In the evolving digital economy, the phrase “code is law” is taking on real world significance. Smart contracts have emerged as a revolutionary technology that is transforming the way we understand agreements, trust, and legal enforcement in the era of blockchain.

 

What Are Smart Contracts?

“Smart contracts” is a term used to describe computer code that automatically executes all or parts of an agreement and is stored on a blockchain-based platform.¹ Smart contracts are self-executing agreements with terms directly written into software. They automatically enforce and carry out these terms once predefined conditions are met. This automation brings several advantages, including improved efficiency, lower costs, and the removal of third party involvement.²

Generally, smart contracts are simple, and function on an “if-this-then-that” basis. This means that if a certain condition is met, then a specific action will take place automatically.

A good example is how smart contracts can be used to buy goods from a vending machine. Imagine a vending machine that uses cryptocurrency instead of cash. When a person makes a payment using cryptocurrency, the smart contract gets a signal through the blockchain that the payment has been made. Once this condition is confirmed, the smart contract automatically instructs the vending machine to release the item to the buyer. In this situation, the smart contract is working on the rule: “If payment is received, then release the goods.” Everything happens digitally without needing a cashier, seller, or third party.³

The same logic can be applied to bigger transactions, such as buying a house. For instance, if a buyer deposits the agreed purchase price into the blockchain system, the smart contract can automatically trigger the transfer of the property title to the buyer. The process is automatic, accurate, and cannot be changed once it starts. As soon as the agreed-upon condition is met, the smart contract carries out the agreement on its own, without requiring any further intervention. Once the contract has been performed and executed, it is considered concluded and completed, with no remaining obligations on either party. Think of a smart contract like a vending machine: if you insert the correct amount of cryptocurrency (the input), the machine dispenses the snack (the output). The whole process is automatic, predictable, and free of human intervention.

 

Why Blockchain Matters

Smart contracts cannot function without blockchain technology. This is because the unique features of blockchain, such as decentralization, transparency and immutability, allow contracts to be created and executed without the involvement of a third party. At present, there is no other technology that can support smart contracts on a scale the way blockchain can.⁴

Blockchain is a decentralized and distributed public digital ledger that records transactions across a network of computers. This structure ensures that once a record is added, it cannot be changed without modifying all later records and obtaining agreement from the entire network.⁵

When the preset conditions in a smart contract are met and verified, a network of computers automatically performs the required actions. Once the transaction is completed, the blockchain is updated to reflect the result. Each term of the smart contract is encrypted and securely stored, reducing the risk of misinterpretation. All parties involved can test the contract with different scenarios to see the possible outcomes, making the process fair, accurate and transparent. Because the contract is recorded on a shared blockchain, the parties can carry out the agreement on their own without needing help from any third party.⁶

 

How Smart Contracts Work – A Simple Breakdown

The process of a smart contract generally follows four key steps.⁷

1. Contract Creation
The process begins with drafting the terms of the agreement in the form of computer code. This code outlines the rules, functions, and parties involved in the contract. Once completed, the code is uploaded to the blockchain, where it becomes part of the network.

2. Contract Trigger
After being uploaded, the smart contract remains dormant until triggered by one of the parties. The trigger can vary based on the type of contract. For instance, in a sales agreement, the trigger could be the buyer making a payment.

3. Contract Execution
When triggered, the contract automatically carries out the agreed terms as written in its code. This may include actions like transferring funds or recording transactions. The blockchain manages the execution, ensuring that it is done accurately and transparently.

4. Contract Completion
Once all conditions have been fulfilled and the necessary actions are completed, the contract is considered complete. The final outcome is then recorded permanently on the blockchain, creating a secure and unalterable record of the transaction.

 

Comparison of Smart Contracts and Traditional Contracts

Smart contracts and traditional contracts differ significantly in their formation, execution, and enforceability. Traditional contracts are typically drafted in natural language, signed by at least two parties, and may require verification by a lawyer, notary, or other third party. In contrast, smart contracts are written in computer code and operate automatically on a blockchain once the specified conditions are met without a third party involved.

Another key distinction lies in authenticity and alteration. Traditional contracts exist in physical or digital form and, if not properly safeguarded, can be forged or altered, sometimes without immediate detection. Smart contracts, on the other hand, are stored on a blockchain, where the terms become immutable once entered, with each transaction timestamped and distributed across multiple nodes in the network.⁸

The mode of execution also differs. Traditional contracts can sometimes be manipulated, for example, if one party signs on behalf of the other without their knowledge. Smart contracts rely on digital key signatures unique to each participant, meaning only the holder of the private key can authorize the transaction.

However, smart contracts introduce challenges not typically present in traditional contracts. They are pseudonymous, as blockchain transactions use wallet addresses rather than verified legal identities. This creates difficulty in resolving disputes, since courts may face obstacles in linking a blockchain address to a real-world party. While mechanisms such as Know Your Customer (KYC) procedures may mitigate this issue, they are not universally applied, leaving gaps in legal enforceability.⁹

 

Are Smart Contracts Legally Recognized?

Common Law

Under common law, a contract is considered legally binding if it contains four essential elements: offer, acceptance, consideration, and an intention to create legal relations. The Statement is clear that the common law rules on contract (offer, acceptance, consideration, and intention to create legal relations) are, in principle, entirely applicable to smart contracts. As long as these elements are present and there are no factors that weaken the agreement, such as misrepresentation, fraud, illegality or duress, the law will generally uphold and enforce the agreement between the parties.¹⁰

The existence of offer and acceptance is usually evident from the natural language used to frame a smart contract. However, when a smart contract is written entirely in computer code, extrinsic evidence, such as the conduct of the parties, may be sufficient to prove that an agreement was reached.¹¹

Malaysian Law

Following the principles of common law, the Contracts Act 1950 in Malaysia sets out the essential elements required for a contract to be valid. These elements include offer, acceptance, consideration, and an intention to create legal relations. If a smart contract satisfies these elements, it may be considered legally enforceable under the Act.

To begin with, Section 2(a) defines a proposal as a situation where one person signifies to another his willingness to do, or to abstain from doing, something with the intention of obtaining the other’s assent.¹² Under Section 2(b), when the person to whom the proposal is made signifies his assent, the proposal is said to be accepted, thus forming a promise.¹³

Furthermore, Section 10(1) of the Act states that all agreements are contracts if they are made with the free consent of parties who are competent to contract, for a lawful consideration and lawful object, and are not expressly declared void.¹⁴ In addition, Section 14 clarifies that consent is considered free when it is not caused by coercion, undue influence, fraud, misrepresentation, or mistake.¹⁵

Therefore, the approach to contract formation under Malaysian law is flexible, and may accommodate emerging forms of agreements such as smart contracts, making them potentially valid and enforceable in Malaysia.¹⁶ Nonetheless, there have not yet been any reported cases in Malaysia specifically concerning smart contracts.

UK Perspective

In November 2019, the UK Jurisdiction Taskforce (UKJT) released a legal statement addressing cryptoassets and smart contracts. The statement concluded that, in principle, smart contracts have the capacity to create binding legal obligations that are enforceable according to their terms. English law does not normally require contracts to be in any particular form. It will enforce any promise (or at least award damages for breach) provided that the common law requirements for formation of a contract are met, and provided that there are no vitiating factors (such as duress, misrepresentation or illegality).¹⁷

According to the UKJT, the essential requirements for the formation of a contract are the same for both conventional contracts and smart contracts.¹⁸ These include:

(a) agreement has, objectively, been reached between the parties as to terms that are sufficiently certain;
(b) the parties intended, objectively, that they would be legally bound by their agreement; and
(c) unless the contract is made by deed, each party to it must give something of benefit (i.e. consideration) because a gratuitous promise in return for nothing is not generally enforceable.

On 25 November 2021, the UKJT published its formal advice to the Government concerning smart legal contracts. This guidance was informed by extensive feedback received through a call for evidence launched in December 2020.

The conclusion reached was that the existing legal framework in England and Wales is well equipped to accommodate and support the use of smart legal contracts, with no immediate need for statutory reform. The adaptability of the common law system provides a strong foundation for innovation and commercial activity. While smart legal contracts may introduce new legal and factual challenges, the current body of legal principles is sufficiently robust to address them, with any necessary developments occurring incrementally and within established legal reasoning.¹⁹

USA Perspective

In the United States, there is no single federal contract law. Instead, the enforceability and interpretation of contracts are governed at the state level.²⁰ While certain fundamental principles are generally consistent across states, and efforts have been made by the National Conference of Commissioners on Uniform State Laws to harmonise state legislation, the fact remains that individual states may adopt differing views. This variation must be taken into account when evaluating the enforceability of smart contracts.

To assess enforceability, state courts traditionally examine whether the common law requirements of offer, acceptance, and consideration are met. These core elements can certainly be satisfied through the use of ancillary smart contracts, depending on how they are structured.

At the federal level, the Electronic Signatures in Global and National Commerce Act (E-Sign Act) recognises the validity of electronic signatures and electronic records in interstate commerce. Importantly, it also states that a contract or other record relating to a transaction “may not be denied legal effect, validity, or enforceability solely because its formation, creation, or delivery involved the action of one or more electronic agents so long as the action of any such electronic agent is legally attributable to the person to be bound.”²¹ The Act further defines an “electronic agent” as “a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part without review or action by an individual at the time of the action or response.”²²

While it is essential to understand the current legal framework in evaluating the enforceability of smart contracts today, future reliance on laws enacted before the development of blockchain technology may not be necessary. For instance, Arizona and Nevada have amended their respective versions of the Uniform Electronic Transactions Act (UETA) to explicitly address blockchain and smart contracts. However, the fact that these two states have adopted different definitions for key terms like “blockchain” and “smart contract” highlights a growing need for uniform definitions as more states consider similar legal updates.²³

 

Potential Challenges in Smart Contract Implementation and Enforcement

While smart legal contracts may raise new legal and factual challenges, existing legal principles remain robust enough to address them with incremental developments. However, their effective implementation and enforcement still face practical hurdles that must be resolved for broader adoption.

