A case study – the Federal Court’s decision in Acexide Technology Sdn Bhd & Anor v. Chang Heng Keong / Woon Kim Choy [2026] CLJU 2221

What Happened

Acexide Technology Sdn Bhd was founded in 1996 by three shareholder-directors: the majority shareholder and managing director (54% with his son), the technical director (10%) and the project director (36%). All three worked in the business day-to-day.

In 2019, the majority shareholder and managing director used his majority shareholding to remove the two respondents as directors at an EGM. The minutes recorded they were “discharged of all their duties” and the company would stop paying their “salaries” — they would keep only their dividend rights as shareholders.

The two director-employees did not challenge their removal as directors, but filed unfair dismissal claims under section 20 of the Industrial Relations Act 1967 (“IRA 1967”), arguing they were also employees. The Industrial Court and High Court both held they were not “workmen” because, as the “directing mind and will” of the company, they answered to no one. The Court of Appeal reversed. The company appealed to the Federal Court.

What the Court Decided

The Federal Court unanimously dismissed the appeal and held:

"Double hatting" is real. A person can simultaneously be a company director (governed by the Companies Act 2016) and an employee/workman (governed by a contract of service and the IRA 1967). These are distinct legal roles. Removing someone as a director does not automatically end their separate employment.

No need for a single "boss." The argument that co-equal directors answerable to no single person cannot be workmen was rejected. Directors and executive employees are each accountable to the board as a whole — that satisfies the superior-subordinate relationship.

No written contract needed. The IRA 1967 recognises oral and implied contracts. Here, an implied employment relationship was established by: EPF and SOCSO contributions, EA Forms classifying income as salary, inclusion in the register of employees, and financial statements describing payments as "salaries" under staff costs rather than board-approved director's fees.

Removal as director is not dismissal as employee — but stripping "all duties" and stopping "salaries" is. The EGM resolution went beyond removing directorships; it also purported to end the respondents' employment. Since no misconduct was ever proved to justify that dismissal, it was without just cause or excuse. Compensation in lieu of reinstatement was upheld.

The Price Tag: Approximately RM1 Million Per Employee

The Court of Appeal’s award, upheld by the Federal Court, applied Practice Note No. 3 of 2019 of the Industrial Court: compensation in lieu of reinstatement at one month’s salary (plus fixed allowance) for each completed year of service, plus back wages (salary plus allowance) capped at 24 months.

Together, the company was liable for combined awards of more than RM2 million in aggregate. This underscores that getting an executive director’s employment status wrong, and failing to prove just cause or excuse for dismissal, is not a technical or abstract legal point — it is an extremely costly exercise for a corporate employer.

The Federal Court also rejected the employer’s argument that back wages should have been reduced for post-dismissal mitigation earnings or contributory misconduct. The employer never adduced any evidence to support either deduction, and both individuals gave unrebutted evidence that they remained unemployed after their removal. This reinforces that an employer bears the burden of proof on those deductions and cannot rely on generic assertions to reduce what is owed.

Why It Matters to Employers

1. Removing a director does not end employment. If a director also has an employment relationship (even an unwritten one), the company must separately follow fair dismissal procedure — show cause, proper grounds, just cause or excuse — or risk an unfair dismissal claim under the IRA 1967.
2. "Equal" directors are not immune. Companies cannot assume that senior shareholder-directors fall outside employment law merely because no single person visibly supervises them. Accountability to the board as a whole is enough.
3. Your own records will be used against you. How a company treats someone in practice — EPF/SOCSO contributions, EA Form classification, payroll records, and how payments are described in financial statements (as "salary" versus board-approved "director's fees") — is strong evidence of whether an employment relationship exists. Inconsistent documentation is a real risk.
4. Structure non-executive roles correctly from the start. If certain directors are genuinely intended to be fee-only with no employment relationship, their remuneration must be structured as properly approved director's fees (not "salary" through payroll), and statutory filings must consistently reflect this.
5. If you intend to end both roles, justify the dismissal separately. A company that wants to remove a working director and end their employment must have just cause or excuse for the employment dismissal, independently of the validity of the boardroom removal.

This article is for general informational purposes only and does not constitute legal advice.

A case study - Industrial Court Award No. 950 of 2026

What Happened

The Claimant, a Brunei national, was employed by Schlumberger Global Resources Limited ("SGR Ltd"), a Bermuda company, as international mobile staff. His 2018 employment letter with SGR Ltd contained an express clause (Clause 13) making Bermuda law the governing law and the Bermuda courts the exclusive forum for disputes.

On the same day, SGR Ltd seconded him to work in Kuala Lumpur at Dowell Schlumberger (Malaysia) Sdn Bhd ("the Company"). The secondment letter confirmed that the SGR Ltd employment contract remained valid and unchanged. There was no separate Malaysian employment contract. The Company's role was purely administrative: applying for his employment pass and filing EA tax forms. His salary (in USD) was paid by SGR Ltd throughout.

