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Explore the latest legal developments, practical commentary, and expert guidance from our team. We write to help you make better decisions, anticipate change, and stay compliant—across borders, industries, and matters.

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Consumer Credit Act 2025: 10 Key Takeaways on Malaysia’s New Authorisation Regime

The consumer credit landscape in Malaysia has just entered a very exciting chapter. While the Consumer Credit Act 2025 (“CCA 2025”) has already been in force since early this year, there is no doubt that the key date many industry players have been truly watching is 1 June 2026, as this is the date on which the licensing and registration regime under the CCA 2025 officially came into operation, marking a significant shift in the way consumer credit businesses and consumer credit service businesses are regulated in Malaysia. Following the full implementation of the CCA 2025, three crucial regulatory standards and guidance documents have also been released. These are: i) the Guide to Seeking Authorisation (Licensing and Registration); ii) the Authorisation Standard, which was published and came into effect on 5 June 2026; and iii) the Conduct Standard, which was published and came into effect on 5 June 2026. For the purpose of this article, we will focus specifically on the licensing and registration regime administered by the Consumer Credit Commission or Suruhanjaya Kredit Pengguna (“Commission” or “SKP”), and more particularly, the Authorisation Standard. As a starting point, it is crucial to understand that the Authorisation Standard applies only to persons seeking to carry out the following businesses: (a) credit business, namely: (i) buy now pay later scheme; (ii) factoring; and (iii) leasing, each of which includes its Islamic equivalent; and (b) credit service business, namely: (i) impaired loan or financing acquisition; (ii) debt collection; and (iii) debt counselling and management. However, the Authorisation Standard does not apply to Islamic financing facilities and Islamic pawnbroking, as these are credit businesses licensed by the Registrar. For the purpose of the Authorisation Standard, the process of applying for the relevant licence or registration is referred to as the authorisation process (“Authorisation Process”). Therefore, against this backdrop, this article aims to set out the top 10 key takeaways that businesses and in-house counsel should pay attention to when preparing for the Authorisation Process, as we will cover key issues including the Authorisation Process, legal requirements, applicable fees, and other key considerations.   Key Takeaway 1: The Authorisation Process Is Not Applicable If the Business Does Not Involve a “Credit Consumer” The first and most important takeaway is that the Authorisation Process is not automatically applicable to every entity carrying on a credit business or credit service business. The Authorisation Process is only relevant where the business involves a “credit consumer”. Under the Authorisation Standard, a “credit consumer” refers to any of the following: i) an individual who obtains, has obtained or intends to obtain credit wholly or predominantly for personal, domestic or household purposes; ii) a person who is a micro or small enterprise (“MSE”) who obtains, has obtained or intends to obtain credit, where such credit does not exceed RM300,000; iii) any other person or class, category or description of person as may be specified by SKP; and iv) an individual who acts as a social guarantor, not for the purpose of making profit, to a credit consumer in respect of a credit agreement to which the CCA 2025 applies. In practical terms, this means that whether the Authorisation Process applies will depend not only on the nature of the business activity, but also on whether the relevant customers fall within the definition of “credit consumer”. This distinction is actually understandable because the CCA 2025 is, at its core, designed to regulate consumer credit. Therefore, before a business rushes into preparing a licensing or registration application, the starting point should be to assess whether its credit business or credit service business actually involves a “credit consumer”.     Key Takeaway 2: If the Business Does Not Involve a “Credit Consumer”, a Declaration May Still Be Required Where an entity carries on a regulated credit business or credit service business but does not deal with a “credit consumer”, it may not be required to go through the Authorisation Process. However, this does not necessarily mean that no regulatory step is required. If an entity provides a credit business or credit service business only to MSEs where all credit facilities exceed RM300,000, such entity would not be required to go through the Authorisation Process, as the credit granted exceeds the amount prescribed for MSEs under the Consumer Credit (Prescription of Credit Amount for Micro or Small Enterprise) Order 2026. However, the entity would still be required to submit a declaration to the Commission regarding its involvement in regulated activities. Similarly, if an entity provides a credit business or credit service business only to medium enterprises or large corporations, such entity would not be required to go through the Authorisation Process, regardless of the amount of credit granted, as medium enterprises and large corporations do not fall within the definition of “credit consumer” under the CCA 2025. However, where the business falls within the relevant regulated activities, the entity would still be required to submit the relevant declaration to the Commission.   Key Takeaway 3: Minimum Financial Thresholds Must Be Satisfied The third key takeaway concerns financial adequacy. Under the Authorisation Standard, an applicant must satisfy the applicable minimum financial threshold before it can be authorised to carry on the relevant credit business or credit service business. For credit businesses, the minimum financial threshold is shareholders’ funds or total equity of RM2,000,000. This applies to relevant credit businesses such as: (i) buy now pay later schemes; (ii) factoring; and (iii) leasing, including their Islamic equivalents. For credit service businesses, the applicable threshold depends on the specific type of activity. For impaired loan or financing acquisition, the minimum financial threshold is shareholders’ funds or total equity of RM2,000,000. In contrast, for: (i) debt collection; and (ii) debt counselling and management, the minimum financial threshold is either: (a) shareholders’ funds or total equity of RM500,000; or (b) shareholders’ funds or total equity of RM250,000 together with professional indemnity insurance coverage of RM250,000. It is also important to highlight that where an entity is authorised to carry

