ZICOlaw | Regional Expertise, Local Grounding ZICOLAW MALAYSIA ONLINE No 1 (March, 2012)

ZICOLAW MALAYSIA ONLINE No 1 (March, 2012)

ZICOLAW MALAYSIA ONLINE

No 1

(March, 2012)

Legislation, Case Law, and News Updates

Civil Procedure 2

Banking & Finance 3

Consumer Law 5

Arbitration 5

Capital Markets & Securities 7

Companies & Corporations 9

Competition Law 10

Partnership 11

Tort 11

Intellectual Property 11

Constitutional Law 12

Evidence 13

Hire Purchase 13

Insolvency 14

Labour Law 14

Land Law 16

Revenue 16

Trusts 17

Civil Procedure

Amendment allowed at end of trial as no prejudice

In Hiroto Watanabe v Law Yen Yen & Anor [2012] 1 AMR 344, the Plaintiff sought to amend the statement of claim at the close of the trial to set out the duties of the defendant as trustees in equity and to include an additional prayer for a declaration. The Defendant objected to the application on the grounds that it was being made very late in the proceedings. The High Court at Kuala Lumpur allowed the amendment as

It was made bona fides
- There was no ploy to delay proceedings or to seek an unfair advantage
- The character of the suit would not change
- No injustice will be caused to the defendant as the amendment merely sets out the consequences in law
- No new witnesses are required and no witnesses need to be recalled.

Federal Court has power to review decisions of the Court of Appeal

On 31 January 2012, the Federal Court delivered its grounds of decision for allowing the application by Datuk Abu Hasan Sherif, made on 18 August 2011, for it to review the decision of the Court of Appeal granting an order for stay of its decision allowing his appeal. The Federal Court held that by virtue of it being the apex court and r 137 Rules of the Federal Court 1995, it had the power to review no only its own orders but also those of the Court of Appeal where there was a clear case of injustice.

Undertaking to offer document for discovery overrides privilege

In Dr Noor Aini bt Hj Sa’ari v Sa-Art Sae-Lee (also known as Sa-Art Phuakthim) & Anor [2012] 1 MLJ 464, the Court of Appeal had to deal with the question of whether a document could be redacted on discovery, when an undertaking had been given to produce it. The Court of Appeal held

Where a party has agreed to the discovery of a report, it cannot later claim privilege or irrelevance to a part of that report, notwithstanding Order 34 rule 7 Rules of the High Court 1980 (“RHC”)
- The proper course to take where a report covers matters that are privileged or irrelevant together with relevant and discoverable material is to require the maker of the report to produce two separate reports so that one may be discoverable and the other covered by privilege or including irrelevant material.

Factors to be satisfied on an application to cross-examine on an affidavit

In Dato’ Dr Henry Ooi Kwee Lim v Majlis Perubatan Malaysia [2012] 1 MLJ 549, the High Court at Kuala Lumpur was faced with an application to cross-examine a deponent on an affidavit affirmed by the deponent. The Court held that there are 3 prime considerations that would influence the court in the exercise of its discretion to allow or disallow cross-examination on affidavit

The trust of the averment or averments in the affidavit must be challenged. Alternatively, the issues of fact must be identified
- The disputed fact or facts on which cross-examination of the deponent is sought must be relevant to the issue to be decided. Cross-examination will only be allowed on that issue.
- Cross-examination will not be allowed if there is sufficient extraneous affidavit evidence or contemporaneous document which will enable the court to determine the issue without cross-examination of the deponent.

Banking & Finance

Draft Islamic Hire Purchase Bill almost completed

A draft Islamic Hire Purchase Bill, or IHP, is in its final stages of preparation and may be tabled at the next sitting of Parliament, according to Datuk Seri Ismail Sabri Yaakob, the Minister for Domestic Trade, Cooperatives and Consumerism on 12 February 2012. The IHP will differentiate Islamic hire purchase based on the concept of Al-Hijrah Tuma Al Bait, from conventional hire purchase under the Hire Purchase Act 1967. He also indicated that an Islamic Pawnbrokers Bill would be introduced to separate pawning under the concept of Ar-Rahnu from conventional pawning under the Pawnbrokers Act 1972.