In 2023, following an alleged assault on a colleague during a pre-assignment visit to Abu Dhabi and a separate internal audit uncovering inflated expense claims, SGR Ltd — not the Company — issued a termination letter dismissing him. The claimant then brought an unfair dismissal claim under section 20(3) of the Industrial Relations Act 1967("IRA 1967") against the Malaysian company.

What the Court Decided

After a trial of the matter, the Industrial Court in June 2026 held it had no jurisdiction to hear the claim, and dismissed it without ever reaching the question of whether the dismissal was with just cause or excuse.

Its reasoning:

One contract, one employer. The secondment letter did not exist independently of the SGR Ltd employment letter and had to be read with it. On secondment, an employee remains employed by the original employer unless that contract ends. Only the original employer (SGR Ltd) could dismiss — and did.

Administrative acts do not make you the employer. The Company's role in applying for the employment pass and filing EA Forms was done purely to satisfy local immigration and tax requirements. These administrative acts did not change who the real employer was.

No extra-territorial jurisdiction. The IRA 1967 is a Malaysian statute with only territorial jurisdiction. Because the true employer, SGR Ltd, was a foreign entity not named as a party, and the claimant had contractually submitted to Bermuda's exclusive jurisdiction, the Court could not hear the claim.

Why It Matters to Employers

1. Local admin does not equal local employer. A Malaysian subsidiary that merely handles immigration paperwork and tax filings for a seconded employee will not, by itself, be treated as the employer under the IRA 1967.
2. Governing-law clauses work. A foreign governing-law and exclusive-jurisdiction clause in the home-country employment contract can prevent the Industrial Court from hearing a subsequent dismissal dispute, provided the true foreign employer is not joined as a party.
3. Get your secondment documentation right. Well-drafted secondment letters that clearly preserve the home-country contract as controlling are an effective way to manage where employment disputes can be brought. All documents — the main contract, the assignment letter, payroll records, and immigration filings — should be internally consistent and should not inadvertently suggest the local entity is the employer.
4. Subsidiaries receiving seconded staff should keep their role limited and documented. If the host entity's involvement goes beyond pure administrative facilitation — for example, issuing a local employment contract or paying salary from its own accounts — the outcome could be very different.

This article is for general informational purposes only and does not constitute legal advice.

Earlier this week, the Court of Appeal has answered that question with a clear yes. Provided that the parties have agreed to it.

In this case, Ong Seow Lee, the lender of a friendly loan, sought to recover RM70,000 from Lee Ee Foong, despite having received 50 Litecoins from Lee Ee Foong. The dispute centred on whether the cryptocurrency transfer constituted repayment of the debt, with the lender arguing that Litecoin was not legal tender and therefore could not discharge the loan.

The Court of Appeal unanimously dismissed the appeal and upheld the High Court's decision, holding that the debt had been fully discharged when the lender knowingly accepted the Litecoin as settlement.

Importantly, while the Court stopped short of recognising cryptocurrency as legal tender, it affirmed that digital assets may validly discharge contractual obligations where the parties expressly or impliedly agree to that mode of payment. The key consideration was therefore not the legal status of the asset itself, but the agreement and conduct of the parties.

Two important observations arise:

• The discharge of a debt depends on the agreement and conduct of the parties, rather than the form of the asset used as payment.
• Digital assets, while not recognised as legal tender, may nevertheless constitute valid consideration for contractual purposes.

Although the dispute involved Litecoin, the significance of this decision extends well beyond cryptocurrency. As digital assets continue to evolve from speculative investments into broader commercial and financial applications, courts are increasingly asked to apply established legal principles to new forms of value.

This decision demonstrates that long-established principles of contract law are sufficiently flexible to accommodate digital assets without requiring new legal doctrines or framework.

The takeaway is clear. If parties intend for cryptocurrency or digital assets to settle contractual obligations, that intention should be documented expressly. Key terms such as the type of digital asset, valuation methodology, timing of payment and wallet details should be clearly addressed.

Technology may evolve, but the underlying legal principles remains constant: the courts will generally give effect to what parties have objectively agreed.

This alert is for general information only and is not a substitute for legal advice.

This publication provides a comprehensive overview of Malaysia’s competition law framework governing vertical agreements and abuse of dominant position. It examines the investigative and enforcement powers of the Malaysia Competition Commission (MyCC), key legal principles under the Competition Act 2010, available remedies and exemptions, and recent legislative developments, including the Competition (Amendment) Bill 2026. The publication also offers practical insights into the assessment of anti-competitive conduct, making it a valuable resource for businesses operating in Malaysia’s evolving competition law landscape.

This publication was first published in ICLG - Vertical Agreements and Dominant Firms 2026.

Introduction

Trust law in Malaysia is governed principally by the Trustee Act 1949 and customary practices. The Malaysian courts will also apply the rules of equity, except where other provisions have been made by written law in Malaysia.

No special form of words is necessary to create a trust so long as that intention is clearly shown or can be inferred. However, the formalities for the declaration of a trust must be complied with in order for the trust to be valid and enforceable. Therefore, the trust must be properly constituted, and the trust property must be properly vested in the trustee. There must also be certainty of intention to create a trust, certainty of subject matter and certainty as to objects of the trust. The terms of the trust must also not infringe the rules against perpetuity and inalienability. A trustee may also be a beneficiary, in which case benefits from the trust property can accrue in his favour to the extent of his beneficial interest under the trust.

