Malaysia

After several years of dialogue, debate and deliberation, the amendments to the Malaysian Legal Profession Act 1976 have finally come into force, taking effect from June 3rd, 2014. The Legal Profession Act was amended to include provisions regarding international partnerships, qualified foreign law firms and registration of foreign lawyers in Malaysia. In this article we examine the methods in which legal services in Malaysia have been liberalised.

As a result of the amendments, there are now three entry routes into Malaysia for foreign law firms and foreign lawyers, namely, via (a) international partnerships (IP), which is a joint venture between a foreign law firm and a Malaysian law firm; (b) qualified foreign law firms (QFLF), in which a foreign firm may be licensed to operate in Malaysia on a stand-alone basis; and (c) the employment of a foreign lawyer by a Malaysian law firm.

IPs, QFLFs and foreign lawyers in Malaysian firms will be regulated by the Malaysian Bar Council (BC). A Selection Committee will make recommendations to the BC in granting such licenses.

The Selection Committee, which is established by the amendments to the Legal Profession Act, will consist of five members, two of whom are the Attorney General of Malaysia and the President of the Malaysian Bar. The Selection Committee will be responsible for considering all applications, and for making recommendations for approval to the Bar Council. The Bar Council will serve as the Secretariat for the Selection Committee.

Licences and regulations
Licenses for IPs and QFLFs are issued for a period of three years and are renewable; while a Malaysian law firm will be granted a three-year licence to employ a foreign lawyer and such licence may be renewed annually.
All individual foreign lawyers working in an IP, QFLF or Malaysian firm will have to register as foreign lawyers and are subject to the same rules and regulations applicable to Malaysian lawyers relating to professional conduct and ethics.

Permitted practice areas
IPs, QFLFs and foreign lawyers are allowed to practice only in ‘permitted practice areas’. A ‘permitted practice area’ is defined as a transaction regulated by Malaysian law and at least one other national law; or a transaction regulated solely by any law other than Malaysian law.

Equity and employment
Equity and voting rights of IPs, QFLFs and foreign lawyers shall be determined by the Selection Committee.

Although an IP is entitled to bill its client as a single law firm and recover costs and retain payments in respect of such practice, it is the recommendation of the Bar Council that voting rights of an IP should be split 60:40 in favour of the Malaysian firm.

As regards a QFLF, the number of Malaysian lawyers shall not be less than 30 percent of the total number of lawyers in that firm, and that the foreign lawyers will have to be resident in Malaysia for 182 days. It is suggested that only a maximum of five QFLF licenses should be granted to foreign law firms with expertise that is established in international Islamic finance, and which would be able to support and contribute to the Malaysian government’s Malaysian International Islamic Finance Centre (MIFC).

In relation to foreign lawyers employed by a Malaysian firm, the number shall not be more than 30 percent of the total number of lawyers in that firm.

‘Fly-in – fly-out’
New subsections 37(2A) and (2B) of the Legal Profession Act will relax the previous prohibition on foreign lawyers flying in and out of Malaysia providing legal advice. Now they may do so for up to 60 days per year, subject to immigration approval. Section 37A of the Legal Profession Act also states that foreign lawyers advising or rendering any other assistance in an arbitration, or who appear as counsel or arbitrators in an arbitration in Malaysia will be permitted to enter the country at any time and with no limit on the duration of their stay.

Conclusion
Although several quarters have expressed their reservations in permitting the entry of foreign lawyers, there may be more advantages in the liberalisation exercise such as technology transfer from large international law firms, greater competition in the marketplace, diversity of choice for clients and employees, and increase in salary of associates. The liberalisation is also expected to develop Malaysia into an international Islamic financial hub and expand the work, expertise and specialisation of the legal profession here.