Bank Negara introduces new liberalisation measures

In line with the broad thrust of the Financial Measure Blueprint, Bank Negara announced additional liberalisation measure for the banking and financial sectors on 30 January 2012. From 31 January 2012

Licensed onshore banks are permitted to trade foreign currency against another foreign currency for a resident;
- Licensed onshore banks are allowed to offer ringgit-denominated interest rate derivatives to a non-bank non-resident;
- Flexibility is permitted for a resident to convert their existing ringgit or foreign currency debt obligation into a debt obligation of another foreign currency.

Bank Negara Malaysia and Bank of Thailand enter into MOU

Bank Negara Malaysia and the Bank of Thailand entered into a Memorandum of Understanding on 2 February 2012 to facilitate a cross-border collateral arrangement aimed enhancing liquidity facilities to financial institutions in both countries. Now eligible financial institutions operating in Malaysia can obtain Malaysian Ringgit liquidity from Bank Negara by pledging Thai Baht or Thai government or Bank of Thailand debt securities. Likewise the Bank of Thailand would reciprocate with respect to eligible financial institutions operating in Thailand.

Banks not immune from competition regulation

On 28 January 2011, Ms Shila Dorai Raj, the Chief Executive Officer of the Malaysian Competition Commission, MyCC, reminded financial institutions that the Competition Act 2010 applied to them if their actions were not pursuant to directives from Bank Negara Malaysia. In particular, MyCC would take action against them if they colluded to make changes to automotive loan applications unless they acted under a formal directive from Bank Negara Malaysia. She said this in response to a news report in a business daily that private sector and financial institutions were moving ahead to tighten credit in auto financing.

Sukuk dominated fund-raising in 2011

Of the total amount of RM118.9 billion raised by approved fund-raising activities through the capital markets in 2011, Ringgit-denominated sukuk offerings accounted for RM78.9 billion or 66.4%. This was announced by the Securities Commission, or SC, in its Fourth Quarter 2011 Scorecard released on 30 January 2012. In 2010, only RM63.9 billion was raised by approved fund raising activities. The SC also noted that issuances of corporate bonds and sukuk had increased significantly in the last quarter of 2011 with 33 applications being approved for RM48.2 billion compared to 15 applications for RM16.1 billion in the third quarter of 2011.

Among the sukuk approved in the fourth quarter was the world’s largest corporate sukuk programme of RM23.3 billion by Projek Lebuhraya Usahasama Bhd.

PBOC and BNM renew currency swap agreement

Bank Negara Malaysia, or BNM, and the Peoples Bank of China, or PBOC, have renewed the currency swap agreement established on 8 February 2009 for another 3 years. The agreement will now lapse on 8 February 2015. Also, the size of the pool has been increased to RMB180 billion/RM90 billion from the original RMB80 billion/RM40 billion.

Consumer Law

Drug importation to be subject to strict licensing from July

The importation of drugs and pharmaceuticals from countries under the Pharmaceutical Inspection Cooperation Scheme (PICS) will not be subject to licensing requirements to be imposed in July 2012. For non-PICS countries, importers will be required to obtain a Good Manufacturing Practice (GMP) license from the Ministry of Health, according to a statement made by Datuk Sri Liow Tiong Lai, the Minister for Health, on 15 February 2012.

PDPA to come into force in June 2012

The Personal Data Protection Department was set up under the Ministry for Information, Communications and Culture to administer the Personal Data Protection Act 2010 when it comes into force in Jun 2012. A perpetrator who abused personal information in breach of the 7 principles set out in the act could face a fine up to RM30,000 or imprisonment up to 1 year or both. Datuk Seri Dr Rais Yatim, the Minister for Information, Communications and Culture made the announcement on 9 February 2012 when he officiated at the opening of the Department.

