MALAYSIA FDI HOST...A MONTHLY NEWSLETTER BY HALIM HONG & QUEK FREE Publication Publication Permit PP19508/08/2019(035103) MALAYSIA AS AN IDEAL FDI HOST AMIDST COVID-19 Also in this

FREE Publication Publication Permit PP19508/08/2019(035103)

MALAYSIA AS AN IDEAL

FDI HOST AMIDST COVID-19

Also in this Issue :

KEY INCENTIVES FOR

MANUFACTURING & SERVICES SECTOR IN MALAYSIA … PG 5

SC’s LATEST GUIDELINES ON CONDUCT OF DIRECTORS … PG 12

| HHQ FACTS | RESCHEDULING & RESTRUCTURING OF LOANS … PG 15

| CASE HIGHLIGHT | Real Estate POWER OF HOUSING CONTROLLER TO GRANT EXTENSION OF TIME … PG 16

A MONTHLY NEWSLETTER BY HALIM HONG & QUEK

| VOLUME 3 | ISSUE NO.7 | JULY 2020 |

hhq.com.my

FOREIGN EXCHANGE POLICY:

RECENT REFINEMENTS BY BNM

From the Editor …

Dear Readers,

We are very delighted to share with you a renewed version of our publication - EMPOWER. This month’s newsletter marks the seventh Issue of the 3rd Volume of EMPOWER, and we cannot thank you enough for the continuous support towards our work. Wish you, our sincerest thank you, nevertheless … Keeping in mind our goal to bring you fresh, engaging, and empowering contents through this publication, we are constantly pushing ourselves to evolve with the current situation.

Hence, we truly hope this month’s EMPOWER will inform you on some of the latest news and key legal & related updates (from a Malaysian perspective), particularly in the sphere of International Trade & Investment. Wish you a fulfilling read!

Till our next Issue …

STAY IN TOUCH!

Kashmir Harbans Singh Editor-in-Chief

FOR SUBSCRIPTION

& ANY COMMENT(S) ON THIS PUBLICATION,

KINDLY REACH US AT

[email protected]

| VOLUME 3 | ISSUE NO. 7 | JULY 2020 |

is a monthly newsletter published by Halim Hong & Quek (HHQ) It is distributed for free and can be read on HHQ’s website - https://hhq.com.my/ All articles in this publication are intended to provide a summary or review of the subject matter and are not intended to be nor should it be relied upon as a substitute for legal or any other professional advice.

EDITORIAL TEAM CHONG LEE HUI

ANKIT R SANGHVI

TAN POH YEE

LIM YOKE WAH

LOW KHYE YEN

GOH LI FEI

WILLIAM LIM WEI LIE

KELVIN KOAY ZHI SHERN

LEE PEI YING

DESIGN & LAYOUT KASHMIR HARBANS SINGH

CIRCULATION

JOYCE WONG

MAIZATUL AKMAL

MAVIS TAN

\

FOLLOW US, / Halim Hong & Quek/

KUALA LUMPUR OFFICE OFFICE SUITE 19-21-1, LEVEL 21, WISMA UOA CENTRE, 19, JALAN PINANG, 50450 KUALA LUMPUR. T +603 2710 3818 F +603 2710 3820 (Corporate & Real Estate) +603 2161 3821 (Dispute Resolution) E [email protected]

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| Volume 3 | Issue No. 7 | JULY 2020 | © Halim Hong & Quek

By DATO’ QUEK NGEE MENG

According to UNCTAD’s recent World

Investment Report 2020, the Covid-19

pandemic, along with its consequential

worldwide lockdown measures, supply chain

disruptions and economy slowdown, is bound

to trigger a significant fall of close to 40% in

the global FDI flows1. This plunge is in

comparison to a total of USD1.54 trillion of

global FDI in 2019, which draws this year’s

figure below USD1 trillion for the very first

time since 20052.

Disrupting almost every aspect of our lives, the Covid-19 outbreak is forcing businesses to rethink

their traditional business model, especially those in the tourism industry and its related sectors.

Meanwhile governments of countries recovering from the outbreak are understandably prioritizing

the immediate need to revive and rejuvenate their respective domestic economic performance, with

minimal focus on foreign investments. The escalating trade war and worsening bilateral ties between

the United States and China, the volatile value of crude oil and increasingly unstable costs of

production, have accumulatively affected export-oriented and commodity-linked investments and as

a result adversely strained flows of foreign direct investments (FDI) into developing economies.

In 2019, vigorous investments from major countries like the United

Stated resulted Asia to emerge as the world’s largest FDI host, with

30% of global FDI inflows worth USD474 billion3. FDI inflows into

the region are however projected to decline by up to 45% in 20204.

Whilst FDI flows to some of the ASEAN member states such as

Myanmar, the Lao People’s Democratic Republic and Thailand

declined last year, investment rates into Malaysia remained flat5.

1 UNCTAD, “World Investment Report 2020”; https://unctad.org/en/PublicationsLibrary/wir2020_en.pdf 2 Ibid 3 Ibid 4 Ibid 5 ibid

AS AN IDEAL

AMIDST COVID-19

2 | INTERNATIONAL TRADE & INVESTMENT

MALAYSIA

FDI HOST

HOSTHOST

MIDST

COVID-19

Keywords: FOREIGN DIRECT INVESTMENT – economy – tax incentives

Key Resources: UNCTAD World Investment Report 2020 – PENJANA - MIDA

“In 2019, Asia was

the world’s largest

FDI host - attracting

30% of global FDI

inflows worth $474

billion”

~ UNCTAD 2020 ~


As at 30 June 2020, Malaysia recorded a sum of

RM37.4 billion worth of approved investments

in the manufacturing, services and primary

sectors in the first quarter of this year, RM26.3

billion of which comprised direct domestic

investment (DDI)6, compared to the

corresponding first quarter of 2019 which

recorded a total of RM21.7 billion of net FDI

inflow alone7.

The Malaysian government will be announcing

related incentives meant for these chosen

industries. To address the present situation, the

recently announced National Economic Plan -

PENJANA8 focuses on bringing overseas

projects and investments back to Malaysia.

Below are some of the tax-based and other

incentives which would apply to foreign MNCs

for investing and/or relocating into Malaysia9:

Like the rest of the world, the Malaysian

government has been strict in shutting down its

international borders since the second quarter of

202010 which has largely caused investors to

reconsider and even postpone their investment

decisions. Nevertheless opportunities of an

economic revival could be in the horizon for

Malaysia given the ongoing re-alignment of

domestic and regional supply chain, increased

reliance on technology to boost efficiency or

outreach, reduction of costs and increased

awareness on health with larger spending on

personal protection equipment and other

hygienic or pharmaceutical products.

A look into the 11th Malaysian Plan as

announced last year suggests that the nation is in

general headed towards the right direction.

Through the said Plan, Malaysia indicated its

focus on developing five main catalytic and high

growth sub-sectors to stimulate its FDI

performance – namely, Electrical and

Electronics, Chemical and Chemical Products,

Machinery and Equipment, Medical Devices

and Aerospace. In the specific context of the

ongoing pandemic, Malaysia has indeed made

the right decision in identifying these strategic

high-growth sub-sectors, such as the production

of medical devices.

6 https://www.mida.gov.my/ 7 https://www.dosm.gov.my/ 8 Ministry of Finance Malaysia, “PENJANA: National Economic Recovery Plan” https://penjana.treasury.gov.my/index-en.html 9 Ministry of Finance Malaysia, “PENJANA: National Economic Recovery Plan” https://penjana.treasury.gov.my/index-en.html 10 All international borders/entries to Malaysia remain closed, at the time of writing


PENJANA :

INCENTIVES FOR FDI QUANTUM : RM50 million

TIMELINE : July 2020 – Dec 2021

0% TAX RATE FOR 10 YEARS for new investment

in manufacturing sectors with capital investment

between RM300 - RM500 million

100% INVESTMENT TAX ALLOWANCE for 3

years for existing company in Malaysia relocating

overseas facilities into Malaysia with capital

investment above RM300 million

Establishment of Project Acceleration &

Coordination Unit (PACU) at MIDA

MANUFACTURING LICENCE APPROVAL for

non-sensitive industry within 2 working days

SPECIAL REINVESTMENT ALLOWANCE for

manufacturing and selected agriculture activity,

from year 2020 to year 2021

Enhancement of DOMESTIC INVESTMENT

Strategic Fund

0% TAX RATE FOR 15 YEARS for new

investment in manufacturing sectors with capital

investment above RM500 million


The PENJANA also allocates additional operating expenditure for Malaysian Investment

Development Authority (MIDA) to undertake promotional activities, whereby its assigned

officials are proactively leading initiatives of targeted marketing and lobbying certain foreign

MNCs. As a result, the Authority reported on 16th July to have identified a total of 433 potential

foreign investment worth RM97.4 billion to be brought into the country11.

Besides these attractive investment incentives launched by the

government, Malaysia’s strength lies fundamentally in its strategic

location within Asia and its rich natural resources. For one, Malaysia

provides ample opportunity for keen investors to explore the emerging

area of agri-technology in sectors of padi, cocoa, rubber, and pepper,

and not forgetting ‘celebrity’ agri-products - durian and palm tree.

With the implementation of a Recovery Movement Control Order since

8th June 2020, majority of economic activities in Malaysia have resumed,

with adherence to standard operating procedures in place. This includes

continuance of some of the mega domestic railway link infrastructure

projects namely the ECRL, MRT 2 and LRT 3. With prominent

infrastructure projects in the pipeline, such as the Johor Bahru-Singapore

Rapid Transit System, and hopefully with the continuance of KL-

Singapore High Speed Rail, the infrastructural enrichment within the

nation would serve as a catalyst for FDI inflow.

By and large, Malaysia has been maintaining a healthy business environment, being ranked at the

12th position in terms of ease of doing business by the World Bank12. Malaysia should treat

the ongoing pandemic as a window of opportunity to preserve and even transform its business

ecosystem by establishing transparent and viable incentive systems for FDI inflow, improve labour

skill-sets and mindset and encourage robust adoption of technology, so that we are better prepared

and positioned to attract FDI of high value and high impact. Most importantly, as our international

borders remain close for now, all investment promotion agencies and professional practitioners

should collectively ensure the interests of FDI investors who already in Malaysia, is not forgotten

and neglected.

11 https://www.mida.gov.my/ 12 World Bank Doing Business Report 2020


“As at 16th July 2020, MIDA has identified a total of 433 potential foreign

investment worth RM97.4 billion to be brought into Malaysia”

ABOUT THE AUTHOR:

DATO’ QUEK NGEE MENG LLM, LL. B (Hons) Adelaide, B. Ec, DSLP

MANAGING PARTNER HEAD, Department of Corporate & Finance HEAD, Department of Knowledge & Innovation

[email protected]

This article is intended to provide an update of the subject matter & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice.


IN BRIEF | KEY INCENTIVES FOR

MANUFACTURING & SERVICES SECTOR IN MALAYSIA


PIONEER STATUS (PS)

INCOME TAX EXEMPTION of 70% - 100%

of statutory income for 5 to 10 years.

Unabsorbed capital allowances &

accumulated losses incurred during the

pioneer period can be carried forward

and deducted from the post pioneer

status of the company.

INVESTMENT TAX

ALLOWANCE (ITA)

AN ALLOWANCE of 60% - 100% on

qualifying capital expenditure

(factory, plant, machinery, or other

equipment used for the approved

project) incurred within 5 to 10 years

from the date the first qualifying

capital expenditure is incurred.

APPLICATION PROCESS

&

ELIGIBILITY CRITERIA

In order to assess whether one’s

product/activity is eligible for these

incentives, the product/activity must

be cross-checked against a promoted

list of activities & products in

Appendix 1 of the publication entitled

“MALAYSIA: INVESTMENT IN THE

MANUFACTURING SECTOR -

POLICIES, INCENTIVES & FACILITIES

2019” available at:

https://www.mida.gov.my/

Companies may apply for the

incentives by filling up the relevant

forms (ICA1 – 7) which are available

on MIDA's website or on request at

MIDA's Business Information Centre

or the nearest MIDA office.

All applications will be issued with

acknowledgement letters stating the

name of the Officer or Deputy Director

or Director of the relevant Industry

Division. Applicants should therefore

contact the assigned person to check

their respective application status.

SUMMARISED BY:

KELVIN KOAY ZHI SHERN LL. B (Hons) London, CLP

ASSOCIATE, CORPORATE & FINANCE

[email protected]

This information is intended to provide a summary of the subject matter & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice.


FOREIGN EXCHANGE POLICY: RECENT REFINEMENTS

BY THE CENTRAL BANK OF MALAYSIA

By TEO SIANG LY

The Central Bank of Malaysia [Bank Negara Malaysia (“BNM”)] issued new Foreign

Exchange Notices (“FE Notices”) dated 30 April 2020 which took effect on the same date. All

previous notices on Foreign Exchange Administration Rules issued by the BNM on 28 June

2013 consisting of seven (7) notices, definitions together with all supplementary notices

(“Previous FEA Notices”) have been revoked.

The new FE Notices together with a comprehensive Interpretation came into effect on 30 April

2020 in replacement to the Previous FEA Notices. The refinement of the FE Notices aimed to

improve business efficacy and provide flexibility for corporate bodies to better manage their

foreign exchange risk exposure.


Keywords: FOREIGN EXCHANGE – banking & finance – foreign currency loan – foreign shareholders - financial guarantee

Key Resources: BANK NEGARA MALAYSIA - Financial Services Act 2013 - Islamic Financial Services Act 2013


THE NEW FE NOTICES

The FE Notices set out the following: -

Approval of the Bank for transactions which otherwise are prohibited under Section 214(2) read

together with Schedule 14 of the Financial Services Act 2013 (“FSA”) and Section 225(2) read

together with Schedule 14 of the Islamic Financial Services Act 2013 (“IFSA”).

Requirements, restrictions, and conditions of the approvals.

Directions of the Bank.

A person must obtain a written approval from BNM to undertake or engage in any transaction

listed in Schedule 14 of the FSA and IFSA that is not permitted by BNM under the FE Notices. In

exercise of powers conferred under FSA and IFSA, the new FE notices comprises an

Interpretation section and seven (7) notices as follows:-

Interpretation

Notice 1: Dealings in Currency, Gold & Other Precious Metals

Notice 2: Borrowing, Lending and Guarantee

Notice 3: Investment in Foreign Currency Asset

Notice 4: Payment and Receipt

Notice 5: Security and Financial Instrument

Notice 6: Import and Export of Currency

Notice 7: Export of Goods.

A new notice on ‘Direction on Dealings with Specified Person and in Restricted Currency’ issued

by BNM pursuant to Section 216(1) of the FSA and Section 227(1) of the IFSA was introduced

on 30 April 2020, which sets out the conditions and restrictions relating to payments and dealings

with Specified Person and the Restricted Currency.

The existing notice on ‘Declaration on Entities Created, Incorporated, etc., in Labuan’ issued by

BNM on 28 June 2013 and effective from 30 June 2013, shall remain in force.



SUMMARY OF KEY CHANGES IN THE NEW FE NOTES

PREAMBLE & INTERPRETATION

The Preamble and Interpretation provides more comprehensive definitions and interpretations for

terms set out in the FE Notices. Some of the key changes to definitions to take note are as follows:

DIRECT

SHAREHOLDER

10%

is now defined as a

shareholder with at least

10% effective

shareholding in a

Resident Entity

BORROWING

is now defined to include

any utilised or unutilised

credit facility or financing

facility, redeemable

preference shares, Islamic

redeemable preference

share, Corporate

Bond/sukuk with

exceptions.

FINANCIAL

GUARANTEE

is now defined as any

guarantee, indemnity or

undertaking to secure

repayment of a Borrowing

NON-FINANCIAL

GUARANTEE

is now defined as any

guarantee, indemnity or

undertaking (excluding

a Financial Guarantee)

issued or obtained not

for purposes of securing

Borrowing

FOREIGN

CURRENCY

ASSET

OFFSHORE

has replaced the term of

“Investment Abroad”

which were in the

previous FEA Notices

NON-RESIDENT FINANCIAL

INSTITUTION “NRFI”

is a new term which is

defined as a Non-Resident

Entity undertaking

financial services

including custodian bank

and trust bank



FE NOTICE 1: Dealings in Currency, Gold and Other Precious Metals

▪ A resident is now allowed to hedge foreign currency loan

obligations up to the underlying tenure. Previously, a resident can

hedge their foreign currency loan obligations up to 12 months

only. This flexibility enables residents to better manage their

foreign exchange risk arising from longer-term foreign currency

loan exposure.

▪ Residents and non-residents are free to cancel or unwind their

hedging except hedges on portfolio investment without the need to

seek BNM’s approval. This flexibility now allows all entities to

unwind their forward positions in managing their hedging costs

except for portfolio investment in response to the changing market

conditions.

‘Portfolio investment’ consists of (a) Tradable debt securities; and (b) Tradable equity

securities (less than 10% of ownership in an investee company), including a collective

investment scheme.

▪ There is no restriction for a resident and non-resident to cancel or unwind any forward

contract involving Ringgit where the underlying commitment still exist.

FE NOTICE 2: Borrowing, Lending and Guarantee

▪ A resident is now free to obtain financial guarantee from non-residents

and there is no approval or registration requirement with BNM.

Previously, residents can obtain financial guarantees up to an

aggregate of RM100 million only. This flexibility removes the limit

and enables foreign investors to better support their entities operating

in Malaysia.

▪ A resident is now free to give financial guarantee on behalf or in

favour of a non-resident with some exceptions. Previously, resident

can only issue financial guarantees up to an aggregate limit of RM50

million. This flexibility removes the limit with some exceptions and

enhances the ability of Malaysian corporate bodies to support their

global operations.

▪ The ‘exceptions’ are (i) for financial guarantee issued to secure foreign currency borrowing

obtained by non-resident SPV from a non-related non-resident entity, which is subject to

external borrowing limit in FE Notice 2; or (ii) for financial guarantee issued to secure

foreign currency borrowing obtained by a non-resident where the repayment of the

borrowing will be paid by a resident (other than when the financial guarantee is called upon

under an event of default). This will be subjected to investment abroad limit in Notice 3 on

Investment Foreign Currency Asset.



▪ If a resident is to issue a financial guarantee to secure borrowing obtained by a non-resident

SPV, but the proceeds are used by another non-resident related entity, an approval from BNM

is required. Approval from BNM is required even if the resident guarantor is not the

beneficiary of the borrowing based on the external borrowing limit in Notice 2.

▪ No approval from BNM is required for any changes made to existing registered or approved

financial guarantee except for guarantee issued under exceptions. A resident guarantor is only

required to submit an annual report on the status of the financial guarantees issued to or on

behalf of non-resident to BNM’s Jabatan Pengurusan Data dan Statistik (JPS) of which the

reporting requirements are to be issued by BNM.

FE NOTICE 3: Investment in Foreign Currency Asset

▪ There is no limit in the amount that a resident individual, sole

proprietorship, and general partnership with domestic Ringgit

borrowing may invest in a Foreign Currency Assets.

▪ An individual resident with domestic Ringgit borrowing is now allowed

to purchase real properties outside Malaysia for own accommodation or

accommodation of his/her immediate family members for the purposes

of education, employment or migration.

FE NOTICE 7: Export of Goods

▪ A resident exporter is exempted from the requirement to convert export

proceeds below RM200,000 per transaction into Ringgit. A resident

exporter can freely retain export proceeds up to RM200,000 equivalent

per transaction in their Trade FCA.

▪ A resident exporter can receive export proceeds up to 24 months from

the date of shipment if the amount of export proceeds does not exceed

RM200,000 equivalent per invoice instead of 6 months’ deadline under

the previous FEA Notices.

▪ Export proceeds above RM200,000 per transaction continue to be

subjected to the existing conversion requirement.

This flexibility will alleviate the administrative burden for exporters,

particularly SMEs, to meet their foreign currency obligations.

Notwithstanding the above, Trade FCA of the resident exporter will be regularly observed by

onshore banks to ensure no abuse to the flexibility.



In addition to the introduction of the new FE Notices, BNM has issued a further explanatory notes

as follows: -

‘Summary Note’ dated 30 April 2020; and

‘Frequently Asked Questions’ dated 30 April 2020 with an updated version dated

25 June 2020

Concluding Remarks

Our highlight to the key changes in the new FE Notices are in summary and not exhaustive.

The measures taken by BNM on the refinement in the foreign exchange policy through the

introduction of the new FE Notices allow Malaysian corporate bodies to have more flexibility into

funding or capital or guarantee from and to foreign investors. Further, a Malaysian corporate body

with foreign shareholders can now have the said shareholder entities to issue financial guarantees

in any amount to secure loans granted to Malaysian corporate bodies without having to procure

prior registrations and written approvals from the BNM.

The relaxation to the requirements on giving and obtaining financial guarantees will expedite the

timing required in the financing transaction processes. The new FE Notices provide a greater

certainty for Malaysian corporate bodies to enhance their ability to support global operations as

part of boosting global economy, and enable foreign investors to better support their entities

operating in Malaysia as part of promoting substantial dealings in Malaysia.


ABOUT THE AUTHOR:

TEO SIANG LY LL. B (Hons) MMU

SENIOR ASSOCIATE, Banking & Finance DEPUTY HEAD, Corporate & Finance

[email protected]

This article is intended to provide an update of the subject matter & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice.


SECURITIES COMMISSION’s LATEST

GUIDELINES ON CONDUCT OF DIRECTORS OF LISTED ISSUERS & THEIR SUBSIDIARIES

\

NOTABLE DEFINITIONS The Guidelines further expands the meaning of some key terms:

12 | COMMERCIAL & COMPLIANCE

BACKGROUND:

Issued by the Securities Commission Malaysia (SC) pursuant to

Section 158 of the Securities Commission Malaysia Act 1993

PURPOSE:

In line with SC’s Corporate Governance Strategic Priorities 2017-

2020, these Guidelines are aimed at strengthening board

governance and supervision in listed issuers and their subsidiaries

APPLICATION

Directors of a listed corporation and directors of subsidiaries of a listed corporation

whether incorporated in Malaysia or otherwise

IN EFFECT

30 July 2020

[except Chapter 5 which will

take effect on 1 January

2021]

“DIRECTOR” as defined in s.2 of Companies Act 2016 (CA 2016)

AND further includes …

• Chief executive officer

• Chief financial officer

• Any other person primarily responsible for the operations or

financial management of a corporation, by whatever name

called

• In the case of a corporation formed / incorporated / existing

outside Malaysia– − a member of the corporation’s board of directors (BOD) or governing

body; OR

− a person occupying or acting in the position of a member of the

BOD, by whatever name called and whether or not validly appointed

to occupy, or duly authorised to act in the position

“SUBSIDIARY” as defined in s.4 of CA 2016

AND further includes … All entities whose financial statements

are consolidated into the financial

statements of the listed corporation

“GROUP” means …

A listed corporation and its subsidiaries


|continued |


3.04 |Notable Guidance| A director is required to inter alia

(a) MAINTAIN A SOUND UNDERSTANDING OF THE BUSINESS & KEEP

ABREAST OF RELEVANT DEVELOPMENTS TO ENSURE HE IS ABLE

TO DISCHARGE HIS DUTIES & RESPONSIBILITIES EFFECTIVELY

(b) PREPARE FOR BOARD MEETINGS, CONTRIBUTE CONSTRUCTIVELY

TO BOARD DISCUSSIONS & DECISION-MAKING, & CONDUCT DUE

INQUIRY BEFORE APPROVING A MATTER

(c) ENSURE KEY TRANSACTIONS OR CRITICAL DECISIONS ARE

DELIBERATED & DECIDED ON BY THE BOARD IN A MEETING

(d) ENSURE HIS DECISIONS & THE BASIS FOR THOSE DECISIONS,

INCLUDING ANY DISSENTING VIEWS ARE MADE KNOWN &

PROPERLY MINUTED

MANAGING CONFLICT OF INTEREST

3.05 A listed corporation & its director must establish POLICIES & PROCEDURES to manage potential

conflict of interest situations including potential conflict of interest between (a) any director & the

corporation; and (b) the listed corporation & its subsidiaries

3.06 A director of a corporation must NOT ACCEPT A BENEFIT FROM OR PROVIDE A BENEFIT TO A THIRD

PARTY unless he is permitted to do so by the corporation’s constitution or its code of conduct, and it is not

contrary to any written law

[CHAPTER 3] CONDUCT REQUIREMENTS FOR DIRECTORS

3.01 A director must exercise his powers for a proper purpose and in good faith in the best interest of the

corporation in which he sits as a board member [Section 213(1) CA 2016]

3.02 A Nominee Director must not subordinate his duty to act in the best interest of the corporation to his

nominator [Section 217 (1) CA 2016]

3.03 A director must exercise reasonable care, skill and diligence which may reasonably be expected of a

director & any additional knowledge, skill and experience which the director has [Section 213(2) CA 2016]



|continued |


SUMMARISED BY:

KASHMIR HARBANS SINGH LL. B (Hons) London, CLP, PG Dip (London) SENIOR ASSOCIATE, Commercial & Compliance TEAM LEAD, Business Development

[email protected]

SOURCE: Info on page 12 -14 of this Publication was mainly extracted from https://www.sc.com.my/

This information is intended to provide a summarised update of the subject matter & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice


[CHAPTER 4] MAINTAIN PROPER RECORDS & ACCOUNTS

4.01 A LISTED CORPORATION & ITS DIRECTORS must cause to be kept the

accounting & other records to:

sufficiently explain the business, transactions & financial position

of the listed corporation and its subsidiaries.

enable the preparation of true and fair financial statements; &

enable the accounting and other records of the listed corporation

and its subsidiaries to be conveniently and properly audited

4.02 A SUBSIDIARY OF A LISTED CORPORATION & ITS DIRECTORS must

cause to be kept the accounting and other records to–

sufficiently explain its business, transactions and financial position;

enable the preparation of true and fair financial statements; &

enable the accounting and other records to be conveniently &

properly audited

4.03 Subsidiary and its directors must provide the listed corporation with all information and record

necessary to enable the preparation of the CONSOLIDATED FINANCIAL STATEMENTS (where required) in

accordance with the approved accounting standards

4.04 Corporations must

ensure that it retains all

RECORDS FOR NOT < 7 YEARS

from the completion of the

transactions or operations

4.05 If any accounting &

other RECORDS ARE KEPT

OUTSIDE MALAYSIA, THE SC

MAY DIRECT THE DIRECTORS

to produce any of those

records at a place in Malaysia

& how those records are to be

kept in Malaysia. Directors

must comply with the direction

[CHAPTER 5] GROUP GOVERNANCE

5.01 A LISTED CORPORATION & ITS DIRECTORS must establish an adequate group

wide framework for co-operation & communication between the corporation & its

subsidiaries and enable oversight of …|GROUP FINANCIAL & NON-FINANCIAL

PERFORMANCE | BUSINESS STRATEGY & PRIORITIES| RISK MANAGEMENT

|CORPORATE GOVERNANCE POLICIES & PRACTICES

5.02 GROUP WIDE FRAMEWORK ON CORPORATE GOVERNANCE includes …

| CODE OF CONDUCT & ETHICS |POLICIES & PROCEDURES ON ANTI-CORRUPTION

| WHISTLEBLOWING | MANAGING CONFLICT OF INTEREST | MANAGING MATERIAL

SUSTAINABILITY RISKS| POLICY ON BOARD DIVERSITY


#HHQ FACTS

Rescheduling & Restructuring of Loans in times of Covid-19

The Covid-19 pandemic has affected businesses

and individuals’ ability to service their respective

loans. In view of this, the Malaysian government

has come out with various special measures such

as a six-month moratorium on selected types of

loans to help affected businesses and borrowers to

weather the adverse effects of Covid-19.

While the granting of the automatic 6-month

moratorium is a rescheduling exercise, loans may

be rescheduled or restructured in many other ways

to suit the financial circumstances of borrowers.

RESCHEDULING a loan refers to the modification of loan repayment terms where the principal terms

and conditions of the contract are not changed significantly, namely lengthening the loan tenure and

revision of monthly instalments. RESTRUCTURING, on the other hand, is the modification of the

principal terms and conditions of the facility which includes change in the type or structure of the loan

or other significant change to its terms.

Depending on the extent of the rescheduling and restructuring of a loan, a borrower will be required to

execute an instrument to reflect the rescheduling or restructuring exercise. If the borrower is applying

for additional loan sum, s/he would be required to execute a facility agreement or any other security

document for the additional loan sum and such instrument will be subjected to ad-valorem stamp duty.

In order to help businesses affected by the Covid-19 pandemic, the Malaysian government also

announced its Economic Stimulus Package 2020 on 27 February 2020 wherein one of the measures

introduced is to provide exemption on stamp duty for the rescheduling or restructuring of business loans.

This was followed by a gazette PU(A) 165 on 21 May 2020 stipulating a 100% exemption of stamp duty

to be granted on the loan/facility agreement entered into between borrowers and financial institutions for

the purposes of restructuring or rescheduling of business loans. This exemption is applicable only if the

stamp duty on the original loan agreement has been paid and only for loan restructuring and rescheduling

agreements executed from 1 March 2020 to 31 December 2020.

Where the rescheduling or restructuring of a loan involves variation to the terms of the existing loan

that is secured by third party security such as a guarantee, consent from the third party to such variation

needs to be obtained, otherwise there may be issue of whether the liability of such third party is

discharged pursuant to Section 86 of the Contracts Act 1950.

15 | HHQ UPDATES | COVID-19 & RMCO

ABOUT THE AUTHOR:

TAN POH YEE LL. B(Hons) University of East London, CLP

SENIOR ASSOCIATE TEAM LEAD, LEARNING & DEVELOPMENT

[email protected]

This write up is intended to provide an update of the subject matter & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice

FOR MORE #HHQ FACTS Follow us, /Halim Hong & Quek/ @ hhq.com.my/ or on …


POWER OF HOUSING CONTROLLER

TO GRANT EXTENSION OF TIME : No Blanket Application of Ang Ming Lee?

