – has now been finally and conclusively removed.
For more information, click here to read our Legal update.
Recent Developments on Competition Law in Malaysia
We set our below the key developments on Competition Law in Malaysia in the past months.
Tabling of Amendments to the Competition Act; Enforcement Action by MyCC
In January 2023, the Minister of Domestic Trade and Cost of Living (“Minister“) indicated that the proposed amendments to the Competition Act 2010 (“Competition Act“), which would incorporate a general merger control regime, would be tabled in Parliament by mid-2023. The Minister also indicated that the Malaysia Competition Commission (“MyCC“) would focus on investigating cartel activities in the food and agriculture sector, in line with MyCC’s recent enforcement action against five feed millers for alleged cartel activities.
MyCC Determines TnG’s Conduct did not Raise Competition Concerns
Separately, in response to allegations by the Federation of Malaysian Consumers Association (“FOMCA“) that MyCC failed to put an end to the monopolistic behaviour of Touch ‘n Go and its affiliate TNG Digital (“TnG“), MyCC stated in a press statement on 28 January 2023 that TnG’s conduct did not raise any competition concerns.
It is important to note that under MyCC’s guidelines on abuse of dominance, it is not illegal for enterprises to occupy a dominant position in their relevant markets. MyCC stated that it did not have jurisdiction over consumer issues between TnG and its users, and it had concluded that the issues that were raised by FOMCA were only related to consumerism.
MyCC Issues Executive Summary on Investigations into Terms of AMH Circular
MyCC had also conducted investigations into the terms of a circular issued by the Association of Malaysian Hauliers (“AMH“) to its members dated 7 November 2016. The aim of the investigation was to determine if the circular amounted to an anti-competitive agreement resulting in price-fixing and/or the fixing of a trading condition among the AMH members. On 31 January 2023, MyCC closed its investigation and reported that it found insufficient evidence to indicate the existence of an agreement and/or concerted practice between the hauliers. MyCC issued an executive summary stating the reasons for its decision.
Singapore and Malaysia Sign Frameworks on Cooperation in Digital Economy and Green Economy
On 30 January 2023, Singapore and Malaysia signed two Frameworks on Cooperation (“FoCs“) in Digital Economy and Green Economy. The FoCs, which were substantially concluded in August 2022, will lay the foundation for future bilateral initiatives relating to the digital and green economies.
Digital Economy
The FoC in digital economy seeks to promote greater inter-operability and collaboration on digital economy issues and improve coordination between Singapore and Malaysia beyond what the E-Commerce Chapters of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) Agreement provide.
The FoC covers various areas, including the following:
- Trade Facilitation: To speed up the entire trade process, allowing seamless transactions online and across borders;
- Cross-border Data Flows: To support the movement or transfer of information between the two countries;
- Electronic Payments: To intensify cooperation in developing safe and secure cross-border E-payment systems;
- Digital Identities: To encourage knowledge sharing for the development of the country’s respective identity regimes, including the development of the ASEAN Unique Business Identification Number (UBIN); and
- Business/Consumer Trust: To explore partnership in new and emerging areas to build trust in the digital systems.
Green Economy
Under the FoC on green economy, both countries agreed to cooperate in the following areas:
- Next generation mobility: To explore collaboration on EV and AV standards and the adoption of technical references;
- Environments, social and governance; capacity development programme for exporters: To promote knowledge sharing and business networking on sustainable business practices;
- Low carbon solutions: To explore joint studies and projects on low-carbon solutions such as hydrogen and carbon capture, utilisation and storage;
- Carbon credits industry collaboration: To explore collaboration voluntary carbon credits projects; and
- Development of new and renewable energy related technology standards to support domestic and regional decarbonisation: This includes developing common policies and standards for new and renewable energy technologies.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice
