Malaysia

Building & Construction

Movement Control Order - Construction Industry: Update on "Critical Works"

On 23 March 2020, the Malaysian Ministry of Works ("KKR") issued an update to its list of Frequently Asked Questions ("FAQ2") in efforts to provide clarity and clear communication to address the queries affecting the construction industry arising from the implementation of the Malaysian Movement Control Order. A key highlight of the FAQ2 is that, in acknowledgment of the importance of ensuring the safety and cleanliness at the construction site during Restriction Period, KKR has revised the examples of “critical works” previously listed in its Frequently Asked Questions issued on 18 March 2020 (FAQ1).

Movement Control Order – How Does It Affect the Construction Sector?

Since 16 March 2020, Malaysia has been abuzz following the announcement by the Prime Minister of the implementation of a Movement Control Order ("MCO"). The MCO restricts the movement of anyone to, fro and within an infected area. Following the announcement, the Government of Malaysia has gazetted the Prevention and Control (Measures Within the Infected Areas) Regulations 2020 ("Regulations") which shall take effect from 18 March 2020 to 31 March 2020 ("Restriction Period"). Under the Regulations, the whole of Malaysia has been defined as an infected area.

Following the Prime Minister's announcement, the different sectors of the construction industry have sought clarification and guidance as to whether the type of construction, operation and/or maintenance work that they perform are classified or may be construed within the purview of Essential Services and/or be considered as critical works. To provide clarity, the Ministry of Works has made a further announcement that all construction work shall be subject to the MCO. Accordingly, all construction and maintenance work must stop. Only critical works are allowed to continue.

This FAQ strives to provide answers to the pertinent questions, addressing the perspective from both the public and private sectors, of the construction industry in general and a brief commentary on specific industry(ies) consequent upon the MCO, its impact and what steps need to be taken by these sectors during the Restriction Period.

Capital Markets, Listed Entities & M&A

Conduct of Virtual General Meetings during the CMCO

With the recent announcement of the Conditional Movement Control Order (“CMCO”) for Sabah, Selangor, Kuala Lumpur and Putrajaya effective from 13 October 2020 until 27 October 2020, the Companies Commission of Malaysia (“CCM”) has granted a further extension of time (“EOT”) of 90 days for a company to hold its annual general meeting (“AGM”), and to circulate and lodge financial statements with CCM.

Following this, the Securities Commission Malaysia (“SC”) also revised the Guidance and FAQs on the Conduct of General Meetings for Listed Issuers (“Guidance Note”) to dovetail the regulation and conduct of general meetings for listed issuers during the CMCO with the latest initiative of CCM.

In April 2020, we issued an Update on COVID-19 AGM Matters & the Move to Virtual General Meetings which highlighted certain measures introduced by CCM and SC in light of the pandemic and the CMCO. This Update highlights the key features of the latest revisions by the two regulators.

COVID-19 AGM Matters & the Move to Virtual General Meetings

As the COVID-19 threat continues to escalate and companies struggle to stay afloat, the Companies Commission of Malaysia, in doing its part to offer companies breathing room, has provided a procedure for the extension of time for public companies to hold annual general meetings (“AGMs”), and has also introduced an extension of time for public and private companies to circulate and lodge financial statements and reports.

Regarding the conduct of AGMs, the Securities Commission Malaysia has issued guidelines on the conduct of general meetings during the Mandatory Control Order period and the post-MCO period.

Contracts & Force Majeure

Business As Usual During COVID-19: Legal Considerations of E-Signing Documents

Following the Prime Minister’s latest announcement that the Conditional Movement Control Order ("CMCO") has been extended until 9 June 2020 (but with further industries and businesses gradually opening up since the start of the CMCO on 4 May 2020), companies and organisations are increasingly compelled by circumstances to adopt new and innovative ways to resume business. Work from home arrangements have been widely implemented across industries to support the Government’s call to practice social distancing in response to the COVID-19 outbreak in Malaysia. In light of the present circumstances, companies and organisations (essential and non-essential services alike) have now turned towards "e-signing" to facilitate the signing and execution of documents in the commercial context. In this client update, we analyse and address some of the legal issues related to the use of electronic signatures.”).