By LEON GAN & HEE SUE ANN

BACKGROUND

On 26 Nov 2019, Federal Court in the case BHL Construction Sdn Bhd v Ang Ming Lee delivered

a key decision on the fundamental jurisdictional issue of whether Controller of Housing is

empowered to grant extension of time (“EOT”) to housing developers.

For a complete discussion of the Federal Court’s decision, see our December 2019 newsletter

@ https://hhq.com.my/publications/

CASE HIGHLIGHT :

LEE SHY TSONG & ORS V AMPROJEK CONSTRUCTION SDN BHD & ANOR | 15 June 2020 | HIGH COURT

BRIEF FACTS:

16 | CASE HIGHLIGHT | REAL ESTATE

https://hhq.com.my/publications/


ISSUE :

Whether the letter by Housing Controller dated 30.08.2012, in granting EOT to the Developer to

deliver vacant possession within 48 months instead of 36 months, was made in error of law.

HIGH COURT’s DECISION:

The High Court dismissed the Purchasers’ challenge and held that the EOT granted to the

Developer was not contrary to the HDA 1966 and was instead premised on various justifications

for the further time provided by the Developer.

The Housing Controller is empowered to amend Schedule H…

The High Court was of the view that the wordings in Regulation 11(3) of the HDR 1989 made

it clear that the Housing Controller (Controller) is empowered to waive or modify clauses in

the statutory SPA, which may include the power of extending delivery period of vacant

possession, provided that the Controller is satisfied that there are special circumstances, hardship

or necessity which makes compliance with the said provision is impracticable or unnecessary.

Decision in Ang Ming Lee to be distinguished …

The High Court held that the facts of Ang Ming Lee’s

case should be distinguished from the present case, in

light of the following reasons:

There is no appeal in the current case. The Purchasers did not appeal to the Minister on the

Controller’s decision on EOT approval within the timeframe of 14 days. It is only the Minister and

no other parties who is being granted such power to decide and sign such letter of approval. An

appeal against the Controller’s decision under Regulation 12 of HDR 1989 should have been firstly

done and followed by filing a judicial review.

The Developer had delivered the VP within 36 months. Despite the EOT approval, the

Developer did not change nor modify the VP period in the SPA to 48 months and had acted in

compliance with the SPA clause to deliver the VP within 36 months. This fact is agreed and

confirmed by the Purchasers. The court is therefore of view that the Purchasers are merely

dissatisfied with the construction of the building specification and defects, wherein the Purchasers’

remedy may be found in a civil suit filed earlier and and had failed to show the action of judicial

review is with merit to be granted. Therefore, the Purchasers’ application was dismissed.

17 | CASE HIGHLIGHT | REAL ESTATE

This case update is based on documents procured from the Court's internet portal. We do not warrant & verify the accuracy and correctness of those documents. This update is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.

ABOUT THE AUTHORS

LEON GAN HAN CHEN LL. B (Hons) MMU

PARTNER, REAL ESTATE

[email protected]

HEE SUE ANN LL. B (Hons) MMU

PUPIL-IN-CHAMBERS, REAL ESTATE

[email protected]


And it is a wrap of an eventful July for us…

18 | HHQ CONNECT | WEBINAR SERIES

2 JULY 2020: Through a (web) #BookClub session, our

Managing Partner, Dato’ Quek Ngee Meng shared some novel

insights from a book written by the world-famous economist,

Yanis Varoufakis. #HHQBookClub sessions are a regular &

special part of our very own #CPDProgramme, which provide

all our staff a learning platform where they can share and discuss

many such insightful ideas and information with each other

Many thanks

to all our attendees!

27 July 2020: Partner of our Dispute Resolution Department,

Mr. Ankit R Sanghvi provided an interesting review of the essential

clauses & terms in the #PAM2006 standard forms of #contracts

For more info our UPCOMING webinars, follow us:

https://hhq.com.my/hhq-webinars/

#HHQ

CONNECT

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Documents

MALAYSIA FDI HOST...A MONTHLY NEWSLETTER BY HALIM HONG & QUEK FREE Publication Publication Permit PP19508/08/2019(035103) MALAYSIA AS AN IDEAL FDI HOST AMIDST COVID-19 Also in this