Arbitration

Arbitration at the KLRCA promoted in India

The Kuala Lumpur Regional Centre for Arbitration, or KLRCA, is actively promoting itself as a dispute resolution centre for global. Sundra Rajoo, the Director of the KLRCA together with Tun Zaki Azmi, the former Chief Justice of Malaysia are currently on an on-going roadshow in Delhi and Mumbai to promote the centre. In 2011, the KLRCA handled about 60 cases, while the Singapore International Arbitration Centre, or SIAC, handled 168 and the Hong Kong International Arbitration Centre, or HKIAC, handled 624.

CIPA to have tremendous impact on cash flow issues in construction

The Construction Industry Payment and Adjudication Bill 2011, or CIPA, will have a big impact in resolving cash flow issues in the construction industry, according to Sundra Rajoo, the Director of the Kuala Lumpur Regional Centre for Arbitration, or KLRCA. He was speaking at a seminar on CIPA on 11 February 2012. CIPA had its first reading in the Dewan Rakyat on 1 December 2011, and is likely to be passed at the next sitting of Parliament. Even so, Sundra Rajoo anticipates that the implementation of the CIPA will only be towards the end of 2012. Under CIPA, the KLRCA is appointed the adjudication authority in Malaysia.

Arbitral Tribunal cannot rule on the existence of substantive agreement – High Court

In Assar Senari Holdings Sdn Bhd v Teratai Sanjung Holdings (M) Sdn Bhd (unreported – 22.12.11) the parties had negotiated terms to enter into a joint venture project. Based on the negotiations Assar Senari had proceeded to execute its share of the work. However, when the formal drafts of the agreements to be executed were circulated, 3 terms could not be agreed. They were

The issue of alienation of land
Procurement of the necessary financial support and security
Resolution of deadlocks

The drafts contained an arbitration clause but were never executed. Teratai Sanjung argued that

There was no dispute as to the arbitration clauses in the drafts
- Assar Senari had proceeded to do the work so there already was an agreement between the parties
- The drafts or the correspondence between the parties constituted a written agreement to refer the matter to arbitration
- Section 18(1) Arbitration Act 2005 allows the arbitrator to determine the validity and existence of an agreement to arbitrate a dispute.

The High Court at Kuching held that

Sections 18(1) Arbitration Act 2005 read with sections 9 and 10 of the Act presupposes the existence of a substantive agreement between the parties containing an agreement to arbitrate.
- Section 18(1) Arbitration Act 2005 is only applicable where there is a substantive agreement in existence. The Arbitral Tribunal may then determine whether or not there is a valid agreement to arbitrate.
- There was a serious question in this case as to whether there was a substantive agreement given the disputed terms and the fact that the draft agreements came into existence after the works had been commenced.

NOTE: Teratai Sanjung had previously applied to strike out the application by Assar Senari which was dismissed by the High Court for the same reasons as set out in this case. Teratai Sanjung had appealed to the Court of Appeal which had dismissed the appeal. Although no grounds were given, it can be argued that the reasons set out by the Court in this case have received the approval of the Court of Appeal.

Capital Markets & Securities

PMI shareholders entitled to compensation

On 28 January 2012, the Securities Commission rejected an appeal of a consortium targeting the privatization of Pan Malaysia Industries Bhd, PMI, against the Securities Commission’s earlier ruling requiring the consortium to compensate shareholders of PMI who had sold their PMI shares between trading hours from 9.00 am 24 August 2011 and 5.00pm. The compensation was to be paid by the members of the consortium and would be the difference in the offer price of 4.5 sen per share and the price which at which those shareholders had sold their shares during the period.

SC considers disclosure of rulings on Takeover Code

According to the Star of 2 February 2012, an investment banking source had indicated that the Securities Commission, or SC, was considering making it ruling on major Takeover Code public, following the practice in Hong Kong. While the idea had been considered previously and rejected, it has resurfaced due to the controversy surrounding the SC’s approval of the takeover of Eastern & Oriental Bhd by Sime Darby Bhd without having to make a mandatory general offer.