MM2H: Practical Insights for Prospective Applicants

https://youtu.be/NgohV2uagdQ?si=rP9T8oNSgqdoBsrQ Thinking about applying for Malaysia My Second Home (MM2H)? In a recent video discussion, Ryan Khoo sits down with Lu Jia Yi from HHQ Advisory (MM2H) to discuss some of the most frequently asked questions surrounding the programme and share practical insights based on real applicant experiences. The discussion covers topics including: • Whether MM2H leads to permanent residency or citizenship;• The application process and physical presence requirements;• Property purchase requirements for MM2H applicants;• Dependent and family-related considerations;• Renewal requirements and minimum stay obligations; and• Common issues faced by MM2H applicants and how to navigate them. The discussion also touches on why Johor remains a popular destination for MM2H participants, particularly those seeking proximity to Singapore while enjoying Malaysia’s lifestyle advantages. Watch the full video to learn more about the MM2H programme and hear practical answers to some of the questions most commonly raised by prospective applicants. For more information on HHQ Advisory (MM2H) and the MM2H programme, visit https://hhqmm2h.com.my/

Protecting Your Legacy: What Constitutes a “Sound Mind” When Making a Will?

INTRODUCTION A will is often challenged by attacking the deceased’s age, illness, medication or dependence on others. Under Malaysian law, the real inquiry is whether the testator had testamentary capacity at the material time the will was made. Malaysian courts do not ask whether the testator was bedridden, looked frail, or suffered from serious illness. The courts will enquire whether the testator had a “sound mind” at the material time the will was made. [1][2] TEST FOR TESTAMENTARY CAPACITY The well-settled test is that the testator must understand [3] : – i) that he is making a will and the effect of making it;ii) the general nature and extent of the property he is disposing of; andiii) the claims of those who ought to be considered. No disorder of the mind or insane delusion should poison the testator’s affections, pervert his sense of right, or influence the disposition in a way that would not have happened if the mind had been sound. [3][4] The testator does not need to be in perfect health. However, the testator must still know what he is doing, what he owns, and who may ordinarily have a claim on his estate. “SOUND MIND” ≠ PERFECT HEALTH A person may be very old, seriously ill, physically weak, or even close to death, and yet still have sufficient understanding to make a valid will. [1][2][3][4] A will may still be valid even though the deceased is described as “a very sick man”, so long as he understood the nature and extent of the properties he was disposing of and was able to comprehend and appreciate the claims of the beneficiaries he had in mind. [2] There must be clear evidence that the illness so affected the testator’s mental faculties as to make him unequal to the task of disposing of his property. Mere proof of serious illness is insufficient to displace prima facie testamentary capacity and due execution. [1] If the testator is ill, that does not by itself deprive him of the ability or capacity to execute a will. What is required to vitiate testamentary capacity is clear evidence of an insane delusion existing at the time of making the will. [5] ILLNESS OR MENTAL CONDITION A will may be vulnerable if the evidence shows that, at the material time the will was made, the testator did not understand the nature of the