[TAX, CUSTOMS & TRADE] Federal Court Dismisses Havi Logistics’ Appeal on Stamp Duty Assessment: Implications for Business and Asset Sales?
On 20.1.2025, the Federal Court ruled in Havi Logistics (M) Sdn Bhd v Pemungut Duti Setem [2025] 3 CLJ 463, unanimously dismissing Havi Logistics’ appeal. The Court held that an Asset Purchase Agreement (“APA”) for the acquisition of business assets and liabilities constituted a “conveyance on sale” subject to ad valorem stamp duty under Section 21(1) of the Stamp Act 1949.
This decision clarifies that:
1. Fixed or capital assets do not qualify as “goods” for the exception from stamp duty under Section 21(1) of the Stamp Act 1949 (“SA 1949”).
2. An instrument falling within Section 21(1) is chargeable with ad valorem duty as if it were an actual conveyance on sale, irrespective of when legal title passes, or the presence or absence of a deeming provision.
The ruling has significant implications for structuring business and asset sales. In this alert, we outline the key takeaways from the Federal Court’s decision and its impact on transactional structuring.
If you have any inquiries on the stamp duty treatment of instruments or related issues, please contact Partner Chris Toh Pei Roo (tpr@lh-ag.com).
[EMPLOYMENT] Industrial Court Rules: Extension of PIP Not Grounds for Constructive Dismissal
The managerial prerogative of an employer to assess the performance of their employees is a settled principle in industrial jurisprudence. The Industrial Court reaffirmed this principle in a recent decision, where it dismissed a bank executive’s claim of constructive dismissal as she failed to demonstrate how the extension of her Performance Improvement Plan (“PIP”) period was in breach of her employment contract or terms of employment.
This alert discusses the key takeaways from the decision and highlights important considerations for both employers and employees in navigating performance management processes.
If you have any queries, please contact Partners Shariffullah Majeed (sha@lh-ag.com) or Nurul Aisyah Hassan (nah@lh-ag.com).
[TMT] TECH Alert: Liquidated Damages Clauses: Key Issues, Problems, and Solutions
Liquidated Ascertained Damages (LAD) clauses are a common feature in contracts, but their enforceability often raises complex legal questions.
In this update, we examine the enforcement of LAD clauses in technology and software contracts, addressing key issues such as proof of loss, limitation of liability, and the impact of early termination. As disputes over LAD clauses become increasingly common in technology-related agreements, understanding their enforceability is crucial for effective risk management.
If you have any queries, please contact Senior Associate Harvey Ng Yih Xiang (nyx@lh-ag.com), Associate Khew Gerjean (kgj@lh-ag.com), or their team Partner, G. Vijay Kumar (vkg@lh-ag.com).
[DISPUTE RESOLUTION] Valuer’s Duty of Care to Banks
When granting a loan, banks would normally seek a valuation of the property from their panel valuer to ensure that it serves as a sufficient security in the event the borrower defaults in repayment.
In a recent High Court decision, RHB Bank Berhad v Azmi & Co Sdn Bhd & Anor, valuers were found liable for overvaluing a property charged by the borrower to the bank as security for a loan. This decision is an important reminder that valuers must exercise reasonable care, skill and diligence in carrying out their work. Their valuation plays an important part in the bank’s financing process. Valuers are, therefore, required to meet the high standards of professional competence expected of them.
If you have any queries, please contact Associate Lim Jun Xian (ljx@lh-ag.com) or his team Partner Chia Oh Sheng (cos@lh-ag.com).
[EMPLOYMENT] Navigating the New Era of Flexible Work: Guidelines for the Implementation of Flexible Work Arrangements
Malaysia’s workplace landscape is evolving with the introduction of Flexible Work Arrangements (“FWA”) under Sections 60P and 60Q of the Employment Act 1955. By October 2024, 2,826 organisations and 565,210 employees had embraced FWAs, highlighting their growing impact.
The “Guidelines for the Implementation of Flexible Work Arrangements”, issued by the Ministry of Human Resources and Talent Corporation Malaysia Berhad, provides structured guidance on FWA implementation, covering types of arrangements (flexible hours, workdays, and workplaces), eligibility criteria, the application process, employer considerations, and withdrawal terms (“FWA Guidelines”). These FWA Guidelines aim to foster a more progressive and adaptable work culture, balancing operational needs with employee well-being in an era of technological advancements and shifting workforce expectations.
If you have any queries, please contact Associate Ashreyna Kaur Bhatia (akb@lh-ag.com) or her team Partner Amardeep Singh Toor (ast@lh-ag.com).
