Legal Updates for April 2022

Public Consultation on Proposed Amendments to Competition Act 2010 - Introduction of Merger Controls in Malaysia

On 25 April 2022, the Malaysia Competition Commission ("MyCC") issued for public consultation, salient points of its proposed amendments to the Competition Act 2010 ("Competition Act"). The proposed amendments aim not only to strengthen MyCC’s investigative and enforcement powers, but also to establish an economy-wide merger control regime in Malaysia.

Currently, mergers and acquisitions ("M&As") are regulated only in the aviation and telecommunications sectors by their respective regulators, the Malaysian Aviation Commission (MAVCOM) and the Malaysian Communications and Multimedia Commission (MCMC), respectively. Businesses and their advisers (including lawyers and investment bankers) will need to ensure that their M&A transactions are afforded proper competition scrutiny, and comply with the Competition Act once the proposed amendments are in force. It is highly possible that the remainder of 2022 and H1 2023 will see a rush by parties contemplating or in the midst of negotiating large M&A transactions, to complete the same to avoid MyCC’s purview over their transactions as the proposed introduction of merger controls is expected to take place in Q4 of 2023.

This Update provides the key highlights of the proposed changes.

Insider Trading – What Directors of Public Listed Companies Need to Know (Part 2)

Insider trading has received increased regulatory scrutiny in the Malaysian market over the past decade, posing several important questions for those who are privy to confidential information.

In our previous Legal Update titled "Insider Trading – What Directors of Public Listed Companies Need to Know (Part 1)", we looked at what exactly is insider trading, determining materiality in the context of insider trading, as well as the interface between the Capital Markets and Services Act 2007 (CMSA) and Bursa Malaysia’s Main Market Listing Requirements ("Bursa's Listing Requirements"). In this Legal Update, we will delve into: (i) considerations that directors need to take into account in the event they do not trade but procure another person, whether directly or indirectly, to buy or sell securities when the directors are in possession of inside information; (ii) closed periods as defined by Bursa's Listing Requirements; and (iii) actions that can be taken by Malaysian regulatory authorities in the event of a breach of insider trading prohibitions.

The Patents (Amendment) Act 2022

The Patents (Amendment) Bill 2021 was passed by the House of Representatives (Dewan Rakyat) and the Senate (Dewan Negara) in December 2021 to introduce substantial amendments to the Patents Act 1983. To effect these amendments, the Patents (Amendment) Act 2022 ("Amendment Act") was gazetted on 16 March 2022 and has recently come into operation on 18 March 2022. 

The Amendment Act was introduced to ensure that the country’s patent laws are in line with the current developments on patent protection in accordance with international standards. The amendments are necessary to afford better protection and satisfy the needs of the patent community, trade and interested parties. 

This Update provides the key changes introduced by the Amendment Act.

COVID-19 and the Journey to Recovery - Exploring the Legal and Practical Issues in the Transport of Vaccines

In recent times, the COVID-19 pandemic has been the unifying and defining experience of the international community. The global journey appears now to be entering smoother waters, with countries headed more confidently towards stabilisation and recovery. One of the key components of the recovery plans being adopted by most countries is a concerted drive to provide vaccinations for their citizens and residents. As such, it should be expected that vaccines will continue to be in high demand across the globe.

The distribution of vaccines remains a profound challenge in the continued fight against COVID-19. How are they being transported? What are the transport requirements of specific vaccines? What are the relevant regulatory and contractual issues that may arise in the transport of vaccines? These are the questions that are of particular relevance to members of the shipping and transport industry, against the backdrop of still fraught supply chains, globally. The transport of vaccines is further complicated by the fact that most vaccines must be stored at very low temperatures, require deft handling, and have limited shelf-life. This not only requires transporters and handlers to be well-versed in cold-chain logistics, it also calls for close cooperation and coordination between those involved at the different stages of the distribution journey.

In this article, we take a look at these issues, particularly from the perspective of the Southeast Asian region from which we have invited invaluable input from the Rajah & Tann Asia network member law practices. The article explores the following: 

  1. Transportation requirements for selected vaccines;
  2. Practical issues in the various stages of the transport of vaccines;
  3. International guidelines or standards governing the transport of vaccines; and
  4. Contractual issues which may arise in the transportation process.
Insider Trading – What Directors of Public Listed Companies Need to Know (Part 1)

Insider trading has received increased regulatory scrutiny in the Malaysian market over the past decade, posing several important questions for those who are privy to confidential information.

Some of the most common issues facing directors of public listed companies (PLCs) is determining:

  1. What are the specific rules that govern their share trading?
  2. When can directors buy or sell the shares of companies on whose boards they sit?
  3. Can a director be in breach of insider trading laws even if he or she individually does not trade but instead shares confidential information with others?
  4. Are directors the only ones at risk of being in breach of insider trading prohibitions?

These are issues that often face those who deal with inside information, particularly directors and company advisers such as lawyers and investment bankers. Thus, what can directors and other corporate insiders do to ensure that they stay on the right side of the law? This Update will address these issues.

Review of Sustainability Reporting Requirements Under the Main Market and ACE Market Listing Requirements

Since the onset of the COVID-19 pandemic, the imperative for greater compliance with Environmental, Social and Governance ("ESG") standards has accelerated through societies across the globe. Investors, public interest groups and governments around the world are calling for higher ESG standards among businesses, demonstrating a trend that is clearly on the uptick. The COP26 meeting which was held in Glasgow last November has witnessed greater commitment by member countries to reduce greenhouse gas emissions. In line with this, Malaysia, as part of its pledge to global standards, presented its updated Nationally Determined Contributions (NDCs) on climate ambition to reduce economy-wide carbon intensity (against GDP) by 45% by 2030[1]. These commitments translate into a need for higher quality of information to be provided by companies to the public on the steps they are taking in addressing sustainability risks and opportunities. At the same time, the impact of climate change on businesses also requires a data-driven approach to ensure that companies themselves have the resilience to manage these risks. 

In 2015, Bursa Malaysia introduced its sustainability reporting framework which became applicable for annual reports issued for financial years ending on or after 31 December 2016. The approach at the time was premised on the fact that companies may be at varying levels of understanding and that preparation of the Sustainability Statement required under Practice Note 9 of Bursa’s Main Market Listing Requirements can be challenging for early reporters and smaller listed issuers. However, fast forward some six years, the market regulator is cognisant that a more standardised approach with quantitative reporting metrics will provide a sound basis for comparative analysis on a company’s material ESG risks. Moreover, as many Malaysian companies, including those which are listed, are part of the global supply chain, there is mounting pressure on companies to adhere to international standards in terms of ESG compliance. 

Bearing this in mind, Bursa Malaysia, on 23 March 2022, issued a Consultation Paper containing seven main proposals on sustainability reporting and seeking the views of the public on the proposed amendments to the Main Market Listing Requirements and the ACE Market Listing Requirements. The proposals in summary are set out in this article. 

[1]Interview with COP26 lead delegate Datuk Seri Zaini Ujang, Secretary General of the Ministry of Environment and Water (KASA), reported in the Edge Malaysia, 22 November 2022, “After COP 26, Malaysia’s Road Forward”.