One key issue is the lack of standardization. Since different blockchains operate on varying protocols and programming languages, interoperability remains a major concern. Without common standards, businesses face uncertainty as to whether their smart contracts will function effectively across different platforms. This challenge can be addressed by adopting interoperable standards, such as blockchain protocols that enable cross-chain communication (e.g., Polkadot or Cosmos), or by deploying smart contracts on platforms that support standardized APIs.²⁴

Another concern is the technical complexity involved in developing and deploying smart contracts. Expertise in blockchain technology, cryptography, and coding languages like Solidity is often required, yet many businesses lack in-house capabilities. This can make implementation expensive and reliant on external specialists. The way forward lies in investing in talent and training, whether by upskilling existing staff, hiring skilled developers, or collaborating with educational institutions to create blockchain certification programs.

Finally, there are legal ambiguities surrounding the enforceability of smart contracts, particularly given their pseudonymous nature and reliance on code. For instance, it will likely be difficult for the court to intervene in commercial disputes performed on a public permissionless blockchain if the parties remain unknown to each other.²⁵ To address this, clarifying legal frameworks is essential. Governments and regulators should establish clear guidelines on the validity and limitations of smart contracts, building upon existing contract law principles. Some jurisdictions have already taken steps in this direction, offering a model for Malaysia and others to follow.

 

Conclusion

Smart contracts mark a significant shift in how agreements are formed, executed, and enforced in the digital era. Powered by blockchain, they offer an automated, transparent, and tamper proof alternative to traditional contracts, eliminating the need for third party intermediaries. With a simple “if this, then that” logic, smart contracts are already transforming sectors such as finance, supply chain, and intellectual property.

Legally, smart contracts are not outside the scope of existing frameworks. As explored in this article, jurisdictions such as Malaysia, the United Kingdom, and the United States have shown that traditional contract elements — offer, acceptance, consideration, and intention to create legal relations can apply to smart contracts. The UK has taken a proactive stance, and select US states like Arizona and Nevada have incorporated blockchain into their legal definitions. Malaysia, though still in its early stages, has shown potential to embrace these developments under its current legal structure.

That said, their widespread adoption will depend on addressing certain practical challenges. These include the lack of standardization across blockchains, the technical complexity of coding and deploying contracts, and the legal ambiguities arising from pseudonymous transactions. Overcoming these issues requires interoperable standards, greater investment in blockchain expertise, and clearer legal frameworks to guide enforceability and dispute resolution.

From my perspective, smart contracts are more than just a technological advancement. They represent a new frontier in law, challenge conventional ideas of trust and enforceability, and highlight the need for the legal sector to evolve alongside emerging technologies. While the foundation of contract law remains relevant, targeted reforms and standardized definitions will be essential to address new complexities, especially in cross border use. For smart contracts to succeed, legal practitioners must engage with technology, and technologists must understand legal consequences. As both worlds continue to converge, smart contracts could pave the way for a more efficient, secure, and inclusive legal ecosystem, one where code and law work together to build a future of trust without borders.

 

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1. Levi, Stuart D., et al. “An Introduction to Smart Contracts and Their Potential and Inherent Limitations.” Harvard Law School Forum on Corporate Governance, 26 May 2018, law.harvard.edu/2018/05/26/an-introduction-to-smart-contracts-and-their-potential-and-inherent-limitations/.
2. Crook, Wesley. “Why Digital Assets Need Smart Contract Security and Governance.” Forbes, 3 Sept. 2024, forbes.com/councils/forbestechcouncil/2024/09/03/why-digital-assets-need-smart-contract-security-and-governance/.
3. Enforceability of Smart Contracts in Malaysia. Shin Associates.
4. “Can Smart Contracts Exist without Blockchain?” Paris Block Chain Week, parisblockchainweek.com/post/can-smart-contracts-exist-without-blockchain.
5. “Blockchain.” Black Duck, blackduck.com/glossary/what-is-blockchain.html.
6. “Can Smart Contracts Exist without Blockchain?” Paris Block Chain Week, parisblockchainweek.com/post/can-smart-contracts-exist-without-blockchain.
7. “How Smart Contracts Work: The Process Explained.” Linkedin, 27 July 2023, www.linkedin.com/pulse/how-smart-contracts-work-process-explained-mosaia-web3/.
8. “Smart Contract vs. Traditional Contract.” Hedera, hedera.com/learning/smart-contracts/smart-contract-vs-traditional-contract.
9. Allmang, Amandine. “Smart Contracts vs Traditional Contracts | Linedata.” linedata.com, www.linedata.com/smart-contracts-vs-traditional-contracts.
10. Enforceability of Smart Contracts in Malaysia. Shin Associates.
11. “What Is the Legal Status of Cryptoassets and Smart Contracts?” Simmons & Simmons, 10 Dec. 2019, simmons-simmons.com/en/publications/ck400ievr65o00b44el9cfb4p/what-is-the-legal-status-of-cryptoassets-and-smart-contracts-.
12. Contracts Act 1950, Section 2(a).
13. Contracts Act 1950, Section 2(b).
14. Contracts Act 1950, Section 10(1).
15. Contracts Act 1950, Section 14.
16. Foo, Jia Yi, and Harminderjit Kaur a/p Harban Singh. “Enforceability of Smart Contracts in Malaysia.” Lexology, lexology.com/library/detail.aspx?g=2f54dde8-5980-4aed-9159-86d6ac20eca6.
17. Lawrence Akka QC, et al. Legal Statement on Cryptoassets and Smart Contracts. UK Jurisdiction Taskforce, Nov. 2019.
18. “UK Jurisdiction Taskforce Publishes Legal Statement on Status of Cryptoassets and Smart Contracts: Observations from Ireland.” Arthur Cox LLP, 18 Dec. 2019, arthurcox.com/knowledge/uk-jurisdiction-taskforce-publishes-legal-statement-on-status-of-cryptoassets-and-smart-contracts-observations-from-ireland/.
19. “Smart Contracts.” Law Commission, 25 Nov. 2021, gov.uk/project/smart-contracts/.
20. Cornell Law School. “Contract.” Legal Information Institute, July 2022, law.cornell.edu/wex/contract.
21. S.Code § 7001(h).
22. S.Code § 7006(3).
23. Levi, Stuart D., et al. “An Introduction to Smart Contracts and Their Potential and Inherent Limitations.” Harvard Law School Forum on Corporate Governance, 26 May 2018, law.harvard.edu/2018/05/26/an-introduction-to-smart-contracts-and-their-potential-and-inherent-limitations/.
24. DK Junas. “Smart Contract Implementation: Challenges and How to Overcome Them.” Antier, Marketing Team, www.antiersolutions.com/blogs/smart-contract-implementation-challenges-and-how-to-overcome-them/.
25. Cadogan, Marsha Simone. “Enforcing Smart Legal Contracts Prospects and Challenges.” CIGI Papers, no. 271, Feb. 2023, p. 32, www.cigionline.org/static/documents/no.271_UN5GG6q.pdf.

 

Written by:

Mohamad Redzuan Idrus redzuan@azmilaw.com
Tan Boon Ting general@azmilaw.com

 

Corporate Communications
Azmi & Associates
25 September 2025

Introduction

In 2025, Malaysia’s Pharmaceutical Market revenue is expected to reach US$1.74 billion.¹ For any company looking to tap into this lucrative market, understanding the local regulatory landscape is the first and most critical step. This landscape is primarily governed by the Control of Drugs and Cosmetics Regulations 1984 (“CDCR 1984”), enforced by the Drug Control Authority (“DCA”) under the National Pharmaceutical Regulatory Agency (“NPRA”) of the Ministry of Health.

According to Regulation 2 of the CDCR 1984, “product” is defined as a drug² in a dosage unit or otherwise, for use wholly or mainly by being administered to one or more human beings or animals for a medicinal purpose.³ For instance, biologics, generic drugs, including prescription medicines and Over The Counter (OTC) products, traditional medicines, veterinary products, and health supplements all fall under the purview of the CDCR 1984.

This article aims to present a general overview of the legally mandated processes for product registration, regulatory compliance, and post-registration obligations.

 

Threshold Requirement to Establish Local Presence

Before a foreign pharmaceutical company can import, market, distribute, and sell products in Malaysia, it must have a recognised presence in Malaysia and register as a Product Registration Holder (“PRH”). This is grounded in Regulation 7 of the CDCR 1984,⁴ which imposes a blanket prohibition on manufacturing, selling, supplying, importing, processing, or administering a product unless the product has been registered and the person holds the appropriate license to do so.

To qualify as a PRH, a company must be incorporated in Malaysia, have a permanent local address, and be registered with the Companies Commission of Malaysia for a business scope that includes pharmaceutical products.

Although local companies that meet NPRA’s requirements may act as their own PRHs, the PRHs do not necessarily have to be the product owner, provided that such PRHs obtain the authorization from the product owners in writing to be the holders of the product registration, who will be responsible for all matters related to the quality, safety, and efficacy of the product.

The PRH takes on significant responsibilities. They are legally accountable for the product’s quality, safety, and efficacy. Key duties include:

1. managing and submitting all technical data related to the product’s quality, safety and efficacy, and promptly informing the DCA of any changes;
2. providing any documents, samples, or information requested by the DCA regarding the registered product;
3. corresponding with the NPRA directly. The NPRA shall not communicate with any other third party (including product owner and the law firm hired by any of the parties) regarding product registration;
4. ensuring the product consistently meets all quality standards and conditions of its marketing authorization; and
5. notifying the DCA immediately if they cease to act as the PRH.

 

Product Registration

(A) Product Classification

To begin the registration process, the applicant must first correctly classify the product. This is a crucial first step, as the classification, whether it is a new drug, a generic, or a health supplement, will determine the regulatory requirements, fees, and evaluation timeline.

Under the CDCR 1984, the “products” are classified into the following categories:

1. New drug products

• New drug products refer to any pharmaceutical products that have not been previously registered in accordance with the provisions of the CDCR 1984.

2. Biologics

• Biologics/ Biological products refer to any products whose active substance is made by or derived from a living organism (plant, human, animal or microorganism) and may be produced by biotechnology methods and other cutting-edge technologies.
• This product imitates natural biological substances in our bodies such as hormones, enzymes or antibodies.

3. Generics

• Generic products are products that are essentially equivalent to an existing registered product in Malaysia.
• Generic products can be classified into two groups: (i) Scheduled Poison (Controlled Medicine); and (ii) Non-scheduled Poison (Non-Poison or “Over-the-Counter”, OTC).

4. Health supplements

• Health supplements refer to any product used to supplement a diet and to maintain, enhance and improve the health function of the human body.
• It can be presented in various forms such as capsules, tablets, powder, liquids and shall not include any sterile preparations (i.e., injectable, eye drops) or products using any other route of administration other than the oral route.

5. Natural products

• Natural products include traditional medicines, herbal products, homeopathic medicines, natural products with modern claims and natural products with therapeutic claims.

6. Veterinary products

• Veterinary products containing Scheduled Poison (as in First Schedule of the Poison Act 1952), Non-Scheduled Poison/OTC, pesticides for internal use, pesticides for external use (control of endoparasite) fall under the jurisdiction of NPRA.

To determine the classification of the products, the following criteria may be taken into account:

1. the primary intended purpose/indication of the product;
2. the primary mode of action/ the principal mechanism of action;
3. the substances and strength of the product; and
4. classification of the products in reference countries.

(B) Application for Quest 3+ Token

All product registrations are managed through Malaysia’s online portal, the QUEST 3+ system. To access this, the PRH must first apply for a membership. The Quest 3+ Token also facilitates product registration, licensing applications, post-registration activities, certificate issuance, export support, and regulatory and safety submissions. Upon the NPRA’s approval, the applicant must complete the remaining steps via the MSC Trustgate website.

Payment for Quest 3+ Token

Payment for Quest 3+ product registration must be made online through the system’s payment portal. The charges for the Quest Membership are as follows:⁵

(C) Submission for New Product Registration

The processing fees and analysis fees for the online application submission for different product categories via the QUEST system are as follows:⁶

Note: The DCA will charge any applicant such costs as it may incur for the purpose of carrying out laboratory investigations/ testing before the registration of any product.⁷

(D) Decisions of DCA

A regulatory decision will be made by DCA on whether to approve or reject an application after reviewing the submitted documents. If required, DCA may request product samples. NPRA’s evaluation timelines upon final and completion submission may vary depending on the product category and evaluation route, as shown in the table below.⁸

Once the NPRA completes its evaluation, the DCA will issue its decision. A successful application marks a major milestone, but it is not the final step.

The decision will be communicated to the PRH via email or an official letter. Under Regulation 11(1) of the CDCR 1984,⁹ DCA can reject, cancel or suspend a product registration at any time if there are issues with its safety, quality or effectiveness, or if the registration conditions are not met.

Thereafter, the PRH will be given a product registration number and a certificate of registration to prove that a pharmaceutical product has been approved for sale and use in Malaysia. The product registration number applies to the specific product, which includes its name, identity, composition, characteristics, origin, its manufacturer, PRH, as specified in registration documents.

 

Post-Registration Process

(A) Licensing and Certification

Receiving the product registration number and certificate is the green light to begin commercial activity. However, to legally manufacture, import, or sell your product, the PRH must obtain the relevant licenses. The specific licenses required will depend on the PRH’s business operations. Under Regulation 12 of the CDCR 1984, the Director of Pharmaceutical Services may issue the following licenses: manufacturer’s licence, wholesaler’s license, clinical trial import licence and import licence.

The processing fees are as follows:

For certification, issuance of a certification by the Director of Pharmaceutical Services includes a fee of RM50.00.¹¹

(B) Maintenance and Renewal of Product Registration

The product registration is valid for five years. To ensure uninterrupted market access, it is crucial to manage the renewal process proactively. An application for re-registration must be submitted within six months before the expiry date. The NPRA typically sends a reminder three months prior, but the ultimate responsibility lies with the PRH.

For withdrawal of the product registration, the PRH shall notify DCA regarding any decision to withdraw a product’s registration and if they are no longer authorised to hold the product’s registration. The registration of a product, once withdrawn, shall not be reinstated. A new application for product registration is required if the PRH wishes to have the product registered again at a later date.

For the amendment to the particulars of the product, the applicant must submit an official written request to DCA if there are any amendments to the particulars of the product via variation applications.

(C) Post-Marketing Surveillance

The PRH’s responsibilities continue long after a product is registered. They must actively monitor the product’s performance in the market and ensure ongoing compliance.

Pharmacovigilance
In accordance with Regulation 28, CDCR 1984, the PRH or any person who possesses any registered product shall immediately inform the Director of Pharmaceutical Services of any adverse reaction arising from the use of the registered product.¹² All PRH must ensure that the company has a pharmacovigilance system in place and takes appropriate action when necessary. PRHs are required to monitor and report any product safety issues that arise locally or internationally to the NPRA and comply with all safety-related directives issued by DCA.

Product Recalls
In certain cases, products may need to be recalled due to reported serious adverse drug reactions. The PRH is responsible for executing any recall directives from the DCA.

 

Conclusion

The path to introducing a pharmaceutical product into the Malaysian market is a structured and multi-layered process designed to uphold the highest standards of public health. As outlined, the entire framework is governed by the CDCR 1984, with the NPRA acting as the central regulatory body.

Nonetheless, gaining market approval is not the end of the journey. The post-registration phase demands strict adherence to licensing, registration renewal, and ongoing pharmacovigilance duties to ensure continued product safety and efficacy.

Ultimately, successfully introducing a pharmaceutical product to the Malaysian market is a journey of meticulous planning and regulatory diligence. While the framework governed by the NPRA is rigorous, it is designed to ensure that only safe and effective products reach the public. For potential entrants, viewing this regulatory process not as a barrier but as a roadmap to building a trusted and sustainable presence is key. Engaging with local experts will be an invaluable asset in navigating this promising and growing pharmaceutical landscape.

  

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1. https://www.statista.com/outlook/hmo/pharmaceuticals/malaysia
2. As per Section 2 of the Sale of Drugs Act 1952, “drug” includes any substance, product or article intended to be used or capable, or purported or claimed to be capable of being used on humans or any animal, whether internally or externally for a medicinal purpose used in humans (and animals).
3. As per Section 2 of the Sale of Drugs Act 1952, “medicinal purpose” means any of the following purposes:

(a) alleviating, treating, curing or preventing a disease or a pathological condition or symptoms of a disease;
(b) diagnosing a disease or ascertaining the existence, degree or extent of a physiological or pathological condition;(c) contraception;
(d) inducing anaesthesia;
(e) maintaining, modifying, preventing, restoring, or interfering with, the normal operation of a physiological function;
(f) controlling body weight;
(g) general maintenance or promotion of health or well-being;

4. Control of Drugs and Cosmetics Regulations 1984 (PU(A) 223/1984), reg 7.
5. Drug Registration Guidance Document (DRGD) Third Edition, Tenth Revision July 2025, Appendix 9.
6. Drug Registration Guidance Document (DRGD) Third Edition, Tenth Revision July 2025, Appendix 9.
7. Control of Drugs and Cosmetics Regulations 1984 (PU(A) 223/1984),reg 8.
8. https://www.npra.gov.my/index.php/en/component/sppagebuilder/113-faq-product-registration.html#:~:text=After%20a%20product%20is%20registered,manufacturer%2F%20import%2F%20wholesale%20license
9. Control of Drugs and Cosmetics Regulations 1984 (PU(A) 223/1984), reg 11(1).
10. Malaysian Guideline for Application of Clinical Trial Import Licence and Clinical Trial Exemption, page 13-15.
11. Control of Drugs and Cosmetics Regulations 1984 (PU(A) 223/1984), reg 16.
12. Control of Drugs and Cosmetics Regulations 1984 (PU(A) 223/1984), reg 28.

 

Written by:

Dato’Azmi Mohd Ali azmi@azmilaw.com
Khong Ling Qi khonglingqi@azmilaw.com

 

Corporate Communications
Azmi & Associates
22 September 2025

Malaysia has long been a hub for global professionals and investors, thanks to its strategic location in Southeast Asia, robust infrastructure, and multicultural society. Expatriates looking to work in Malaysia must navigate a structured legal and regulatory framework that governs the issuance of work permits and passes. This article provides a detailed overview of the available permits, governing laws, and practical requirements for foreigners intending to establish careers in Malaysia.

 

The Legal Framework

The primary legislation regulating expatriates in Malaysia is the Immigration Act 1959 (Act 155) and the Immigration Regulations 1963. The Immigration Act provides that under Section 6(1)(c), non-citizens must obtain a valid permit or pass to enter and remain in Malaysia, and entering without one constitutes an offence. The Immigration Regulations 1963, on the other hand, empower the Director General of Immigration to issue different passes, including Employment Passes, Dependant Passes, and Visit Passes. Together, these laws provide the foundation for Malaysia’s expatriate management system.

 

Employment Pass (EP)

The Employment Pass is the most common permit for foreign professionals and is divided into three categories based on salary and position. The table below summarises the categories, validity, eligible positions, and family-related entitlements:

• Category I is reserved for senior-level expatriates with higher salaries and offers the most stability and benefits, including the right to hire domestic help.
• Category II applies to mid-level professionals with moderate salaries.
• Category III is limited to skilled technical staff with shorter validity periods and more restrictions.

All Employment Passes require employers to submit comprehensive documentation through the Expatriate Services Division (ESD), including the expatriate’s passport, academic and professional certificates, employment contract, proof of insurance, and industry-specific approvals.

 

Residence Pass-Talent (RP-T)

The Residence Pass-Talent is designed for highly skilled expatriates who wish to establish a long-term career in Malaysia. Applicants must have worked in Malaysia for at least three years under an Employment Pass, earn a salary of at least RM15,000 per month, hold recognized qualifications, and maintain a tax record in Malaysia. The RP-T offers a validity period of ten years and is renewable, providing greater flexibility than the Employment Pass. Holders may switch jobs or start businesses without needing fresh approvals, and family members can also obtain dependent visas aligned with the RP-T duration. This makes the RP-T ideal for professionals who have already established themselves in Malaysia and are seeking stability and long-term residency options.

 

Professional Visit Pass (PVP)

The Professional Visit Pass caters to foreign professionals engaged in short-term assignments, training, or projects in Malaysia for a duration of up to twelve months. Applicants remain employed by their foreign companies and are only authorized to perform temporary work in Malaysia. This pass is particularly relevant for consultants, trainers, and technical experts who come to Malaysia for limited engagements.

 

Golden Visa Schemes

Malaysia also provides residency-by-investment pathways, primarily aimed at investors, retirees, and affluent individuals. The Malaysia Premium Visa Programme (PVIP), introduced in 2022, offers a twenty-year renewable visa for investors who place at least RM1 million in a Malaysian bank and demonstrate offshore income of RM40,000 per month. The Malaysia My Second Home (MM2H) programme, by contrast, is a more established scheme that provides five to twenty-year visas based on fixed deposits and property purchases and is particularly popular among retirees and families. While both programmes provide access to lifestyle benefits, property ownership, and healthcare, they do not lead to citizenship.

 

Dependant Passes and Family Matters

Expatriates who hold an Employment Pass or Residence Pass-Talent may apply for Dependant Passes to bring their legally married spouses and children under the age of eighteen to Malaysia. The required documents typically include the dependants’ passports, marriage or birth certificates translated into English, photographs, and the primary pass holder’s supporting documents. The Dependant Pass is valid for the same period as the principal pass, although dependants are not permitted to work or study without securing their own permits. This ensures that expatriates can live in Malaysia with their immediate families while complying with the regulatory requirements.

 

Investor Pass (2025)

In April 2025, Malaysia introduced the Investor Pass, which aims to facilitate easier entry for global investors and businesspeople. The pass allows stays of up to six months per entry with multiple-entry privileges. Unlike the Premium Visa Programme or the MM2H scheme, the Investor Pass is not designed for residence or retirement but is instead focused on supporting business-related mobility and investment opportunities.

 

Conclusion

Malaysia’s expatriate framework offers a comprehensive system tailored to different categories of foreign professionals, investors, and families. From temporary assignments under the Professional Visit Pass to long-term stability through the Residence Pass-Talent or investment opportunities under the Premium Visa Programme, expatriates can select a pathway that best fits their career, lifestyle, or financial aspirations. Compliance with the Immigration Act, employer sponsorship, and proper documentation remain central to obtaining and maintaining legal residence and employment in Malaysia. For companies, ensuring compliance when hiring foreign talent is equally critical. With Malaysia continuing to position itself as a competitive global destination for investment and talent, its immigration framework remains an essential gateway for international professionals seeking opportunities in Southeast Asia.

 

How We Can Help

Transitioning into Malaysia’s professional landscape requires more than just a job offer. It demands compliance with immigration laws, employment regulations, and family relocation requirements. Azmi & Associates delivers clear, practical legal advice on work permits, residency pathways, and long-term settlement options, helping you navigate every step with confidence.

 

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References:

• Immigration Act 1959/63 (Act 155) – Principal legislation governing the entry, stay, and employment of non-citizens in Malaysia. https://www.imi.gov.my/index.php/pekeliling/immigration-act-1959-63-act-155/
• Expatriate Services Division (ESD), Immigration Department of Malaysia – Official platform for expatriate applications and employer submissions. https://esd.imi.gov.my/portal/
• Residence Pass-Talent (RP-T), TalentCorp Malaysia – Long-term residency scheme for highly skilled expatriates. https://rpt.talentcorp.com.my/applications/new-applications/eligibility-criteria
• Malaysia Premium Visa Programme (PVIP) – Launched in 2022 for affluent investors, offering long-term renewable residence permits. https://insightplus.bakermckenzie.com/bm/tax/malaysia-malaysian-premium-visa-programme-pvip
• Malaysia My Second Home. (2024). National MM2H – Malaysia My Second Home. [online] Available at: https://mm2h.com/national-mm2h/.
• Investor Pass (2025) – Recently introduced multiple-entry pass allowing investors and businesspeople to stay for up to six months per entry. https://www.skrine.com/insights/alerts/may-2025/multiple-entry-investor-pass-launched-for-peninsul

 

Written by:

Amir Fahmi Annas amirfahmi@azmilaw.com
Muhammad Danial Azli danial.azli@azmilaw.com

 

Corporate Communications
Azmi & Associates
26 August 2025

Why Choose Malaysia

Malaysia continues to shine as one of Southeast Asia’s most attractive destinations for investors and global citizens alike.

For international investors and multinationals seeking stability, strategic location, business friendly policies, cost efficiency, and of course, great food, Malaysia delivers it all, and the Malaysia My Second Home (“MM2H”) program offers you, the chance to enjoy life in an affordable, tropical, and culturally diverse country.

Since its launch in 2002, the MM2H program has welcomed nearly 60,000 participants worldwide, and following its 2024 revamp, it has already drawn 1,300 new approvals and MYR840 million (USD$196 million) in inflows by mid-2025 — underscoring its renewed global appeal.

Malaysia’s appeal to foreign nationals goes beyond affordability, it is a country where strong economic fundamentals meet quality living. Ranked among Asia’s most cost-effective destinations for expatriates, Malaysia combines a lower cost of living with world-class healthcare, modern infrastructure, and a thriving business environment supported by steady growth, rising foreign investment, and expanding sectors such as digital infrastructure, finance, and semiconductors.

According to Business Insider’s “8 cities around the world that offer both a low cost of living and a high quality of life,” Malaysia stands alongside leading nations like Poland, Croatia, and Hungary. Add to this, its lush rainforests, tropical islands, and cosmopolitan cities with top tier healthcare and education, Malaysia offers something rare: a place where economic opportunity and lifestyle go hand in hand, making it easier than ever to call Malaysia your second home.

 

MM2H Program Tiers

Under the revamped 2024 MM2H rules, applicants can choose from different tiers, each with different fixed deposit requirements, minimum property purchase obligations, and durations to suit varying budgets and goals. The table below summarises the main differences between the MM2H tiers:

 

Key Considerations

The Silver tier offers the lowest entry cost, but higher tiers provide longer visa validity and potentially greater investment flexibility. All tiers require property acquisition, with minimum values set according to the tier.

Special Economic Zones or Special Finance Zones are specific areas within Malaysia where the Malaysian government wishes to attract foreign investments and facilitate development. Currently, Forest City in Johor is the only location designated as SEZ under MM2H.

Successful MM2H applicants will gain the right to purchase property, open accounts with local banks and access both private and public healthcare in Malaysia. Additionally, with a multiple-entry visa, participants are able to enter and exit freely. Most importantly, thanks to the country’s exemption on foreign sourced income, overseas earnings and pensions can be enjoyed tax free. Other benefits include:  The ability to bring dependents and parents / in laws (spouse and children under the age of 21), as well as access to education, healthcare and financial services.

 

How to apply

Currently, you cannot apply to the MM2H program directly and must do so through a licensed and registered agency. The government imposes a standard fee on the agency based on the selected tier: MYR44,000 for Silver, MYR55,000 for Gold, and MYR70,000 for Platinum.

 

Standard Application Procedure

Step 1: Once you have chosen a registered and licensed agency you must pay a deposit. Deposit amounts may vary by agency.

Step 2: Select the program tier you wish to apply for and check that you are eligible.

Step 3: Gather and submit required documents. Documents would include: the main applicant’s passport, resume, proof of kinship and a certificate of criminal clearance. Then you must wait for a conditional approval from the government.

Step 4: Once you receive an approval you must pay the rest of the agency’s fees as well as the government participation fee.

Step 5: You must travel to Malaysia for visa endorsement, open your fixed deposit account, undergo a medical examination, and obtain medical insurance.

Step 6: One year from the date of your visa endorsement you are required to purchase property.

 

How We Can Help

Moving countries is a big step. We can make it simple. Azmi and Associates provides clear practical legal guidance for your MM2H application, property purchase, and family relocation, allowing you to build your new life in Malaysia.

 

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References:

• Chia, N. (2025). MM2H visa requirements and benefits: 2025 guide. [online] Wise. Available at: https://wise.com/my/blog/mm2h-requirements-malaysia.
• Daly, M. (2025). Malaysia’s Revamped MM2H Attracts 1,300 Approvals and US$200 Million in Under a Year – IMI Daily. [online] IMI Daily. Available at: https://www.imidaily.com/asia-pacific/malaysias-revamped-mm2h-attracts-1300-approvals-and-us200-million-in-under-a-year/
• D’Arthitz (2025). MM2H FAQ – D’Arthitz. [online] Mm2home.biz. Available at: https://mm2home.biz/mm2h-faq/
• (2018, July 25). Malaysia My Second Home (MM2H) Visa Application Guide. Lifestyle Consulting Company, IKI LINKS in Johor Bahru Malaysia. https://ikilinks.com/en/mm2hvisa-en/#t3
• Lloyd, A., Pandy, J. and Latu, D. (2025). 8 global cities that offer low cost of living, high quality of life. [online] Business Insider. Available at: https://www.businessinsider.com/cities-abroad-lowest-cost-of-living-highest-quality-of-life-2025-2.
• Malaysia My Second Home. (2024). National MM2H – Malaysia My Second Home. [online] Available at: https://mm2h.com/national-mm2h/
• Malaysia Visa Permit and Residence Requirements – MM2H. (2024, December 20). MM2H. https://mm2h.co/mm2h-requirements/
• Visa Permit Application How To Apply – MM2H. (2024, December 20). MM2H. https://mm2h.co/mm2h-visa-permit-application/
• Beyond Uncertainties: Malaysia’s Investment Outlook Remains Promising For Global Investors – https://www.businesstoday.com.my/2025/05/30/beyond-uncertainties-malaysias-investment-outlook-remains-promising-for-global-investors/

 

Written by:

Amir Fahmi Annas amirfahmi@azmilaw.com
Muhammad Danial Azli danial.azli@azmilaw.com

 

Corporate Communications
Azmi & Associates
23 August 2025

What is an IP Policy?

An IP Policy is an important tool in a single written document which provides and describes the policies and strategic frameworks in respect of the administration and management of the intellectual property (“IP”) of a company. This would include matters related to IP creation, ownership of the IP, utilization and protection of the IP, rights and obligation of the employees, interaction with third parties and so on.

 

Why a company needs IP Policy?

IP (such as trademarks, patents, copyrights, industrial design and trade secret) is one of the most valuable assets for a company. The existence of an IP Policy provides a clear, complete, and protective framework on dealing with the company’s IP.

An IP Policy also contains frameworks and parameters on ways for company to encourage innovation and creation of new IP by its employees, and the regulations on ownership of these new IP. This would therefore help the company becomes more competitive, innovative, and to properly manage its IP, as well as to minimise any IP related risks such as infringements.

The formulation of an IP Policy will vary depending upon the nature of a business and the relevant industry of such company. For example, where a company is involved in research and development, as ESG (Environmental, Social and Governance) has becoming predominant nowadays, the IP Policy may need to consider the role of IP creation with sustainable innovation.

 

What needs to be included in the IP Policy?

When developing an IP Policy, certain key features should be included in order for the policy to effectively address the various elements and issues present in administering, managing, and protecting an IP.

Furthermore, the IP Policy of a company should adhere to, uphold, and enable its missions and visions to be carried out in its IP activities, and the utilisation of an IP and/or its commercialisation guidelines in the IP Policy should also reflect those values.

Below are some of the key features to keep in mind when developing the IP Policy of a company.

(a) Purpose

An IP Policy would usually list the purpose of its formulation. The purpose of an IP Policy is to provide a guideline and framework for the protection and management of a company’s IP, including its registration, disclosure, and commercialisation of its IP.

The IP Policy should include all of the important aspects of the activities or businesses which are relevant to the creation of IP and any potential dealing of the IP. If applicable, a company should consider utilizing all types of IPs (trademarks, patents, copyrights, industrial design and trade secret) to protect its assets.

(b) Parties Covered

The parties covered under an IP Policy depend on the nature of the company (and its business) which the IP Policy governs.

Generally, the parties which would be covered under an IP Policy would include, among others:

(i) The company itself;
(ii) The staff/ employees of the company, or any persons engage by the company;
(iii) Any third parties involved in IP projects/creations/ collaborations (i.e. research groups, third party sponsors and etc.); and
(iv) IP managers/administrators of the company.

(c) Defined Terms

It is important that an IP Policy has a set of defined terms in order to ensure the smooth application and governance of the IP Policy towards the IP of a company.

Having a set of defined terms in an IP Policy is important for a few reasons, including the following:

(i) to provide clarity on the terms present in the IP Policy; and
(ii) to avoid disputes in interpretations and definitions of the terms present in the IP Policy.

(d) General Policies

(i) IP Ownership

(aa) IP created by the employee

The regulations and guidelines of ownership of an IP created by the employee, as well as the extent of freedom to create and own those IP while being employed under the company, is dependent upon the company itself. There is no hard and fast rule in regard to how a company should regulate IP ownership of its employees. Some policies toward IP ownership are strict whereas some are lenient.

The IP Policy of a company should clearly provide on the ownership of any IP developed by its employees. For example, any rights in the IP made or created by its employees, either developed in the course of or pursuant to the employment of the employee, will be owned by the company. An exit form should also be introduced for employee leaving the company to expressly obtain the employee’s acknowledgement on compliance of the IP Policy during the employment period.

(bb) IP created together with third parties (pursuant to collaboration or contract for services)

The IP Policy of a company should establish the best practices involving third parties such as independent contractors or independent consultants. This includes requirement to enter into an agreement with such third parties and as far as practicable, to ensure that the terms of the agreement are consistent with the principles set out in the IP Policy. This agreement needs to be prepared based on the nature of the transaction. For example, a research collaboration would depend on the type of research and the specific roles each party brings forward to the collaboration. As there is no one-size-fit-all agreement, lawyers should be involved in reviewing, drafting and the negotiation of such an agreement.

(ii) IP Disclosure

Disclosure of an IP is usually obligated onto employees when an IP has either been created, invented, and/or discovered by them in the course of their employment.

The IP Policy of a company should introduce a clear and concise innovation disclosure mechanism where an employee is obligated to disclose any innovation created in their course of employment in the company.

The disclosure of an IP is important in order for company to be aware of any IP that has been, or has the potential to be, invented, created, or discovered so that it is able to evaluate and assess on the best ways to protect or manage it.

Disclosure of an IP is usually done through an Invention Disclosure Form (IDF), and such disclosure must be made to the company.

(iii) IP Protection

(aa) For registrable IP (patent, trademark, industrial design)

The decision to register registrable IP will be determined by the company. The IP Policy of a company provides the frameworks on registering these kinds of IP, such as the factors to consider when deciding to undertake IP registration, the probability of the registration to be successful, and any other factors which may possibly prevent the IP from being successfully registered. The registration of an IP is usually done by the IP managers or administrators in the company.

(bb) For non-registrable IP (copyright, trade secret, confidential information)

For non-registerable IP, an IP Policy of a company would provide the rights and ownerships that exist toward these IP, the guidelines and limitations on dealing with these IP, either in terms of maintaining its confidentiality or in its management and administration, as well as the guidelines on who can deal with these non-registrable IP.

(iv) IP Management and Protection

It is vital that an IP Policy of a company provides provisions, frameworks, and guidelines that address the management and protection of the company’s IP.

When formulating policies for IP management and protection, the various avenues and protective protocols and measures must be clearly laid down in order to have a concise and effective IP management and protection policy.

This is to ensure a specific mechanism is provided in the IP Policy of a company to properly address the management and protection of the IP, as it is a valuable asset to the company.

Some examples of IP Policy which address the management and protection of a company’s IP are confidentiality or non-disclosure related provisions, dispute resolution procedures and guideline as to whom an IP may be disclosed, or licensed to.

(v) IP Enforcement

In regard to IP enforcement, the decision to commence IP enforcement against an infringer depends on the companies, and to what extent they are willing to take in order to protect their IP.

Some companies prefer to settle IP infringement without taking any legal action in order to reduce legal costs, whereas some employ IP legal counsels that monitor and manage the companies’ IP portfolio in order to address IP enforcement or any legal matters.

Having an IP Policy that provides for IP enforcement ensures wider protectionary measures to the company’s IP on what avenues a company can take to protect their IP.

To be on the safe side, company should ensure that its IP Policy addresses IP enforcement matter as a precaution in case an IP enforcement matter arises. Additionally, an IP Policy may provide for an establishment of a committee to investigate any IP infringement matters by any persons, and the findings will determine whether legal action should be taken.

(vi) IP Commercialization

The IP Policy of a company should provide the manner and mechanism how its IP may be commercialized.

(aa) Licensing

Some companies may opt to have a licensing related provision in their IP Policy to enable them the possibility of licensing their IP to third parties to ensure wide usage of its IP through licensing arrangement, either for commercial gain or to be utilised for social good.

When drafting IP Policy in regard to licensing of an IP, the core values and what is intended from the utilization of the IP (such as for the IP to be used for the good of society or for monetary gain) should be considered.

Additionally, IP Policy on IP licensing should outline the situations in which an IP may or may not be licensed for, as well the limitations as to whom the IP may be licensed to or to what extent it may be utilised for, among others.

The following may be taken into consideration when drafting licensing related provisions in an IP Policy:

1) Protection of the company’s ownership and rights toward the IP;
2) Protecting the IP being licensed from any risks;
3) Any profits or commercial returns;
4) Clear limitations to be adhered to by the licensee;
5) How the IP will be utilised; and
6) Prioritising the company’s utilisation of its IP for current and future usage.

(bb) Sale of the IP

Some companies may opt to have a provision in their IP Policy to enable them the possibility of selling their IP to third parties for financial gain in which the companies will assign their rights over such IP to the third party.

Different from licensing, an assignment of an IP means that a company will not own the IP anymore and instead it will be transferred to another party.

In most cases, a company will sell its IP where it is no longer interested to deal with such IP.

The IP Policy of a company should outline the situations in which an IP may or may not be sold for, as well the limitations as to whom the IP may be sold to.

(e) Responsible Parties

(i) Key Person

In an IP Policy of a company, a key person is the person who is in charge of approving, enforcing, upholding and updating (where necessary) the company’s IP Policy.

It is important for the key person to be well-versed in the company’s IP Policy as well as the activities and dealings with the company’s IP as this enables them to be aware of any infringements or non-compliance of the IP Policy, as well as to ensure that the IP Policy is properly adhered to. Additionally, the key person must also ensure the IP Policy is up to date based on the latest direction of the company.

The key person in a company may be a senior member of management, such as a director or senior IP officer of the business.

Additionally, a company may even choose to establish a compliance team headed by the key person in charge, in order to address the issue of compliance with the IP Policy.

(ii) IP Committee

To ensure smooth implementation of the IP Policy, the IP Policy of a company should require for an IP Committee to be set up. The term of reference of the IP Committee should be detailed out in the IP Policy such as the functions, composition, duties, powers and frequency of meeting (if required). The IP Committee may advise the company or they may be authorised to make decisions in respect of the company’s IP such as the best form of protection and assessment on the applications for IP protection.

(f) Incentive for IP Creation

In recognition of innovative research, incentive schemes for inventors whose invention is proven to have commercial value upon valuation of the IP Committee may be considered. This incentive can be in monetary form or other kinds of recognition depending on the type of the innovation activities. The incentive may also be implemented on key performance indicator (KPI) scheme basis, such as filing of patent application, grant of patent application or publication or presentation of technical paper for internationally recognised conference.

Revenue distributions are usually present in the IP Policy of educational and research institutions.

Revenue distribution related provisions provide the mechanism for distribution of the revenues, which are obtained from IP licensing and commercialisation activities, to the inventors or creators of such IP.

This serves as a way to incentivise and remunerate the inventors or creators involved in the creation and development of the IP during their employment under the educational and research institution, as well as to any persons who were involved.

A revenue distribution related provision may provide for the division percentage and distribution guidelines of the revenue between the educational and research institution, inventors, collaborators, and any persons who were involved in the creation and development of the IP.

A royalty related provision should also be included in an IP Policy if the educational and research institution is keen to license their IP to a third party. This is to ensure that the IP Policy addresses how the royalties obtained from IP licensing activities are distributed between the educational and research institution and the inventors or creators of the IP.