Sukuk dominated fund-raising in 2011

Among the sukuk approved in the fourth quarter was the world’s largest corporate sukuk programme of RM23.3 billion by Projek Lebuhraya Usahasama Bhd.

Relationship between brokers. dealers and representatives examined by High Court

In Francis Joseph Puthucheary v Eng Securities Sdn Bhd & Anor [2012] 7 MLJ 409, the High Court at Kuala Lumpur examined the nature of the relationship between brokers, dealers and dealers representatives. The Court found that

The definition of a dealer under section 2 Securities Industry Act 1983 does not distinguish between a dealer’s representative and a commissioned dealer’s representative with regards to the relationship between dealers, their representatives and the stockbroking firm. Dealers and their representatives are all agents of the stockbroking firm in whose name they transact.
- The acceptance of recompense from the compensation fund set up by Bursa Saham Malaysia is not tantamount to a subrogation of the rights of the recipient to Bursa Saham Malaysia if the compensation was received with reservation of rights to proceed against the stockbroker and with an undertaking to return the compensation amount should the claim be successful.

NOTE:Although the decision dealt with the position under the Securities Industry Act 1983 (“SIA”), the provisions referred to have equipollent, if not identical, provisions in the Capital Markets and Services Act 2007 (“CMSA”) that replace the SIA. The decision is equally applicable to licensed stockbrokers, dealers and dealers’ representatives under the CMSA

Companies & Corporations

Australia and Malaysia to sign FTA in May

Datuk Seri Mustapa Mohamed, Minister of International Trade and Industry announced on 31 January 2012 that Australia and Malaysia would sign the Malaysia-Australia Free Trade Agreement, or MAFTA, in May this year. A meeting has been scheduled in March between representatives of the 2 countries to iron out residual issues in March. The 2 countries have been in negotiations on the MAFTA since 2005.

Companies Commission expects 1.01 registered companies by end 2012

The Companies Commission of Malaysia, CCM, expects 40,000 new companies to be registered in 2012. Also 12,000 companies are expected to deregister in the same period. The newly appointed Chief Executive Office, Mohd Daim Daruwish, said that, in arriving at the figure, the CCM had taken into account the expected slowdown in Gross Domestic Product, or GDP, this year. With the additional 40,000 new registrants, there should be 1.01 million companies registered with the CCM by the end of the year.

Companies Commission issues third Best Business Practice Circular

On 27 January 2012, the Companies Commission of Malaysia, or CCM, issued its third Best Business Practice Circular entitled “Achieving Corporate Integrity”. The Circular promotes the adoption of the Corporate Integrity Pledge, or CIP, and the Corporate Integrity System and Questionnaire, or CISAQ, in an attempt to develop a business environment free from corruption, fraud and economic crime.

Who to sue? The Minister of Finance Incorporated or the Minister of Finance?

In Tan Sri Adam Kadir v Pos Malaysia Bhd & Ors & Anor Appeal [2012] 1 MLJ 526, the issue of the proper party to sue, when the Minister of Finance makes a decision on a special share held by the Minister of Finance Incorporated fell to be considered by the High Court in Kuala Lumpur. The Court held:

Notwithstanding that the Minister of Finance Incorporated is the alter ego of the Minister of Finance, the Minister of Finance Incorporated is a separate legal entity under the Minister of Finance (Incorporated) Act 1957 and is the proper party to be joined in proceedings where it holds special shares in a company.
- The power under the Memorandum and Articles of a company for a specified shareholder to appoint an officer or director of a company does not create a contract between such a shareholder and the officer or director so appointed.

Limited Liability Partnership business model available by June 2012

On 28 January 2012, Mohd Naim Daruwish, the Chief Executive Officer of the Malaysian Companies Commission, announced that the limited liability partnership, LLP, business model would be recognised and become available to the public by June 2012.