act, the effect of the will, the extent of the property being disposed of, or the claims of those who ought to be considered. [1][3][4] Cases before the courts distinguish between physical weakness and mental incapacity. A person may be weak in body but clear in mind. However, if the testator’s mind was affected by delusion, confusion, medication, or cognitive impairment such that he was unable to understand the testamentary act, the will may fail. [3][4][6] WHO MUST PROVE TESTAMENTARY CAPACITY? Where the validity of a will is challenged, the propounder of the will bears the burden of proving [2][7][8] : – i) testamentary capacity;ii) due execution; andiii) the absence of suspicious circumstances surrounding the making of the will. Only after that burden is discharged does the burden shift to the person challenging the will to prove any vitiating factor such as undue influence, fraud or forgery. [2][7][8] The challenger does not have to begin by disproving the will. The propounder must first satisfy the conscience of the court that the paper propounded is the last will of a free and capable testator. [7][8] CHALLENGE TO A WILL MUST BE SUPPORTED BY EVIDENCE Where the evidence is clear and consistent, the will is more likely to be upheld. Where the evidence is weak, contradictory, or raises unanswered suspicion, the will may be set aside. [2][6][7] The following factors may be considered by the courts [1][2][8] : – i) the evidence of the solicitor who prepared or witnessed the will;ii) the evidence of the attesting witnesses;iii) medical evidence directed to the testator’s mental state at the material time; andiv) evidence that the contents of the will were read over to the testator and understood by him. General references to old age, hospital visits, or illness are not enough. If unsupported by evidence, allegations of lack of testamentary capacity are “just a bare allegation” and “pure conjecture”. [9] Where testamentary capacity is genuinely in dispute, the issue ordinarily turns on evidence at a full trial, including the evidence of witnesses, the solicitor, and, where relevant, medical practitioners. [7] WHEN WILL A WILL GENERALLY BE VALID? A will is generally valid where the court is satisfied that, at the time of execution [1][2][7][8]: –   i) the testator was fully conscious and had a sound mind;ii) the testator understood and approved the contents of the will;iii) the testator understood the nature and effect of making the will;iv) the testator understood the general nature and extent of his property;v) the testator was able to comprehend and appreciate the claims of those who ought to be considered;vi) the will was duly executed; andvii) any suspicious circumstances have been sufficiently explained or dispelled. Once these matters are established, the courts will generally give effect to the wishes of a free and capable testator. The courts are not concerned with whether the disposition was fair, generous or expected. [5][8] CONCLUSION A “sound mind” does not mean perfect health. It means sufficient mental ability at the material time the will was made. [1][2][3] Serious illness does not, without more, defeat capacity; but the will must still be shown to be the act of a free and capable mind. [1][2][5] In the next part of this series, we will look at suspicious circumstances, and when they are serious enough to put the validity of a will in doubt. Footnotes [1] Chin Jhin Thien & Anor v Chin Huat Yean @ Chin Chun Yean & Anor [2020] 4 MLJ 581 (Federal Court)[2] Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1

Fiduciaries Must Account for Unauthorised Profits

INTRODUCTION In the business world, relationships are built on trust. Whether one is a company director, agent, partner or trustee, the law imposes strict standards of conduct to ensure that such trust is not abused. Recently, the UK Supreme Court delivered an important judgment in Recovery Partners GP Ltd and another v Rukhadze and others [2025] UKSC 10; [2026] 1 All ER 189 (“Recovery Partners”), reaffirming the strict approach taken by equity towards fiduciaries who profit from their position without their principal’s fully informed consent. WHO ARE FIDUCIARIES AND WHAT IS “SINGLE-MINDED LOYALTY”? A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of single-minded loyalty to his principal. This means that a fiduciary must act in good faith; must not make a profit out of his trust; must not place himself in a position where his duty and his interest may conflict; and must not act for his own benefit, or the benefit of a third person, without the informed consent of his principal. As explained in Bristol and West Building Society v Mothew [1998] Ch 1, these are the defining characteristics of fiduciary obligations. The purpose of these duties is practical. Human nature being what it is, the law seeks to deter fiduciaries from being tempted to prefer their own interests over those whom they are bound to protect. Examples of fiduciaries include company directors, trustees, agents, solicitors, partners and, depending on the circumstances, senior employees. WHAT IS AN ACCOUNT OF PROFITS? A breach of fiduciary duty gives rise to remedies which differ from the usual remedies available for breaches of contract or tortious duties. One such remedy is an account of profits. The duty to account for profits is usually called the “profit rule”. It is an obligation imposed by equity on fiduciaries as an inherent aspect of their undertaking of single-minded loyalty to their principals. Where a fiduciary makes an unauthorised profit from, out of, or otherwise sufficiently connected with the fiduciary relationship, equity may require the fiduciary to account for that profit to the principal. This is not merely about compensating the principal for loss. The focus is on the fiduciary’s profit. Equity treats unauthorised profits made from the fiduciary relationship as belonging in equity to the principal from the moment they are received, through a constructive trust. The strictness of the rule is designed to deter fiduciaries from placing themselves in a position where their interest and duty may conflict. However, the Court may grant an equitable allowance to compensate the fiduciary, in an appropriate case, for the work, skill and risk involved in generating the profits. THE DECISION IN RECOVERY PARTNERS In Recovery Partners, three individuals in senior fiduciary roles pursued, for themselves, a highly lucrative asset-recovery opportunity which had been developed while they were acting for SCPI and Revoker. They later resigned and entered into arrangements to provide the recovery services through a newly formed corporate structure. The profits were substantial. The accountable net profits were assessed at approximately US$179 million, although the Court allowed a 25% equitable allowance for their work and skill. When the claimants sued for an account of profits, the defendants argued that the Court should apply a common law “but-for” causation test. In essence, they argued that they should not be required to account for the profits because they would have made the same profits anyway, even if they had not breached their fiduciary duties. The UK Supreme Court rejected that argument. NO “BUT-FOR” CAUSATION TEST The UK Supreme Court held that the fiduciary duty to account for profits is not subject to a common law “but-for” test of causation. The duty is to account for profits made from, out of, or otherwise sufficiently connected with the fiduciary relationship. There must be a link between the fiduciary relationship and the profit, but the Court will not ask whether the fiduciary might have made the same profit in a hypothetical world where no breach occurred. In the language of the Court, such “what if” counterfactuals are illegitimate and irrelevant speculation. A fiduciary cannot defend his retention of a profit by saying that he would have made it anyway, or that the principal would have consented if asked. The liability to account also does not depend on fraud, absence of good faith, or proof that the principal suffered loss. The liability arises from the mere fact that an unauthorised profit has been made in circumstances sufficiently connected with the fiduciary relationship. KEY LESSONS FROM THE CASE First, fiduciary obligations may outlast resignation. A fiduciary cannot avoid liability simply by resigning and then exploiting a maturing business opportunity which came to him through his fiduciary position. Second, consent matters. If a fiduciary wishes to pursue a personal opportunity which overlaps with his fiduciary duties, the safe course is full and frank disclosure and the fully informed consent of the principal. Third, the law is not concerned with whether the fiduciary could have made the same profit anyway. Equity does not permit a fiduciary to rely on hypothetical excuses to retain unauthorised profits. Fourth, an account of profits is concerned with disgorgement of profit, not compensation for loss. This explains why the principal does not need to prove that it suffered loss before seeking an account. CONCLUSION The decision in Recovery Partners is a powerful reminder that fiduciary loyalty is not a loose commercial expectation. It is a strict equitable obligation. Where a person undertakes to act for another in circumstances of trust and confidence, equity requires that person to put the principal’s interests before his own. If the fiduciary makes an unauthorised profit from that position, the law will not readily allow him to keep it. In short, fiduciaries cannot rely on “but-for” arguments to justify keeping profits made from their position of trust. Equity remains uncompromising when it