ZUL RAFIQUE & partners
D3-3-8 Solaris Dutamas
No 1 Jalan Dutamas 1
50480 Kuala Lumpur, Malaysia
Tel: (60) 3 6209 8228
Fax: (60) 3 6209 8221
Email: mariette.peters@zulrafique.com.my
Website: www.zulrafique.com.my

Related Articles by Firm
Moral Rights … From peaks to pieces
MALAYSIA- Six years ago, the cultural and historical sculpture, Lunar Peaks or Puncak Purnama (‘the Sculpture’) made the national headlines when ...
Introducing the tort of sexual harassment
The Malaysian Federal Court in the case of Mohd Ridzwan bin Abdul Razak v Asmah binti Hj Mohd Nor recently delivered a landmark judgment ...
New Minimum Wages from July 2016
In Malaysia, the National Minimum Wages initiative (the Policy) was first introduced and announced by the Malaysian Prime Minister ...
Only Muslims may practise in Syariah courts
The Malaysian Federal Court in the case of Majlis Agama Islam Wilayah Persekutuan v Victoria Jayaseele Martin [2016] 1 LNS 131
Trans-Pacific Partnership Agreement ... some highlights
The Trans-Pacific Partnership Agreement (the TPPA) is a multilateral free trade agreement which aims to further liberalise the economies of ...
Financial Ombudsman Scheme
Financial Ombudsman Schemes are not novel in countries such as Australia, Ireland, the United Kingdom, and Singapore. On October 29, 2015, the Central Bank of Malaysia...
Budget 2016... Some highlights
Budget 2016 was first unveiled on October 23, 2015 by the Malaysian Prime Minister and Minister of Finance, Dato’ Sri Mohd ...
The Prevention of Terrorism Act 2015
The Prevention of Terrorism Act 2015 (the Act) came into force on September 1, 2015. The Act, which aims to prevent the conduct or ...
A new strata regime
Introduction The Strata Management Act 2013 (the Act) which came into force on June 1, 2015 repeals the Building and Common Property (Maintenance and Management) Act 2007. The implementation of the ...
Unfair dismissal…compensation, reinstatement, or neither?
The Malaysian Federal Court in the case of Unilever (M) Holdings Sdn Bhd v So Lai & Anor1 has issued a landmark ruling whereby it was held that an employee who had been wrongfully ...
The net effect
Netting arrangements refer to the settlement of obligations between two parties that processes the combined value of transactions. It is designed to lower the number of transactions ...
Taxing times ahead?
The Goods and Services Tax (GST) at the rate of 6 percent was introduced in Malaysia with effect from April 1, 2015. ...
What to expect when you are expecting…
The Court of Appeal, in the recent decision of Airasia Bhd v Rafizah Shima Mohamed Aris,1 ruled on the extent of which …
Amendments to the Malaysian Penal Code
After the withdrawal of two controversial clauses relating to the national flag and vandalism, the amendments made to the Malaysian Penal Code finally took effect …
Dismissal for unlawful picketing...too harsh?
In October 2014, the Federal Court of Malaysia, in Harianto Effendy Zakaria & Ors v Mahkamah Perusahaan Malaysia & Anor, [2014] 6 MLJ 305, upheld the dismissal of nine former bank employees by …
Prompt, punctual and paid (the Construction Industry Payment & Adjudication Act)
The construction industry, which has always been one of the more productive sectors, is constantly contributing to Malaysia’s economy. However, its fluctuating growth rates …
The Malaysian Credit Reporting Agencies Act comes into force
The Credit Reporting Agencies Act (CRA Act) came into force on January 15th, 2014. The Act provides for the registration and regulation of credit reporting agencies that are carrying on credit …
Landmark case on minimum wages in Malaysia… Does it include a service charge?
In June 2014, the Malaysian Industrial Court, in a landmark decision, ruled on the issue of a hotel employee’s salary structure. …
Deep impact... (on Malaysia’s bond market?)
The recent decision of the Malaysian Federal Court reported as CIMB Bank Bhd v Maybank Trustees Bhd & Other Appeals [2014] 3 CLJ 1 appeared to have changed the landscape of the bond market …
Related Articles
Related Articles by Jurisdiction
Amendments to the Malaysian Penal Code
After the withdrawal of two controversial clauses relating to the national flag and vandalism, the amendments made to the Malaysian Penal Code finally took effect …
Latest Articles