PMI shareholders entitled to compensation

Deadline for submission of returns to CCM

The Companies Commission of Malaysia, or CCM, announced that companies who held their Annual General Meetings on 31 December 2011 had until 7 February 2012, or, if 7 February was a public holiday, 8 February 2012. to lodge the Annual Reports and Financial Statements for the year ending 30 June 2011. Lodgments after the date would incur a penalty.

Competition Law

Banks not immune from competition regulation

Partnership

Limited Liability Partnership business model available by June 2012

Tort

Negligence differs from dangerous and reckless driving says Court of Appeal

On 2 February 2012, the Court of Appeal granted leave to Tan Soon Hwa to bring an appeal against his conviction for dangerous and reckless driving under s 41(1) Road Transport Act 1987. Tan had been convicted under the section for causing the death of one Sokhdeb Singh by negligent, dangerous and reckless driving. The Court of Appeal stated that the circumstances leading to a fatal accident had to be determined as negligence under the civil law did not equate with recklessness and dangerous driving under the criminal law.

Intellectual Property

Stricter IP compliance in the offing

Malaysia is negotiating a new multilateral agreement with the United States called the Trans-Pacific Partnership Agreement, or TPP Agreement. According to Datuk Mukhriz Mahathir, the Deputy Minister for International Trade and Industry, the move is to provide sufficient intellectual property protection so that investments, innovation, research and development will be encouraged. Consumer groups expect the intellectual property section of the TPP Agreement to bring Malaysian copyright laws in line with those in the United States. Possible changes to local copyright laws include

Extending copyright protection for works to 70 years after the author’s death, where the copyright holder is an individual, as opposed to the 50 years now provided under Malaysian copyright law
- Extending copyright protection to either 95 years after publication or 120 years for corporate copyright holders, as opposed to the 50 years now provided under Malaysian copyright law
- Removing the distinction between personal and commercial use, as opposed to the current less stringent protection given to copyright under Malaysian law where personal use is concerned.

The TPP Agreement is expected to be concluded this year.

Constitutional Law

International Conventions are reference points in interpreting rights under the Federal Constitution, says High Court

In Noorfadilla Ahmad Saikin v Chayed Basirun & Ors [2012] 1 MLRH 504, the High Court at Shah Alam, examined the extent to which reference should be made to international conventions and instruments in determining the fundamental liberties provisions of the Federal Constitution. In particular, the Court was being called upon to declare the refusal to offer a training contract on the grounds of pregnancy unconstitutional.

The Court held that

In interpreting the fundamental liberties provisions of the Federal Constitution, the Court is duty-bound to take into account the Government commitment and obligation at international level, particularly under an international convention to which Malaysia is a party
- To clarify the terms “equality” and gender discrimination under Article 8(2) Federal Constitution, reference must be made to the use of the terms in the Convention on the Elimination of All Forms of Discrimination against Women (“CEDAW”) which prompted the amendment to the Article to ensure Malaysia complied with its obligations under the Convention.

NOTE:While this case dealt purely with Article 8(2) Federal Constitution and the employment rights with regards a state agency, the principle would also apply where conventions have been signed, ratified or acceded to by Malaysia with respect to economic, trade and financial matter.

Evidence

Factors to be satisfied on an application to cross-examine on an affidavit

The trust of the averment or averments in the affidavit must be challenged. Alternatively, the issues of fact must be identified
- The disputed fact or facts on which cross-examination of the deponent is sought must be relevant to the issue to be decided. Cross-examination will only be allowed on that issue.
- Cross-examination will not be allowed if there is sufficient extraneous affidavit evidence or contemporaneous document which will enable the court to determine the issue without cross-examination of the deponent.

Pleadings based on inconsistent facts indicative of sham

In Datuk Ishak Ismail v Kenanga Investment Bank Bhd & Ors [2012] 1 MLRH 446, the High Court at Kuala Lumpur held that

Pleadings based on inconsistent facts are indicative that the party is not truthful.