CIPAA 2012: Timing Matters for Direct Payment under Section 30

INTRODUCTION It is trite that where a party who has obtained an adjudication decision in its favour fails to receive payment of the adjudicated amount from the party against whom the adjudication decision was made, the successful party may seek direct payment from the principal pursuant to section 30 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”). However, section 30 may only be invoked if money is due or payable by the principal to the adjudication respondent at the time of receipt of the request under section 30(1). This requirement was recently considered by the Court of Appeal in Tri Pacific Engineering Sdn Bhd v KL Eco City Sdn Bhd [2026] MLJU 1313. BRIEF BACKGROUND The Plaintiff was appointed by the Main Contractor, Ireka Engineering & Construction Sdn Bhd (“Ireka”), as the Sub-Contractor for certain works under the project. The Plaintiff alleged that it had completed the works but that Ireka had failed to pay the sums due under the sub-contract. The Plaintiff then commenced adjudication proceedings under the CIPAA against Ireka. Before the conclusion of the adjudication proceedings, the Plaintiff had already received RM532,940.70 from Ireka. On 8.5.2023, the adjudicator delivered the adjudication decision in favour of the Plaintiff, and the Plaintiff then sought direct payment from the Defendant, as principal, for the total adjudicated sum of RM1,191,624.42. The Plaintiff issued two notices under section 30 of the CIPAA, namely the first notice dated 9.5.2023 and the second notice dated 23.5.2023. The Defendant subsequently made direct payment of RM998,653.66 to the Plaintiff. ISSUE BEFORE THE COURT The predominant issue before the High Court, and later on appeal, was whether there was any money due or payable by the Defendant to Ireka at the time of receipt of the Plaintiff’s notice of demand made under section 30 of the CIPAA and, if so, whether the Defendant was liable to pay the balance adjudicated amount to the Plaintiff. The Plaintiff contended that the Final Certificate dated 10.6.2023 showed that monies were due or payable by the Defendant to Ireka, and that the statutory requirement under section 30(5) was therefore satisfied. The Defendant, on the other hand, contended that at the time of receipt of the second notice, only the balance retention sum of RM998,653.66 was due or payable to Ireka, and that this sum had already been paid directly to the Plaintiff. The Defendant further relied on the Settlement Agreement entered into with Ireka and contended that, even taking the Final Certificate into account, the amount due or payable to Ireka was only RM87,916.92. HIGH COURT The High Court dismissed the Plaintiff’s claim. The High Court Judge found that the valid Notice of Request for the purpose of section 30 of the CIPAA was the second notice, and not the first. This was because, as at the date when the first notice was issued, the time frame for Ireka to pay the adjudicated sum to the Plaintiff under the adjudication decision had not yet expired. Accordingly, the first notice was premature and invalid. The learned High Court Judge then considered whether there was any money due or payable by the Defendant to Ireka at the time of receipt of the second notice, and concluded on a balance of probabilities that, as at the time of the second notice, only the balance retention sum in respect of the Plaintiff’s portion of works amounting to RM998,653.66 was due by the Defendant to Ireka. As that sum had already been paid directly to the Plaintiff, there were insufficient funds to sustain the Plaintiff’s claim under section 30. COURT OF APPEAL The Court of Appeal upheld the High Court’s decision and dismissed the appeal.The Court of Appeal ruled that the right to direct payment from the principal arises only when there is money due or payable by the principal to the successful party in the adjudication proceedings at the time of receipt of the Direct Payment Demand. In this case, the material time was when the second notice was received by the Defendant. The Court of Appeal adopted and reiterated the position taken in HSL Ground Engineering Sdn Bhd on the effect of section 30(5) of the CIPAA and the words “due or payable”. If there is an obligation or liability to pay upon it being properly claimed, the Defendant is obliged to make direct payment if there is money due or payable under section 30(5) of the CIPAA. The Court also accepted the distinction between “due” and “payable”, namely that a debt may accrue when the relevant certificate is issued, but the money only becomes due upon expiry of the payment period stipulated in the contract. The focal point of the dispute was the Final Certificate dated 10.6.2023. The Plaintiff argued that this demonstrated that there were funds due and payable by the Defendant to Ireka at the material time. The Court of Appeal disagreed. After reviewing the Final Certificate, it found that the same showed the total amounts due to 12 nominated subcontractors, of which the Plaintiff itself was one, and that from that figure, only RM998,653.66 was due to the Plaintiff. The Court therefore did not agree with the Plaintiff’s contention that the Final Certificate demonstrated that, at the material time, there were funds due and payable to the Main Contractor. The Court of Appeal further held that, pursuant to the Final Certificate and after taking into account the set-off or deductions made in accordance with the Settlement Agreement, the amount due or payable by the Defendant to Ireka was RM87,916.92. However, that sum would only become due when the Final Certificate was issued on 10.6.2023. Since the Plaintiff took the position that there was no fresh demand under section 30 of the CIPAA after the second notice, there was no amount due or payable by the Defendant to Ireka as at May 2023 beyond the RM998,653.66 already paid. The Court also found that the Settlement Agreement was a valid agreement between the Defendant and Ireka and could be