(g) Conflict of Interest

An IP Policy addressing conflicts of interest serves to protect the company’s IP from any actual or potential conflicts of interest by any employees or by anyone dealing with their IP.

A conflict of interest related provision would usually obligate the person(s) to report or disclose to the company of any circumstance or situation which would pose a conflict of interest to the company in relation to its IP, and the next steps to undertake in the event that a conflict of interest does exist. This provision is to ensure that the company and its IP are protected in the best interest for them.

A conflict of interest related provision includes all aspects and/or stages of IP dealings, such as during the research, creation, or invention of the IP, during IP commercialisation, as well as during the employment of all staff members.

Such conflicts may be the sharing of trade secrets, working with a competitor company, or starting a business which is in a similar nature to the company’s business.

In some cases, company may even opt to formulate a Conflict of Interest Committee to address any conflicts of interests toward the company. The role of this committee is usually to determine whether a situation or circumstance has a conflict of interest element against the company and its IP and if affirmative, to address such conflict of interest.

Please note that this article only serves as an overview and guide on the basics of an IP Policy and the key features that an IP Policy should contain.

It is important to keep in mind that an effective IP Policy is ultimately dependant on the company itself such as the nature of its business and dealings, its values, and its visions and missions. As such, there is no singular ‘IP Policy template’ or a ‘correct’ IP Policy as IP Policy will vary among companies depending on various factors.

It is thus advisable to seek legal advice from IP professionals if your company is interested to know more about IP Policy, or if your company is keen to develop an IP Policy.

 

Written by:

Khairul Fazli Abdul Kadir khairul.fazli@azmilaw.com
Azarith Sofia Aziz azarith.sofia@azmilaw.com

 

Corporate Communications
Azmi & Associates
6 August 2025

In recent years, I have seen a strong shift in Malaysia’s financial and estate planning industry — clients are no longer looking for products that are merely financially effective. They are seeking solutions that are both legally robust and Syariah-compliant.

One concept that perfectly bridges these two worlds is Hibah Amanah.

Before we explore its modern applications, let us return to the fundamentals.

 

What is Hibah?

In Islamic law, Hibah is a voluntary gift given by a living person to another without expecting anything in return.

It is completed when there is an ijab (offer) and qabul (acceptance), and the asset is delivered to the recipient.

The Qur’an repeatedly encourages generosity:

• Surah Al-Baqarah (2:177) –

 “…but [true] righteousness is [in] one who…gives wealth, in spite of love for it, to relatives, orphans, the needy…”

• Surah Al-Insan (76:8-9) –

“And they give food in spite of love for it to the needy, the orphan, and the captive…”

The Prophet ﷺ also emphasised gift-giving:

“Exchange gifts, as that will lead to increasing your love for one another.”
 (Hadith, Bukhari)

Hibah, therefore, is not just a legal act — it is an act of love, compassion, and relationship building.

 

What is Amanah?

Amanah means trust — the responsibility to hold, manage, and safeguard property for the benefit of someone else.

In legal terms, a trustee holds a fiduciary duty to act honestly and in the best interest of the beneficiary.

The Qur’an commands this duty clearly:

• Surah An-Nisa (4:58) –

“Indeed, Allah commands you to render trusts (amanah) to whom they are due…”

In practice, amanah may be for a set time or until certain conditions are fulfilled — for example, when a child reaches maturity or when a specific purpose is achieved.

 

Bringing Them Together – Hibah Amanah

When Hibah and Amanah are combined, the result is a powerful Syariah-compliant wealth transfer tool:

• The giver (settlor) makes a hibah to the receiver (beneficiary).
• The trustee holds and manages the hibah property on behalf of the receiver until the agreed conditions are met.

In financial products, many Hibah Amanah arrangements are conditional hibah — meaning the gift only takes effect upon a trigger event, typically the death of the giver.

This differs from the Mazhab Syafie definition of hibah, which generally requires an immediate transfer of ownership during the giver’s lifetime. Here, the product’s trust structure allows a deferred but legally enforceable transfer.

 

Applications in Financial Products and Their Trustees

1. Takaful Policies – Conditional Hibah

• The policyholder names a nominee as trustee, not as an absolute beneficiary.
• Upon death, the takaful operator pays the proceeds to the nominee-trustee for distribution to the hibah recipient.
• Governed by Islamic Financial Services Act 2013, s. 142, which recognises hibah nomination in takaful.
• Trustee role: The nominee acts as trustee (unless structured as absolute hibah, in which case the nominee is beneficiary).
• This is a conditional hibah — only effective upon the death of the giver.
• Benefit bypasses faraid and probate, ensuring faster access for dependants.

2. ASB / ASNB Unit Trusts – Hibah Amanah Ruqba (Conditional)

• The investor gifts certain units to a beneficiary but retains trustee rights to manage, buy, or sell during lifetime.
• Upon the trigger event (death), any remaining units are transferred to the beneficiary.
• This follows the hibah Ruqba concept — a gift dependent on the survival of the giver or receiver.
• Trustee role: ASNB itself acts as trustee of the units under the Hibah Amanah arrangement, administering them until transfer upon death.
• Governed by Trustee Act 1949 and Capital Markets and Services Act 2007.
• Advantage: Claims are processed much faster than probate, often within 30 days.

3. Tabung Haji Savings – Hibah Amanah Mutlak (Absolute)

• The depositor gifts a fixed amount from their Tabung Haji account to the beneficiary and holds it strictly as trustee during lifetime.
• The trustee (giver) cannot use or withdraw the gifted amount for personal purposes.
• Upon death, Tabung Haji steps in as substitute trustee to execute the transfer of the stated amount to the beneficiary.
• This is a Hibah Amanah Mutlak — ownership is recognised from the time of the gift.
• Governed by Tabung Haji Act 1995.

4. Private Wealth Mandates

• Common in high-net-worth succession planning.
• Clients gift assets via hibah and appoint a licensed trust corporation or private trust company as trustee.
• Often used to stagger distributions, preserve control, and prevent premature dissipation of assets.

5. Corporate Shareholding

• Hibah Amanah used to transfer company shares smoothly to successors while retaining operational oversight until the business transition is complete.

 

Benefits for Clients

• Avoids faraid disputes by transferring ownership during lifetime or at a defined trigger event.
• Immediate or prompt access for beneficiaries — avoiding long probate delays.
• Customisable conditions for education, special needs, or staged distribution.
• Syariah assurance when properly documented and aligned with relevant statutes and fatwa.

 

Key Considerations

• Legal documentation must be legally sound and Syariah-compliant — verbal promises are risky.
• Trustee selection is critical — corporate trustees offer continuity and impartiality.
• Must align with State fatwa, Bank Negara Malaysia guidelines, and relevant statutes.

 

Conclusion

Hibah Amanah is more than a legal document — it is a bridge between the timeless generosity encouraged in Islam and the modern realities of wealth and succession planning.

In my 25 years as a Syariah-compliant wealth management lawyer, I have seen how well-structured Hibah Amanah — whether immediate or conditional — can protect families, prevent disputes, and preserve legacies.

It is time for professionals in the banking, trust, and legal sectors to work together to refine these structures so that our financial products do not just manage wealth, but also honour faith, family, and future generations.

 

Written by:

Tuan Haji Mohamad Redzuan Idrus redzuan.idrus@azmilaw.com

 

Corporate Communications
Azmi & Associates
2 August 2025

Introduction

As Malaysia advances towards a self-assessment regime for all taxpayers, with taxpayers having to compute and pay stamp duties on their own effective 1 January 2026, the Inland Revenue Board Malaysia (“IRB”) has introduced the Stamp Duty Audit Framework, also known as the Rangka Kerja Audit Duti Setem (“Framework”), effective from 1 January 2025. This Framework is not merely a procedural guideline, rather, it marks the beginning of a stricter enforcement and a new era of taxpayer accountability and transparency in stamp duty compliance.

 

Stamp Duty Audit Framework¹

1. General Review (Semakan Umum)

At its core, the Framework is designed to verify that the correct stamp duty has been paid according to the Stamp Act 1949 (“SA 1949” or “Act”). This involves the examination of all instruments that are subject to duty. The Framework introduces two distinct modes of audit, i.e., general review and comprehensive review.

A general review is primarily a desk audit conducted at the IRB offices. It involves an examination of documents attached by the auditee during their online stamping application via the Stamp Assessment and Payment System (“STAMPS”). Should the IRB require further details, the auditee may be called to the office for an interview. Based on the findings, a general review case can be escalated to a more in-depth comprehensive review. In such circumstances, the auditee will be notified as per the normal process of initiating a comprehensive review.

2. Comprehensive Review (Semakan Menyeluruh)

A comprehensive review, in contrast, involves a detailed on-site audit that may be conducted at the auditee’s premises or a mutually agreed location. This type of review scrutinises all executed documents in the auditee’s possession.

3. Objective

The principal objective of the Framework is to encourage voluntary compliance with the provisions of the SA 1949. It also serves as an educational initiative to inform taxpayers of their tax responsibilities and obligations. The Framework aims to ensure that stamping is carried out correctly and in an orderly manner, while also explaining the laws, rights, and responsibilities of all parties involved in the audit process.

4. Stamping period

A stamp duty audit, whether general or comprehensive, may cover a period of up to three (3) calendar years. However, this three-year statutory time limit is not applicable in cases involving fraud (penipuan) (Section 74 of the SA 1949), and duty evasion or negligence (pelarian duti atau kecuaian) (Sections 63 and 64 of the SA 1949).

5. Selection criteria for audit

Stamp duty audit cases are identified using a computerised system that applies risk assessment criteria or relies on information obtained by the IRB from multiple sources.

The key methods for selecting these audit cases include:

• Using risk-based assessment criteria;
• Targeting specific industries;
• Focusing on particular issues relevant to certain categories of duty payers; and
• Acting on information provided by third parties.

6. Implementation of Stamp Duty Audit

(a) Initial Audit Action –

The audit process formally begins with a notice to the taxpayer. For general reviews, this comes in the form of a Notification of Audit Action sent through the STAMPS platform. For comprehensive reviews, the IRB issues a Letter of Audit Visit. Recipients must respond within fourteen (14) working days. In cases where valid reasons are provided, the audit may be deferred. Each audit notification outlines key details such as the proposed audit date, required documents, the name of the assigned audit officer, and the estimated duration of the review.