The Court said

“It is to be noted that the plaintiff deny (sic) that he ever signed the Undertaking but in the same breath the plaintiff said that he signed under duress and under illegitimate pressure. Clearly the plaintiff is blowing hot and cold. If what the plaintiff said is true i.e. that he never signed the Undertaking, then the issue that he signed under duress illegitimate pressure and coercion should not arise at all. There cannot be two sets of facts. Clearly the plaintiff is not telling the truth here.”

Hire Purchase

Draft Islamic Hire Purchase Bill almost completed

Insolvency

Insufficient funds no excuse for liquidator not to proceed with liquidation

In Bina Puri Sdn Bhd v Jambulingam Sethuraman-Raki [2012] 1 MLRH 427 , the High Court at Kuala Lumpur dealt with an application by creditors to remove the appointed liquidator on the grounds that he was not conducting the liquidation in a timely manner. The liquidator claimed that there were insufficient funds in the company under liquidation to proceed expeditiously. The Court removed the liquidator and held that:

Even after an application to remove a liquidator has been dismissed, a fresh application can be made if there has been a change of circumstances since the early application was made
- A liquidator cannot be removed unless cause can be shown for him to be removed. In this regard weight will be given to the views of a majority of creditors.
- Where a liquidator voluntarily accepts an appointment, he or she cannot subsequently claim an inability to proceed with the liquidation due to a shortage of funds. In such a circumstance the liquidator should either apply to Court for directions or to be discharged as a liquidator.

Labour Law

Cash incentive payments not limited by ceiling on expense deductions

In NV Alliance Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri [2012] 1 MLJ 441 , the Court of Appeal was called upon to consider if cash incentive payments were fully deductible or limited by deductions on expenses.

“Hospitality of any other kind” referred to in s 39(1) Income Tax Act 1967 (“ITA”) is confined to a sense analogous to ‘food, drink, recreation’ expressly set out in the section.
- Cash incentive payments to employees did not fall within the meaning of ‘hospitality of any other kind’ in s 39(1) ITA. Therefore the amount given as case incentives was fully deductible and not limited by the ceiling for expenses set out in s 39(1) ITA.

Court has no power to vary terms of awards for proper dismissal, says CA

In giving its decision in Panzana Enterprise Sdn Bhd v Norizan Bakar allowing the appeal, the Court of Appeal ruled, on 10 February 2012, that the Industrial Court, High Court or any other Court could vary the award given by a domestic inquiry on finding an employee guilty of misconduct. In the case at hand, the employer, a domestic inquiry held by Panzana Enterprise Sdn Bhd had found Norizan Bakar guilty of 4 counts of misconduct and dismissed him. The Industrial Court, however, dismissed 3 of the 4 counts but found Norizan guilty of misconduct on the 4^th count. However, the Industrial Court held that the misconduct did not warrant dismissal and ordered Panzana to pay him RM148,000 in compensation. The High Court, on the hearing of a judicial review of the decision of the Industrial Court at the instance of Panzana, agreed with the Industrial Court. However, the Court of Appeal ruled that one misconduct is made out the Court had no power to vary the punishment imposed by the employer for that misconduct.

Entitlement under ESOS is income upon acceptance not vesting of shares, says HC

In Maxis Communications Bhd v Ketua Pengarah Hasil Dalam Negeri & Anor [2012] 7 MLJ 391, the High Court at Kuala Lumpur had to consider the at what point would an entitlement under a Employee Share Options Scheme would be considered income in the hands of the recipient. The Court held that

Under s 25(1A) Income Tax Act 1967, with regards rights to acquire shares in the employer by an employee, gross income is imputed when the right to acquire accrues and not when the shares are vested.
- Where an option to purchase is offered in an Employee Share Option Scheme, the value of the shares at the date of the acceptance of the option is the relevant date for the computation of gross income.
- In the instant case, the options were released to the employer in exchange for rights to acquire shares in a third company following a corporate exercise. The gross income will be calculated when the options were released and not when the new shares or the optioned shares are vested.
- The gross income would be the market value of the shares on the date of the release less the cost of acquisition of the options.