The Limits of Developer Control over Common Property

INTRODUCTION The decision of the High Court in Perbadanan Pengurusan 10 Boulevard v. Newlake Development Sdn Bhd & Anor [2026] MLJU 1378; [2026] MLRHU 987 provides an important clarification on the limits of a developer’s ability to retain ownership over facilities within a strata development. At its core, the dispute concerned whether the developer could lawfully designate visitor carparks and landscape areas as “accessory parcels” appurtenant to its own parcel, thereby retaining ownership and control over them, or whether those areas constituted “common property” belonging to all parcel owners. BACKGROUND FACTS 10 Boulevard is a commercial strata development comprising four office towers. Under the amended Development Order, the development was required to provide 1,302 carpark bays, including 118 visitor carpark bays. When strata titles were issued, the Developer registered 122 ground-floor carpark bays together with several landscape, boom-gate and ticketing-machine areas as accessory parcels attached to its own parcel comprising the basement carparks. The Developer subsequently rented out the carparks and imposed parking charges on the users. The Management Corporation of 10 Boulevard commenced proceedings against the Developer and the Director of the Selangor Land and Mines, contending that these areas constituted common property and could not lawfully be retained and monetised by the Developer. MANAGEMENT CORPORATION’S CASE The Management Corporation argued that the impugned areas were common property by operation of law. It relied on section 2 of the Building and Common Property (Maintenance and Management) Act 2007 (“BCPA“), which expressly includes carparks, entrances, exits and landscape areas within the definition of common property. Since sections 44 and 45 of the BCPA prohibit contracting out of its provisions, any Sales and Purchase Agreement clause purporting to reserve visitor carparks to the developer was void and unenforceable. The Management Corporation also relied on the Court of Appeal case of Ideal Advantage Sdn Bhd v Perbadanan Pengurusan Palm Spring @ Damansara [2020] 4 MLJ 93 and High Court case of PJ Centrestage JMB v Cherish Springs Sdn Bhd & Ors [2024] MLJU 591, which emphasised that common property cannot be removed from the statutory scheme through private contractual arrangements. DEVELOPER’S CASE The Developer relied principally on the Sale and Purchase Agreements (“SPAs“), which expressly excluded the carparks from the definition of common property and provided that the carparks belonged to the developer. The Developer also argued that the Management Corporation was estopped from challenging its ownership as the arrangement had been accepted for years and maintenance charges had been paid accordingly. The Developer further relied on the Court of Appeal case of Target Term Sdn Bhd v Waldorf and Windsor Management Corp and Another Appeal [2024] 6 MLJ 598, where the Court held that once carparks are identified as accessory parcels in a certified strata plan, they cannot be regarded as common property. On this basis, the Developer contended that the impugned areas had been validly accessorised and therefore belonged to it. FINDINGS OF THE COURT The Court accepted that the impugned accessory parcels were being used in conjunction with the Developer’s main parcel. However, the Court held that this was not the decisive issue. The real question was whether the visitor carparks should have been carved out as accessory parcels in the first place. In answering that question, the Court placed significant weight on the Development Order. Although the Development Order did not specify the exact location of the required visitor carparks, the Court found that it is logical that the 122 ground-floor bays were intended to fulfil that requirement, given their location and close correspondence with the number of visitor bays required under the Development Order. The Court held that the statutory definition of common property under the BCPA prevailed over the SPA provisions. Any attempt to reserve the visitor carparks to the Developer through contractual arrangements was therefore invalid. The Court also rejected the developer’s estoppel argument, reaffirming the principle that estoppel cannot be used to circumvent a statute or validate an arrangement prohibited by law. Since the relevant SPA clauses contravened the BCPA, they were null and void. PRACTICAL IMPLICATIONS FOR DEVELOPERS AND OWNERS This decision serves as an important reminder that developers cannot rely solely on SPA provisions or the designation of an area as an accessory parcel to retain ownership of facilities that are intended to serve the development as a whole. While Target Term confirms that validly created accessory parcels are generally not common property, this case demonstrates that the Court may still examine whether those parcels ought to have been accessorised in the first place. Where the area in question is intended by statute or planning approval to function as common property, a developer cannot transform it into a private asset through drafting or registration alone. REAFFIRMATION OF STATUTORY PROTECTION This High Court decision reaffirms a simple but important principle: where there is a conflict between a private agreement and a mandatory statute, the statute prevails. Developers cannot privatise visitor carparks, landscape areas and other facilities intended for common use merely by labelling them as accessory parcels. Ultimately, the decision reinforces the integrity of Malaysia’s strata management regime and safeguards common property from being converted into a private revenue-generating asset. Disclaimer: This article is for general information only and does not constitute legal advice or legal opinion. It should not be relied upon as a substitute for specific legal advice. No person should act (or refrain from acting) based on this article without obtaining advice on the specific facts and circumstances. Halim Hong & Quek does not accept responsibility or liability for any loss or damage arising from reliance on this article. Halim Hong & Quek reserves the right to update, amend or withdraw this article at any time. All rights reserved. Subscribe to DISPUTES DECODED BY HHQ, our bi-monthly legal update, at https://mailchi.mp/hhq/2nofd6rjlt to receive our latest legal updates and articles. You may also visit the HHQ website at https://hhq.com.my/insights/ for further articles and insights from our team. About the authors Meyer Thor Xiao XinSenior AssociateDispute ResolutionHalim Hong & Quekmeyer.thor@hhq.com.my ○ Tan Chuin-LoongAssociateDispute ResolutionHalim Hong &

Can More Than One Trade Union Represent Your Employees?