[TAX, CUSTOMS & TRADE] Signed, Sealed, Delivered … But Not Stamped? How Changes in Stamp Duty Administration in Malaysia Could Affect Taxpayers
Malaysia’s stamp duty regime is set for a major overhaul with the introduction of a self-assessment system from 1 January 2026, shifting the responsibility to taxpayers to calculate and pay the correct duty. The IRB’s new Stamp Duty Audit Framework (effective 1 January 2025) signals stricter enforcement, with audits covering up to three years—or indefinitely in cases of fraud or negligence. Errors or late stamping could lead to significant penalties, making compliance more critical than ever. To encourage compliance, the voluntary disclosure mechanism for stamp duty allows taxpayers to rectify unstamped instruments before an audit, potentially reducing penalties.
Common misconceptions, such as the belief that stamping is only required if a document is to be used in court or that intercompany agreements are automatically exempt, may result in costly non-compliance. To mitigate risks, taxpayers should review past transactions, ensure timely stamping, and seek professional advice where needed. With the IRB’s increased scrutiny, a proactive compliance strategy is key.
In this alert, we summarise the key changes, audit risks, and compliance strategies under the new stamp duty regime.
If you have any inquiries on stamp duty treatment of instruments and issues arising from stamp duty audits, please contact Partner Chris Toh Pei Roo (tpr@lh-ag.com).
[TAX, CUSTOMS & TRADE] Reinvestment Allowance & Investment Tax Allowance – Are They Mutually Exclusive?
On 9.12.2024, the High Court ruled in favour of Panasonic AVC Networks Johor (M) Sdn Bhd (“Taxpayer”). The Taxpayer had challenged the Director General of Inland Revenue’s (“Revenue”) position that Reinvestment Allowance (“RA”) under the Income Tax Act 1967 and Investment Tax Allowance (“ITA”) under the Promotion of Investments Act 1986 (“PIA”) are mutually exclusive. The Taxpayer was successfully represented by Dato’ Nitin Nadkarni and Chris Toh Pei Roo of LHAG’s Tax, Customs and Trade practice.
In this alert, we provide a concise overview of the parties’ respective contentions and the High Court’s decision.
If you have any queries pertaining to tax allowances, incentives, or tax disputes, please contact Partner Chris Toh Pei Roo (tpr@lh-ag.com) or Associate Soon Jia Ying (jys@lh-ag.com).
[ESG] Malaysia’s National Action Plan on Business and Human Rights
The Malaysian Government is seeking public feedback on the Zero Draft of the National Action Plan on Business and Human Rights (NAPBHR) for the next five years (2025-2030). As ESG continues to shape corporate strategies, the business and human rights framework aims to align these strategies with fundamental human rights principles.
This alert provides an overview of the Zero Draft and its relevance to businesses in Malaysia.
If you have any queries, please contact ESG & Sustainability Practice Partner, Tan Hooi Ping (hpt@lh-ag.com).
[EMPLOYMENT] Special Alert: Justifying Deviations from the Code of Conduct for Industrial Harmony
The Industrial Court reaffirmed that while the Code of Conduct for Industrial Harmony is not legally binding, it serves as a key benchmark in assessing the fairness of a retrenchment exercise. In this case, the Company’s financial distress, exacerbated by the COVID-19 pandemic, necessitated a transition from manufacturing and R&D to supply chain management, leading to the retrenchment of 61 employees, including the Claimants. The court held that the restructuring was bona fide, with genuine redundancy arising from the reorganisation. This decision underscores that non-compliance with the Code, in itself, does not invalidate a legitimate retrenchment exercise.
If you have any queries, please contact Partners, Shariffullah Majeed (sha@lh-ag.com), or Arissa Ahrom (aa@lh-ag.com).
[SUCCESSION, TRUSTS, ESTATE PLANNING & PRIVATE WEALTH] Beyond the Jackpot: Strategies for Effective Wealth Preservation
The multi-million ringgit lottery jackpot fever may have subsided, but for the fortunate winner—and any wealthy individual—important questions remain: How do you protect and preserve your wealth?
Whether wealth is gained through a sudden windfall or years of effort, effective tax planning, strategic wealth structuring, and legal safeguards are crucial for ensuring long-term financial security.
In our latest article, we explore essential legal considerations for lottery winners and high-net-worth individuals alike.
For advice on succession planning, wealth management, or asset protection, please contact Partners Andrew Chiew Ean Vooi (ac@lh-ag.com), Bella Chu Chai Yee (cy@lh-ag.com), Chng Keng Lung (ckl@lh-ag.com), or Chris Toh Pei Roo at (tpr@lh-ag.com) of Lee Hishammuddin Allen & Gledhill’s Succession, Trusts, Estate Planning & Private Wealth (STEP) Practice.