Control Measures

The Recovery Movement Control Order - Prevention and Control of Infectious Diseases (Measures Within Infected Local Areas) (No. 7) Regulations 2020

On 7 June 2020, the Government of Malaysia announced that the Recovery Movement Control Order (“RMCO”) will replace the Conditional Movement Control Order (“CMCO”). The Prevention and Control of Infectious Diseases (Measures within Infected Local Areas) (No. 7) Regulations 2020 (“Regulations No. 7”) outline measures to control and prevent the spreading of COVID-19 during the RMCO. The RMCO is effective from 10 June 2020 to 31 August 2020.

Movement restrictions were initially introduced under a Movement Control Order, which lasted for 6.5 weeks from 18 March 2020 to 3 May 2020. These were succeeded by the CMCO that was effective from 4 May 2020 until the institution of the RMCO.

In this Update, we examine the changes that have been implemented by Regulations No. 7 and the various initiatives introduced by the Government to aid and relieve those affected by the COVID-19 outbreak.

Movement Control Order (Extended) – the Prevention and Control of Infectious Diseases (Measures within Infected Local Areas) (No. 2) Regulations 2020

On 25 March 2020, the Prime Minister's Office announced that the movement control order ("MCO") will be extended by two weeks to 14 April 2020.

Following that announcement, the Government gazetted the Prevention and Control of Infectious Diseases (Measures within Infected Local Areas) (No. 2) Regulations 2020 ("MCO2 Regulations") which are to be effective for the period of 1 April 2020 to 14 April 2020. Whilst the provisions of the MCO2 Regulations contain similarities to those set out in the Prevention and Control of Infectious Diseases (Measures within Infected Local Areas) Regulations 2020 ("MCO1 Regulations") for the initial MCO period, there are additional conditions imposed and variations to the definition of essential services under the MCO2 Regulations.

Following the gazetting of the MCO2 Regulations, the National Security Council released FAQs on 2 April 2020 and 3 April 2020 to provide clarifications on the MCO2 Regulations.

The Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) Regulations 2020 – Containing the COVID-19 Outbreak in Malaysia

Following a sharp increase in the number of persons infected by the COVID-19 virus, the Malaysian Government has gazetted the Prevention and Control (Measures Within the Infected Areas) Regulations 2020 ("Regulations"). The Regulations are to have effect from 18 March 2020 to 31 March 2020. This followed the announcement by the Prime Minister’s Office on 16 March 2020 of a Movement Control Order, which according to the announcement, will be enforced under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967. The Regulations were issued subsequent to the Prevention and Control of Infectious Diseases (Declaration of Infected Local Areas) Order 2020 which declared all states and federal territories of Malaysia as infected local areas.

Corporate Matters & Business Impact

Corporate Liability is not Shelved – Adequate Procedures More Crucial Than Ever in the Face of COVID-19 Corruption and Fraud Risks

COVID-19 has forced businesses into survival mode, especially with restrictions on how businesses can operate during the Conditional Movement Control Order and, before this, the Movement Control Order (collectively, the "MCO") period. From shifting to new methods of transacting to partnering with new business associates, businesses have had to change the way they operate to stay in the black. Post-MCO, businesses will clamber to make up for lost time and revenue. It is tempting to assume compliance responsibilities can take a back seat during such trying times, but companies cannot fall victim to this fallacy

In light of Section 17A of the Malaysian Anti-Corruption Commission Act 2009 coming into effect on 1 June 2020, this Update highlights the risks of corruption exacerbated by COVID-19 which companies need to be aware of, and offers some suggestions of practical adequate procedures to implement.

Legal Analysis of COVID-19 Outbreak: What Businesses Should Be Aware Of

On 30 January 2019, the World Health Organisation declared the coronavirus disease 2019 ("COVID-19") a public health emergency of international concern. More than 90,000 people globally have been infected in a short span of two months, sending shockwaves through the global economy. Every business has been affected in some way or the other by COVID-19 and the measures taken by governments and authorities to contain its outbreak.

The first part of this guide provides a legal analysis on the potential impact of COVID-19 on seven crucial Malaysian economic sectors, namely, Building & Construction, Energy & Power, Events & Sports, Hospitality & Tourism, Oil & Gas, Real Estate & Retail, and Shipping & Trade. In the second section of this guide, we examine the general legal implications on contracts, employment, personal data protection, financing, mergers & acquisitions, and social media.