Private Sector Retirement Age Bill to be tabled in March 2012

A Private Sector Retirement Age Bill is targeted to be tabled in the Dewan Rakyat when it sits on 12 March 2012. According to a statement on 14 February 2012 by Datuk Seri Dr S Subramaniam, the Minister for Human Resource, the Bill is in the final stages of preparation. Under the Bill, a mandatory age of retirement of 60 will be imposed for the private sector, with the provision of a 4-year extension if the employee’s services are still required by the employer.

Land Law

High Court pronounces on the legal nature of a REIT

In Metroplex Bhd v Commerce International Merchant Bankers Bhd & Ors [2012] 1 MLRH 484, the High Court at Kuala Lumpur was called upon to determine a challenge to the purchase of a property at an auction under the National Land Code 1966 by a trustee of a REIT. The Court held

A REIT is not legal entities.
- There is no prohibition on a trustee for a REIT acquiring property on its behalf at auction under the National Land Code 1966
- Where a trustee acquires property for a REIT at an auction under the National Land Code 1966, it is irrelevant whether there are foreign owners of units in the REIT. The REIT, not being a legal entity, cannot be considered a ‘foreign bidder’ within the meaning of s 433B National Land Code 1966.

The Court said

“…the REIT itself is not a legal entity. It is akin to a financial product a commodity of sorts that is traded on the stock exchange. Ownership of the REIT is always in a state of flux – as is expected of a publicly listed and traded valuable instrument. There would be hundreds or even thousands of buyers and registered owners of the REIT at any given time.”

Revenue

Cash incentive payments not limited by ceiling on expense deductions

“Hospitality of any other kind” referred to in s 39(1) Income Tax Act 1967 (“ITA”) is confined to a sense analogous to ‘food, drink, recreation’ expressly set out in the section.
- Cash incentive payments to employees did not fall within the meaning of ‘hospitality of any other kind’ in s 39(1) ITA. Therefore the amount given as case incentives was fully deductible and not limited by the ceiling for expenses set out in s 39(1) ITA.

Entitlement under ESOS is income upon acceptance not vesting of shares, says HC

Under s 25(1A) Income Tax Act 1967, with regards rights to acquire shares in the employer by an employee, gross income is imputed when the right to acquire accrues and not when the shares are vested.
- Where an option to purchase is offered in an Employee Share Option Scheme, the value of the shares at the date of the acceptance of the option is the relevant date for the computation of gross income.
- In the instant case, the options were released to the employer in exchange for rights to acquire shares in a third company following a corporate exercise. The gross income will be calculated when the options were released and not when the new shares or the optioned shares are vested.
- The gross income would be the market value of the shares on the date of the release less the cost of acquisition of the options.

GST Bill to be tabled in Dewan Negara only with agreement of business community

The Goods and Services Tax Bill 2009, now awaiting a second reading in the Dewan Rakyat, will be taken to the Dewan Negara only after a majority of the chambers of commerce agree at a round table conference to be held in mid-2012. Only after agreement is reached will a date for implementation of the goods and services tax be fixed. This was announced by Datuk Donald Lim Siang Chai, the Deputy Minister for Finance on 14 February 2012.

Trusts

High Court pronounces on the legal nature of a REIT

A REIT is not legal entities.
- There is no prohibition on a trustee for a REIT acquiring property on its behalf at auction under the National Land Code 1966
- Where a trustee acquires property for a REIT at an auction under the National Land Code 1966, it is irrelevant whether there are foreign owners of units in the REIT. The REIT, not being a legal entity, cannot be considered a ‘foreign bidder’ within the meaning of s 433B National Land Code 1966.

The Court said

@ 490 para 20 per Vazeer Alam Myin Meera JC