For as long as most Malaysian employers can remember, trade union representation followed a simple pattern: one workplace, one union. That is no longer the position. Labour law reforms that took effect in 2024 have reshaped how trade unions are formed and recognised, and, for the first time, a company may face more than one trade union competing to represent the very same employees. If two trade unions both claim to speak for the same group of workers, must the employer recognise both, and which union does it actually negotiate a collective agreement with? The answer lies in the recognition and sole bargaining provisions of the Industrial Relations Act 1967 (“IRA”), read together with the recent amendments. Why the Question Now Arises Previously, the Trade Unions Act 1959 (“TUA”) defined a “trade union” by reference to workmen within a particular establishment, trade, occupation or industry, which limited how trade unions could be formed. The Trade Unions (Amendment) Act 2024 (“TUAA”) removed that language, opening the door to more than one union organising the same workforce. The IRA was amended in parallel. The sole bargaining rights provisions in sections 12A and 12B, introduced by the Industrial Relations (Amendment) Act 2020, exist because the law now anticipates multiple unions being recognised by the same employer, requiring a mechanism to decide who negotiates on behalf of the employees. Recognition: The Gateway to Representation Before a trade union can deal with an employer on behalf of a class of employees, it must first be accorded recognition. The process begins when a union claims recognition from the employer. The employer, in response, has the following options within 21 days of being served with a claim for recognition: (a) voluntarily accord recognition; or (b) refuse recognition and notify the trade union of the reasons for its decision. If the employer refuses recognition or does not respond to the claim for recognition, the trade union may, within 14 days of receipt of the notification or 21 days of service of the claim, report the matter to the Director General of Industrial Relations (“DGIR”). The DGIR may take such steps to ascertain whether the union is competent to represent the employees and may conduct a secret ballot to determine whether the majority of the workmen support the trade union seeking recognition. Once these steps are completed, the DGIR shall give his decision on the claim for recognition. Recognition is the statutory gateway to a union having the standing to represent a defined group of workmen. Once accorded, recognition is protected for a defined period. Under section 11, no other union may claim recognition for the same group of workmen unless one year has elapsed, or the recognised union ceases to exist. Section 12 adds that a union whose claim has been withdrawn or refused may not make a fresh claim for the same group for six months. Together, these provisions limit competition by unions over representation and give the workplace stability. When More Than One Trade Union Is Recognised Recognition is always given for a particular class of workmen, such as executive or non-executive employees. It is therefore common for more than one union to operate in a single company where each union represents a different class of workmen. The question of multiplicity arises only when more than one union seeks to represent the same class. The restrictions in sections 11 and 12 are limits of timing, not permanent bars to recognition. Once the one-year window has elapsed, another union may claim, and obtain, recognition for the same class. The IRA therefore accepts that a company may, in time, have more than one recognised union for the same group. This then raises a pressing question: which union does the employer bargain with? Sole Bargaining Rights: Who the Employer Negotiates With The IRA answers this through the concept of sole bargaining rights. Where more than one union is recognised for the same class of workmen, section 12A provides two routes. The first route is for the recognised trade unions to decide among themselves which union is to hold the sole bargaining rights, and to notify the DGIR. Alternatively, if there is no agreement, the employer, a trade union of employers, or any union concerned may apply in writing to the DGIR to decide which union holds the sole bargaining rights. On an application being made under the second route, the DGIR may take such steps to determine the application or to make such inquiries by way of secret ballot to ascertain which union has the highest support among the employees. A union holding the sole bargaining rights is given a mandate of three years to represent the workmen in negotiating with the employer. During this period, no other union can claim those rights unless the union holding the sole bargaining rights ceases to exist. For employers, this provides clarity as to which union to negotiate the collective agreement with. What This Means for Employers (i) Recognition and sole bargaining rights are distinct: Recognition confers the right to represent a class of workmen; sole bargaining rights confer the exclusive right to negotiate the collective agreement. An employer may recognise more than one union but will negotiate with only one. (ii) Employers must bargain with the sole bargaining rights holder: Where more than one union is recognised for the same class of workmen, the employer’s bargaining counterpart is the single union holding the sole bargaining rights, not every recognised union. (iii) Employers may apply to resolve a deadlock: Where the recognised unions cannot agree on who is to hold the sole bargaining rights, the employer may apply to the DGIR for the question to be determined by secret ballot. (iv) Sole bargaining rights are protected for three years: Once obtained, that mandate is protected for three years, giving the employer a settled and predictable period for negotiating a collective agreement. Conclusion With the amendments to the TUA and IRA since 2024, employers must now be prepared for more than one

Navigating the New Incentive Framework: A Strategic Guide for Chinese Investors and Malaysian Businesses in the Manufacturing Sector