Healthcare

Pharmaceutical Product Registration and Cosmetic Product Notification in Malaysia

As the global COVID-19 cases continue to rise, researchers around the world are racing to understand the virus and working to roll out an effective vaccine.

In this Update, we look at the general requirements and procedure for pharmaceutical product registration and also cosmetic product notification in Malaysia.

Manufacturing

Movement Control Order - How Does It Affect the Manufacturing Sector?

Manufacturing was not explicitly named as one of the essential services under the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020. However, the essential services list does provide for "any services or works determined by the Minister as essential or critical to public health or safety" to continue to operate during the Movement Control Order period between 18 March 2020 to 31 March 2020 ("Restriction Period"). On 18 March 2020, the National Security Council and the Ministry of International Trade and Industry issued corresponding press statement and circular to allow certain manufacturing companies to operate during the Restriction Period if such companies are producing critical products.

Support Measures

Amendment to Insolvency Act 1967 to Mitigate Financial Ramifications of COVID-19 and Provide Individuals with Additional Protection From Bankruptcy

On 25 August 2020, the Insolvency (Amendment) Bill 2020 (“Insolvency Bill”) was passed with a simple voice majority in the Dewan Rakyat. It appears that the Insolvency Bill is intended to mitigate the financial ramifications of the unprecedented COVID-19 pandemic and to provide individuals with additional protection from the threat of bankruptcy.

This Update provides in a nutshell the key changes introduced by the Insolvency Bill.

Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020

On 12 August 2020, the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020 ("COVID-19 Bill"), which aims to provide temporary relief to reduce the impact of the COVID-19 pandemic and the effects of the Movement Control Order (“MCO”), was tabled for first reading in the Dewan Rakyat. The COVID-19 Bill has also been tabled for second reading in the Dewan Rakyat on 18 August 2020.

In a nutshell, Part II of the COVID-19 Bill provides temporary relief measures in relation to any inability to perform certain contractual obligations, while Parts III to XVII of the COVID-19 Bill provide for modifications and amendments to certain Acts and Ordinances which are transient in nature.

In this Update, we examine and summarise some of the key temporary reliefs proposed under the COVID-19 Bill and the effective period for such reliefs.

Control and Support Measures in Malaysia Amid the COVID-19 Pandemic

On 16 March 2020, the Malaysian Prime Minister announced the implementation of a nationwide Movement Control Order ("MCO") which began on 18 March 2020 and was initially scheduled to end on 31 March 2020. This order was made pursuant to the Prevention and Control of Infectious Diseases Act 1988 with the objective being to restrict the spread of COVID-19. However, due to the increase in the number of COVID-19 cases seen in Malaysia during that time, the Government made a decision to extend the initial period of the MCO to 14 April 2020 (Phase 2) and the MCO was subsequently further extended until 28 April 2020 (Phase 3). The Prime Minister recently made an announcement extending the MCO period to 12 May 2020. 

As part of the Government’s efforts to mitigate the social and economic impact of COVID-19 and the MCO, on 27 March 2020, the Prime Minister announced a RM250 billion stimulus package known as the Prihatin Rakyat Economic Stimulus Package (PRIHATIN). Through this stimulus package, financial assistance will be channelled to targeted individuals, Small and Medium Enterprises (SMEs) and industries to provide temporary relief.

COVID-19: Interim “Immunity Booster” for Financially Distressed Companies

In fighting against our common enemy, COVID-19, the Government of Malaysia has implemented a Movement Control Order (“MCO”) commencing on 18 March 2020 and currently extended until 12 May 2020 (“MCO Period”).

It is inevitable that beyond the MCO Period, the global and domestic economies will continue to be severely impacted due to reduced socio-economic activities – with each passing day, many business entities are struggling to survive.

In this Update, we are specifically considering the practical and legal issues pertaining to the interim measures taken by the Government of Malaysia in an attempt to assist financially distressed companies from being wound up by the Court.