Additionally, the IRB may extend its audit to encompass related entities such as subsidiaries or companies under common control. If no audit visit is conducted in a comprehensive review case, a formal Letter of Determination of Commencement of Case Conclusion Period will be issued to initiate the audit resolution phase.

(b) Conducting the Audit Visit –

Applicable only to comprehensive reviews, visits may take place at various locations including the auditee’s premises or the IRB offices. During the visit, audit officers will identify themselves and present their authority cards. They will explain the audit’s legal basis under Sections 3A and 76 of the SA 1949, outline the scope of the audit, and inform the auditee of their legal rights and obligations. Officers are authorised to inspect and retrieve physical documents, as well as download relevant electronic data.

7. Duration of the Visit

Audit visits typically last between one (1) to four (4) days. However, the actual duration may be extended based on factors such as the volume of documentation, the complexity of records, and the level of cooperation received from the auditee.

8. Review and Access to Records

Audit officers are entitled to review all stamping records and any related documents, whether in physical or electronic form. They may make copies or take original documents, provided a documented inventory is maintained. Officers may also access electronic records and download data using suitable storage devices.

Pursuant to the newly introduced Section 35B of the SA 1949, any person liable to pay stamp duty on an instrument is required to retain the instrument and all relevant documents for a period of seven (7) years from the date the duty is paid.

9. Concluding the Audit

At the close of the audit, auditees may be invited to participate in discussions (either in person or virtually) to review and clarify findings. Following this, a Case Review Findings Letter will be issued, outlining the audit results and the supporting rationale. The auditee has fourteen (14) working days to submit any objections or additional documentation. If no response is received, the findings will be deemed accepted, and a Notice of Amended Assessment along with applicable penalties will be issued.

Audit completion timelines are strictly defined:

• Comprehensive reviews must be concluded within sixty (60) working days from the date of the audit visit letter.
• General reviews must be finalised within seven (7) working days of the audit notification.
• Any delays will be formally communicated by the IRB.

10. Voluntary Disclosure

Conditions

Taxpayers are permitted to make voluntary disclosures for documents that were submitted for stamping beyond the prescribed three-month window, provided this occurs before any audit action has commenced. The audit process is deemed to have commenced once the IRB issues a Letter of Request for Documents and Information. Only documents submitted through STAMPS are eligible.

11. Penalty for Voluntary Disclosure

A concessionary penalty of 10% or RM50 (whichever is higher) may apply.

(a) Offences and Penalties

Under Section 47A of the SA 1949, penalties may be imposed for unpaid or insufficient stamp duty. Nonetheless, the Collector retains the discretion to reduce or waive penalties, particularly in cases where taxpayers come forward voluntarily in respect of their non-compliance.

(b) Appeals

Pursuant to Section 38A of the SA 1949, taxpayers dissatisfied with an audit outcome may submit a Notice of Objection to the Collector within thirty (30) days from the date of Collector’s assessment or additional assessment. The Notice must state the grounds of objection, and the Collector may request further information in relation to those grounds. Notwithstanding the objection, the taxpayer remains liable to pay the duty in accordance with the original assessment pending the outcome of the Notice. If still dissatisfied, they may appeal to the High Court within twenty-one (21) days of receiving the Collector’s decision, pursuant to Section 39 of the Act.

 

Conclusion: Proactive Steps for Businesses and Individuals

Maintaining clear, accurate records is no longer just a good practice, but a necessity. Businesses must ensure that all stamp duty-related documents are properly stamped and readily accessible in the event of an audit. A well-maintained audit trail not only demonstrates compliance but also helps to avoid unnecessary disputes.

Regular internal reviews are just as important. By periodically checking and verifying stamping records, businesses can catch discrepancies early and take corrective action before minor issues become major problems. Equipping staff with the right training on stamping procedures and current legal requirements further strengthens this compliance framework.

Professional advice can also make a difference. Tax consultants and legal advisors offer valuable insights into the intricacies of the SA 1949, helping businesses stay ahead of regulatory demands. At the same time, maintaining open and transparent communication with the IRB fosters trust and supports a smoother, more cooperative audit process.

With the IRB’s enhanced audit framework, stamp duty audits are no longer a remote possibility but a growing reality. Businesses that adopt a proactive and structured approach will not only reduce their risk exposure but also reinforce their financial and regulatory credibility.

 

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1. Stamp Duty Audit Framework (Rangka Kerja Audit Duti Setem): https://www.hasil.gov.my/media/x5hn0ha0/rangka-kerja-audit-duti-setem-2025.pdf

 

Written by:

M Inamul Hassan Shah HassanShah@azmilaw.com
Megan Yap Sze Chyi megan.yap@azmilaw.com
Sharmaine Yap Ern Xie sharmaine.yap@azmilaw.com

 

Corporate Communications
Azmi & Associates
31 July 2025

Introduction

A Company Limited by Guarantee (“CLBG”) is a unique corporate structure designed primarily for non-profit organisations, professional bodies, and charitable foundations. Unlike conventional companies, a CLBG has no share capital, and its members’ liability is limited to the amount they agree to contribute if the company is wound up.

With nearly 2,000 CLBGs incorporated in Malaysia, according to the Companies Commission of Malaysia (“CCM”), this corporate model plays a significant role in the non-profit and social enterprise sectors. But what makes a CLBG different from other companies? This article explores the legal framework governing CLBGs and highlights their key features.

 

Incorporation of CLBG under the Companies Act 2016 (“CA 2016”)

Pursuant to Section 45 of the CA 2016, a CLBG can only be established for specific purposes, including:

(a) Providing recreation or amusement;

(b) Promoting commerce and industry;

(c) Promoting art;

(d) Promoting science;

(e) Promoting religion;

(f) Promoting charity; or

(g) Promoting pension or superannuation schemes.

The CCM, through its Guidelines on CLBG, further clarifies that “useful objects” for the community or country may include initiatives related to the environment, health, education, research, social welfare, or sports.¹

To incorporate a CLBG, an application must be submitted to the Registrar along with the company’s constitution.² To ensure compliance, every CLBG is required to adopt Part A of the model constitution provided by the Registrar.

A CLBG may also apply to the Minister for a licence to omit the word “Berhad” or the abbreviation “Bhd.” from its name, and for this purpose, the CLBG is required to obtain an initial fund of RM1 million to ensure that the CLBG is able to carry out its objectives as soon as it is incorporated.³

On the other hand, a CLBG which had been incorporated for at least two (2) years may apply to omit the word “Berhad” or “Bhd” provided that there is a cash of RM1 million shown in the bank account of the latest financial statements. Therefore, there are two (2) types of CLBG namely a CLBG without the word “Berhad” or “Bhd”, for example, The Royal Selangor Golf Club⁴ and CLBG with the word “Berhad” or “Bhd”, for instance, Khairat Keluarga Perbadanan Johor Berhad.⁵

Similar to the incorporation of a private limited company (“PLC”), a promoter is also required to incorporate a CLBG. According to the Guidelines, a promoter (founder member) or a director of a CLBG must be a person who is fit and proper and is not disqualified under the CA 2016. The Registrar may consider the following criteria in determining whether a person is fit and proper:

(a) Consider the experience, qualification and competency which would assist him in carrying out his duties as director of CLBG;

(b) Consider the reputation, character and integrity;

(c) Conduct a security vetting on the potential promoter (founder member) or director, and a safety filter (security vetting) shall be conducted by the Royal Malaysian Police and/or other agencies.

 

General Requirements and Prohibitions

According to the Guidelines, a CLBG must ensure that its financial resources are utilised solely to carry out its objects and comply with all the provisions set in its Constitution. The Registrar may also require the CLBG to submit segmental reports and financial statements. A CLBG must keep a list of the funds, donations, or contributions at all times, as well as the bank statement as evidence in relation to the fund transactions, donations, or contributions. The Registrar may also issue a notice and require the CLBG to submit the Financial Information Form (Borang Maklumat Kewangan – BMK) to CCM.

A CLBG is also prohibited from doing the following, except with prior approval from the Registrar:

(a) Appointing new directors;

(b) Paying any fees, salaries and fixed allowances to its directors;

(c) Paying any fees, salaries and fixed allowances that relate to prior financial years of the company to its directors unless:

(i) The CLBG has been incorporated for at least three (3) years;

(ii) The fees, salaries and fixed allowances payable must have been provided for in those financial years and do not relate to the initial three (3) financial years from the incorporation date;

(iii) The total amount payable shall not exceed 30% of the total assets of the company before payment is made; and

(iv) The CLBG will be solvent immediately after the payment is made,

(d) Soliciting any contribution or donation or making any money collection from the public;

(e) Incorporating or holding a subsidiary; and

(f) Amending the Constitution.

The CCM has provided a comprehensive set of checklists (Checklist 1-8) and examples (Example 1-5) to guide the applicants in submitting requests to CCM. These checklists and examples correspond to specific matters for which a CLBG may seek approval. For instance, Checklist 3 outlines the application process for appointing a new director.

Additionally, only CLBGs that hold a licence with conditions issued by the Minister under Section 24(3) of the Companies Act 1965, or those whose Constitutions explicitly require Ministerial approval, must obtain approval from the Minister. All other CLBGs must seek approval from the Registrar instead. It is crucial to determine the correct approving authority, as different documentation and fees apply depending on whether approval is required from the Minister or the Registrar.

 

Differences between a CLBG and PLCs

For ease of reference in examining the differences between a CLBG and a PLC, listed below are several areas that may be scrutinised. It is to be noted that the lists are non-exhaustive. The Company Secretary of the CLBG ought to check further to see whether the matter on hand will require approval from the Minister or Registrar before execution.

 

Conclusion

In conclusion, the CLBG framework continues to serve as a vital pillar in fostering sustainability and long-term growth for non-profit entities. By offering a structured and transparent corporate model, a CLBG presents an optimal choice for individuals and organisations seeking to establish a non-profit entity with limited liability, aligned with the permissible objectives outlined in the law.