Through the Malaysian Budget 2026, the New Incentive Framework (NIF) was introduced. NIF was introduced in line with Malaysia’s National Investment Plan 2030 (NIMP) and National Investment Aspirations (NIA), with the primary objective to attract high-growth and high-value investment[1]. The development of NIF forms an important component of Malaysia’s broader strategy to sustain and diversify its investment inflows, including from foreign countries like China. Amongst others, China invested RM 28.2 billion in Malaysia, which accounted for approximately 16% of Malaysia’s foreign investment revenue.[2] The NIF also seeks to strengthen the competitiveness of Malaysian manufacturing businesses by promoting technology-driven and value-added activities. This article sets out the key points of the NIF and its impacts for Chinese investors and local Malaysian businesses in the manufacturing sector. A. Introduction Prior to the introduction of NIP, the two main tax incentives for the manufacturing sector were Pioneer Status (PS) and the Investment Tax Allowance (ITA), which were governed under the Promotion of Investments Act 1986 (PIA). Under the NIF, PS is replaced by the Special Tax Rate (STR). In other words, the two main tax incentives currently under the NIP framework are stated as follows: • STR; and• ITA Both STR and ITA for the manufacturing sector are administered under the Income Tax Act 1967[3]. It must be noted that both STR and ITA are mutually exclusive. The company may submit an application for the said incentive starting from 1.3.2026. Based on the statement[4] issued by the Malaysian Investment Development Authority (MIDA), the Government will no longer accept new tax incentive applications for the manufacturing sector under the PIA after 28.2.2026. However, the existing approvals shall remain valid according to the approved terms and conditions. B. STR and ITA The details of STR and ITA are summarised in the following table:   No. Item STR ITA   1.      Description A reduced corporate income tax rate on the company’s taxable income.   Allowance on qualifying capital expenditure incurred is to be offset against statutory income. 2.      Tax rate 0% – 15% (depending on different categories[5]) Up to 100% of allowance granted can be used to offset between 70% to 100% of statutory income.   3.      Period granted [6] Up to 15 years   4.      Carried forward losses/ allowance[7]   Accumulated losses incurred during the STR period can be carried forward for 7 consecutive years and be deducted from the company’s post-incentive income.   Any unutilised allowance can be carried forward to subsequent years until fully utilised. 5.      Type of company For any manufacturing sector For capital-intensive local and Chinese manufacturers (particularly those bringing in machinery and production equipment)   The general criteria are stated as follows: 1. The company is required to hold the manufacturing licence (ML) prior to the incentive application (except for IC design and testing activities); and2. Such ML must remain valid throughout the incentive period. Certain subsectors carry additional requirements, such as capital investment per employee thresholds, automation adoption, sustainable practices and Malaysian workforce composition criteria and so forth. C. NIA Scorecard The NIF is transforming into an outcome-based initiative with a tiering approach where the application will be evaluated based on the company’s commitment and assessment using the NIA scorecard. The NIA scorecard has 6 main pillars, which are stated below:   No. NIA Pillars Objectives Indicators in the NIA scoreboard 1.      Increase economic complexity a)    Development of sophisticated products & services   b)    High local Research & Development (R&D) and innovation intensity   a)    Product complexity index by Harvard Atlas b)    Percentage share of R&D expenditure to sales revenue c)    Level of technology d)    Meet the Fourth Industrial Revolution (4IR) adoption of technology       2.      Create high-value job opportunities     High-skilled and high-income employment a)    Percentage share of high-skilled workers with university diploma, degree and above, or with technical certificates b)    Median salary per worker c)     Percentage share of workers earning RM 10,000 d)    Percentage share of Malaysian workers in the Managerial, Technical and Supervisory (MTS) level from overall MTS employment 3.      Extend domestic linkage   a)    Usage of domestic input   b)    Deepen local supply chain integration a)    Percentage share of local inputs b)    Percentage share of training expenditure out of total salary c)    Collaboration with local academia and industry d)    Engagement in Vendor Development Programme e)    Conduct cash pooling activities or repatriate income into Malaysia   4.      Develop new and existing clusters   a)    Development of high-productivity sectors   b)    Develop new products and services locally   a)    Product patent b)    Product aligned under NIA / NIMP sectors c)    Commercialisation of R&D findings from local institutions 5.      Improving inclusivity   a)    Balance economic development b)    Human capital development a)    Opportunity for non-employee (Internship/apprenticeship, fresh graduates with less than 3 years’ experience) b)    Percentage share of women in top management c)    Percentage share of workers in the vulnerable group out of the total workers d)    Percentage share of Malaysian workers out of total workers   6.      Enhance sustainability practices Drive towards Net Zero aspirations a)    Sustainable materials/services; b)    Sustainable waste c)    Sustainable management; d)    Sustainable water consumption; and e)    Sustainable energy consumption       D. Eligible Manufacturing Sectors and Excluded Sectors The NIF applies to 15 priority manufacturing subsectors, including the following sectors: 1. Electrical and electronics;2. Chemicals and chemical products;3. Pharmaceuticals;4. Medical devices;5. Aerospace;6. Machinery and equipment;7. Automotive;8. Petroleum products and petrochemicals;9. Oleochemicals and their derivatives;10. Food production and processing;11. Wood;12. Paper and furniture;13. Textiles;14. Apparel and footwear;15. Strategic minerals-based products;16. Rubber-based products; and17. Metal The excluded sectors stated in the Guideline dated 15.1.2026 issued by MIDA (Guideline) are stated as follows:   No. Type of product(s) / activity(ies) Sub-sectors 1.      Mixing and blending activity Chemical and chemical products 2.      Fill and finish activity   Pharmaceuticals 3.      Glove products and passenger vehicle tyres   Rubber-based products 4.      Upstream segment, i.e. Mining and quarry Strategic mineral-based products 5.      All types of papers   (which is not

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