Technology & Data Privacy

Personal Data Protection Commissioner Issues Advisory on the Collection, Processing and Storage of Personal Data During the Conditional Movement Control Order

Following the shift from the previous Movement Control Order to the Conditional Movement Control Order (“CMCO”) in Malaysia (which is currently scheduled to end on 9 June 2020), most industries and businesses have been allowed to resume operations, subject to compliance with standard operating procedures issued by the Malaysian Government. On 29 May 2020, the Personal Data Protection Commissioner issued an Advisory on the Procedure for the Handling of Activities relating to the Collection, Processing and Storage of Personal Data by Business Premises during the Conditional Movement Control Order (“Advisory”), which outlines the minimum requirements to be complied with by business premises operating during the CMCO period in order to comply with the seven Personal Data Protection Principles (“PDP Principles”) of the Personal Data Protection Act 2010.

In this Update, we analyse some of the minimum requirements against each of the PDP Principles as identified in the Advisory to be observed by businesses when collecting personal data for contact tracing purposes during the CMCO period.

Processing Personal Data in the Context of COVID-19 and the Movement Control Order

In light of the COVID-19 outbreak in Malaysia, organisations will likely face questions in respect of their right to share and disclose personal data of employees, customers and visitors to their premises (in particular, after the end of the Movement Control Order when business resumes as usual) for the purpose of contact tracing or to take other response measures.

In this client update, we explore the possible legal grounds for the collection, disclosure and retention of personal data under the Personal Data Protection Act 2010 in the context of the COVID-19 outbreak.

Workplace & Employment

Going Remote – Challenges Employers Face in Work from Home Arrangements

The term “the new norm” is widely used in mainstream media and can be said to have become synonymous with social distancing, the application of face masks, body temperature checks, etc. In the context of employment, this new norm can be associated with the Work-From-Home ("WFH") arrangements that allow employees to discharge their duties and obligations from home. Needless to say, the second quarter of 2020 has seen a sharp rise in the percentage of employees with WFH arrangements, particularly those from the service sector.

With the gradual lifting of government restrictions, we are now witnessing more economic sectors reopening. Things are slowly but surely reverting to “the old norm”. That said, there are businesses that continue to allow their employees to opt for WFH arrangements.

In this Update, we examine some of the challenges businesses face in the context of employment laws and highlight the need for effective WFH policies to be created and implemented.

The National Economic Recovery Plan: Employment Reliefs and Incentives

In our previous Update on the Recovery Movement Control Order, we have highlighted some of the initiatives implemented by the Government of Malaysia under the National Economic Recovery Plan ("PENJANA"). Further guidance on the initiatives relating to employment have since been released by the relevant regulatory bodies and government agencies.

In this Update, we discuss in further detail the initiatives introduced under PENJANA to assist employers and employees during this period of recovery of the country's economy.

Movement Control Order: Update on Employment Issues

The Movement Control Order by the Government of Malaysia which started on 18 March 2020 has been extended till 28 April 2020 (“Restriction Period”).

In this update, we discuss the initiatives introduced by the Government to assist employers and employees during the Restriction Period, and the updated FAQs issued by the Ministry of Human Resources as a result of consultations with stakeholders in the wider industry.

Movement Control Order – Update on Employment Issues

Since the issuance of the Movement Control Order by the Government of Malaysia ("MCO”), business has slowed substantially for essential services providers and come to a standstill for others. The prospect of the MCO being extended beyond the initial restriction period, i.e. 18 March 2020 to 31 March 2020, is weighing heavily on the minds of business owners. The need to minimise expenses and conserve cash at a time when revenue has fallen substantially has given rise to questions of what employers can do to secure their business and at the same time support their employees.

In this Update, we examine various laws and pronouncements and explain their effects on the employer-employee relationship. We analyse in particular the two FAQs issued by the Ministry of Human Resources on 19 March 2020 and 20 March 2020.

Useful Resources

Ministry of Health

Ministry of Health Telegram

Prime Minister’s Office

National Security Council

National Security Council Telegram

Ministry of Domestic Trade and Consumer Affairs

Ministry of International Trade and Industry

Ministry of International Trade and Industry Facebook

Ministry of International Trade and Industry Twitter

Ministry of Human Resources

Ministry of Finance

Central Bank of Malaysia

Ministry of Communications and Multimedia

Malaysian Communications and Multimedia Commission

MCMC Portal: Clarification of fake news on COVID-19

Ministry of Works (Malaysia)

Intellectual Property Corporation of Malaysia