However, strict adherence to the prescribed guidelines and regulatory requirements is paramount. Ensuring full compliance not only upholds integrity and transparency but also safeguards the entity from potential legal repercussions, including regulatory penalties. As the landscape of corporate governance evolves, the CLBG structure remains a robust and credible vehicle for driving meaningful social impact while maintaining financial and operational accountability.

 

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1. CCM, Guidelines on Company Limited by Guarantee (27 September 2021), paragraph 5.
2. CCM, Guidelines on Company Limited by Guarantee (27 September 2021), paragraph 4.
3. CCM, Guidelines on Company Limited by Guarantee (27 September 2021), paragraph 26.
4. CCM, ‘List of Companies Limited by Guarantee (CLBG) Without the Word “BERHAD”’ (CCM, n.d.) <https://www.ssm.com.my/Pages/Services/Registration-of-Company-(ROC)/CLBG/List-of-Companies-Limited-by-Guarantee-(CLBG)-Without-the-Word-“BERHAD”.aspx> accessed 7 May 2025.
5. CCM, ‘List of Companies Limited by Guarantee (CLBG) With the Word “BERHAD”’ (CCM, n.d.) <https://www.ssm.com.my/Pages/Services/Registration-of-Company-(ROC)/CLBG/List-of-Companies-Limited-by-Guarantee-(CLBG)-With-the-Word-‘BERHAD’.aspx> accessed 7 May 2025.

 

Written by:

Nadia Liyana Hassan nadialiyana@azmilaw.com

Fatin Syaheera Mohd Zuki fatinsyaheera@azmilaw.com

Nur Batrisyia Huda Mohd Rosli batrisyia.huda@azmilaw.com

 

Corporate Communications
Azmi & Associates
29 July 2025

Introduction

The acronym “ESG” stands for Environment, Social and Governance. At first glance, it may not appear to include human rights. However, human rights tend to find its way into the very essence of the ESG framework, particularly in its data compilation, implementation, and reporting.

The fundamental document for human rights is the United Nations Declaration of Human Rights that was adopted on 10 December 1948 in the wake of the Second World War – a date that is now commemorated as World Human Rights Day.

The overlap between ESG and human rights becomes clear when considering the environmental and social issues aspects of ESG. In the international context, relevant documents include the International Covenant on Economic, Social and Cultural Rights as well as the Paris Agreement¹, an international binding agreement dealing with climate change.

This covenant includes rights relating to work, as set out in Article 6 which states that:

“Article 6

1. The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.”

The covenant also addresses workplace safety, health, and education, all of which find their way onto. These issues often appear in ESG reports, whether due to legal compliance of through private sector community contributions, such as supporting schools or providing medical treatment.

In terms of disclosure, the usual approach is to address labour issues under the Human Rights perspective. As an example, the Simplified ESG Disclosure Guidance (“SEDG”) when reporting on human rights focuses essentially on child labour and forced labour.

Source: Simplified ESG Disclosure Guide issued by Capital Markets Malaysia and the Securities Commission

 

Human Rights in GRI Standards and Environmental Reporting

The intersection of human rights with other ESG aspects is further underscored by how GRI standards apply. Generally, these standards state:

“GRI standards enable an organisation to report information about its most significant impacts on the economy, environment and people including impacts on their human rights …”²

This means that even disclosures focused on environmental issues – such as floods or impacts on water resources – inherently affect not just employees but entire communities. These community impacts touch on human rights and should be reported. When reporting is required, there is also obligation to address remediation. This is especially relevant for extractive industries that operate on lands rich in minerals and oil, often belonging to indigenous communities.

Similarly, the severe impact of oil spills on fishing and coastal communities highlights the need for ESG human rights assessments to extend beyond employment standards³. ESG reporting should account for how company activities impact various community segments, reflecting broader social and environmental consequences.

 

International Labour Organisation and Indigenous Rights

The International Labour Organisation (“ILO”) has long recognised these links through its Indigenous and Tribal Peoples Convention, 1989 (No. 169) (ILO Convention No 169), adopted on 27 June 1989. This Convention underscores the obligation to respect the cultural and spiritual importance of lands for indigenous peoples. It highlights the collective aspect of this relationship and the need to protect it. The ILO specifically addresses the special features of this relationship between the land and indigenous people in Article 14, which states:–

“Article 14

1. 1. The rights of ownership and possession of the peoples concerned over the lands which they traditionally occupy shall be recognised. In addition, measures shall be taken in appropriate cases to safeguard the right of the peoples concerned to use lands not exclusively occupied by them, but to which they have traditionally had access for their subsistence and traditional activities. Particular attention shall be paid to the situation of nomadic peoples and shifting cultivators in this respect.”

Other provisions of the ILO Convention No. 169 cover matters such as recruitment and conditions of employment, including health hazards through exposure to pesticides or other toxic substances, as well as prevention of coercive recruitment systems, including bonded labour and other forms of debt servitude.

 

Cultural Rights and Indigenous Land Use

Article 15 of the ILO Convention No 169 explicitly recognises:

“the rights of the peoples concerned to the natural resources pertaining to their lands … (which) include the right of these peoples to participate in the use, management and conservation of these resources.”

Relocation of indigenous communities is tightly regulated. Most importantly, the right to return to their traditional lands once the grounds for relocation cease to exist, is expressly recognised⁴. This is particularly important when considering the actual condition of the land after activities like mining.

 

Land Rehabilitation and Reporting Obligations

This underscores the importance of land rehabilitation as part of the human rights of indigenous and affected communities. Rehabilitation typically involves restoring a site (previously used for activities like mining) to its original state. Although full restoration is often impossible, this highlights the gap between the recognition of human rights in international instruments and the limited protection available in practice. Despite these challenges, countries and companies have an obligation to report remedial actions – such as cleaning contaminated areas to safe levels – to enable communities to return to their lands. While it may not be expressly provided in national laws, ESG reporting requirements demand that these questions be ask, answered, and acted upon.

 

Traditional Activities and Social Rights

Article 23 of the ILO Convention No 169 highlights the importance of traditional activities of indigenous people, such as handicrafts, hunting, fishing, trapping and gathering:

“… as important factors in the maintenance of their cultures and in their economic self-reliance and development. Governments shall, with the participation of these peoples and whenever appropriate, ensure that these activities are strengthened and promoted”.

While the convention addresses governments, it should be noted that in a world where ESG is of increasing importance, businesses also share responsibility in these areas, regardless of whether national laws are up to date.

 

Conclusion: Expanding the Human Rights Lens

This is especially relevant in light of the United Nations Declaration on the Rights of Indigenous Peoples, adopted in 2007, and the United Nations Guiding Principles on Business and Human Rights (“UNGPHR”), adopted in 2011. The UNGPHR clearly states that these guiding principles should be implemented in a non-discriminatory manner:

“… with particular attention to the rights and needs of, as well as the challenges faced by, individuals from groups or populations that may be at heightened risk of becoming vulnerable or marginalized, and with due regard to the different risks that may be faced by women and men.”⁵

While it is arguable that these instruments are merely declaratory in nature, it is no longer acceptable for those involved in human rights or ESG implementation to claim ignorance or indifference to companies’ human rights obligations. These obligations go beyond labour issues to include cultural and social rights and environmental responsibilities, reflecting the far-reaching impacts of business activities on human rights.

 

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1. Malaysia has not signed or ratified or acceded to this Covenant but is bound by the Paris Agreement.
2. See GRI 2: General Disclosures – Global Reporting Initiative at <https://www.globalreporting.org/>
3. Compensation for the effects of oil spills is covered by International Conventions, national laws and by insurance coverage for vessels. The majority of vessels operating in international trade are insured for third party liabilities by a Protection and Indemnity (P&I) Club. For oil pollution incidents, the P&I Clubs and other insurers may pay for losses up to the amount set by the applicable convention or national legislation. See <https://www.itopf.org/knowledge-resources/documents-guides/liability-and-compensation-for-ship-source-oil-pollution-in-the-marine-environment-an-overview-2021/>
4. ILO Convention No 169, Article 16.
5. General Principles UNGPHR.

 

Written by:

Pushpa SK Nair pushpanair@azmilaw.com

 

Corporate Communications
Azmi & Associates
24 July 2025

Introduction

The Communications and Multimedia (Amendment) Act 2025 (“Amendment Act”), which provides amendments to the Communications and Multimedia Act 1998 (“CMA 1998”), was passed by the Malaysian Parliament in December 2024 and came into effect on 11 February 2025. However, Section 92 (Sending of unsolicited commercial electronic messages) and Section 112 (Preservation of communications data) of the Amendment Act will come into effect on a later date to be determined by the Minister of Communications (“the Minister”).

 

Key Amendments to the CMA 1998

There have been major amendments made to the CMA 1998 via the Amendment Act, covering various matters. However, for the purposes of this article, we will be focusing on some of the key amendments to the CMA 1998 relating to the enhancement of protection for individuals and the powers of the Malaysian Communications and Multimedia Commission (“MCMC”):

(a) Enhancement of the protection to individuals

(b) Enhancement of the MCMC’s powers

Conclusion

The Amendment Act introduces significant revisions to the CMA 1998. It is important for those affected by these amendments—especially licensees and service providers—to carefully review the changes and take the necessary steps to ensure full compliance, in order to avoid potential liabilities that may impact their operations.

 

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1. i.e. network facilities provider, network service provider, applications service provider or content applications service provider.
2. Amendment Act, s 66.
3. Under the new s 188(2) of the CMA 1998, incorporated pursuant to s67(a) of the Amendment Act.
4. Under the new s 188(3) of the CMA 1998, incorporated pursuant to s 67(b) of the Amendment Act.
5. Amendment Act, s 91(a).
6. Amendment Act, s 91(b).
7. Amendment Act, s 91(c).
8. Amendment Act, s 92.
9. Amendment Act, s 96.
10. Amendment Act, s 20.
11. Ibid.
12. Amendment Act, s 81.
13. Amendment Act, s 88.
14. Ibid.
15. Amendment Act, s 112.
16. Ibid.

 

 

Written by:

Khairul Fazli Abdul Kadir khairul.fazli@azmilaw.com
Khaliesah Yusri Kamaruzaman general@azmilaw.com

  

Corporate Communications
Azmi & Associates
22 July 2025