There are basically three main types of trust – fixed trusts, discretionary trusts and unit trusts. Different types of trusts can be created to fulfil various purposes, for instance to enable property to be held for people who are mentally handicapped or minors, or to enable the beneficial ownership of property to be kept confidential. A trust can also be created to hold property in succession or to protect the trust property from beneficiaries who are incapable of managing their own affairs. A testamentary trust takes effect after death and must comply with the formal requirements of a valid will, in contrast with an inter vivos trust, which may take effect immediately upon being set up.

Continue reading the full article here.

The National AI Office (“NAIO”) has launched a public consultation on the proposed AI Governance Bill through the Unified Public Consultation (“UPC”) platform. The consultation invites stakeholders and members of the public to submit written feedback, comments, or proposals by 31 July 2026. You can find access to the public consultation here.

Background

Artificial Intelligence (“AI”) is rapidly emerging as one of the most powerful technologies of our generation, with the ability to transform industries, enhance productivity, improve public services, and create new economic opportunities. However, the current regulatory landscape poses the risk of differing standards and approaches being applied across various sectors. In response, Malaysia is developing a national AI Governance Bill to establish a comprehensive and coherent governance framework that aims to ensure responsible and trustworthy use of AI while stimulating innovation.

It is noteworthy that the formulation of the Bill is built upon three core approaches: institutional oversight through a Central AI Authority whilst leveraging existing sectoral institutions, a principle-based approach that allows the framework to remain agile and adaptable, and a risk-based approach ensuring that regulatory obligations are proportionate to the level of risk posed by an AI System.

Key Features of the Proposed AI Governance Bill

NAIO has released a Consultation Paper setting out six key areas of the Bill for preliminary public feedback. These areas are summarised below.

Scope of the Bill

The Bill proposes to regulate the AI Lifecycle of AI Systems which are placed on the market or put into service within Malaysia, designed, developed, or used in Malaysia, or used by a Deployer established in Malaysia regardless of where the system is physically hosted. The Bill introduces definitions for key concepts including “Artificial Intelligence”, “AI Systems”, and “AI Lifecycle”, and identifies two primary regulated parties which are “Developers, who materially shape what an AI System is capable of doing, and “Deployers”, who cause the AI System to operate in the real world or domain of deployment. Exemptions are proposed for personal use and national security applications.

AI Governance Architecture

The Bill proposes the establishment of a Central AI Authority which operates as an institutional anchor for the AI governance framework. The Central AI Authority would have three core functions: AI Safety, Investigation and Enforcement, and AI Enablement. The Bill further proposes leveraging existing frameworks through the appointment of Sectoral Leads who may be appointed and delegated specific powers under the Bill to support implementation where they have sufficient legal authority, technical expertise, and governance capacity.

AI Governance Principles

Adopting a principle-based approach, the Bill sets out five guiding AI Governance Principles:

1. Protecting, promoting, and preserving human dignity by upholding human agency and safeguarding human rights.
2. Transparency and explainability proportionate to risk and impact;
3. Clear accountability through traceability and effective redress;
4. Safe and secure use through robust and resilient AI Systems; and
5. Responsible data governance and stewardship in relation to AI Systems.

Developers and Deployers of AI Systems would be required to have “due regard” for these principles throughout the AI System’s lifecycle, with compliance scaled based on the level of risk, context, and purpose of the AI System.

Implementation of these principles is expected to take a phased approach with voluntary documents issued at the early stages of the Bill and progressively moving towards codifying full implementation once a level of maturity is reached by the ecosystem.

AI Risk Framework

The Bill proposes a risk-based approach anchored to four categories of harm: death, bodily injury, unlawful deprivation of fundamental liberty anchored to the Federal Constitution, and contravention of any written law. Based on this, a three-tier risk framework is envisaged namely Tier 1 (Unacceptable Risk), Tier 2 (High Risk), and Tier 3 (Low Risk). Requirements set on these tiers will be proportionate to the nature, context, and level of risk posed by an AI System.

AI Incident Reporting

The Bill proposes a structured AI incident reporting mechanism to ensure a systematic approach in identifying, assessing, learning from, and addressing AI-related incidents. AI Incidents may include an event, failure, weakness, misuse, unexpected effect, material circumstances, or near misses.

Reporting may be made by Developers or Deployers as well as through public complaints to the Central AI Authority, and in cases where a similar mechanism exists, the Central AI Authority may leverage them through Sectoral Leads.

AI Sandbox

The Bill proposes the establishment of an AI Sandbox as a controlled environment to test AI Systems under supervised conditions. The AI Sandbox is intended to encourage innovation, facilitate flexible testing, and support evidence-based policymaking. It may be implemented either as a centralised sandbox operated by the Central AI Authority or by designating and leveraging existing infrastructures through Sectoral Leads.

Conclusion

This public consultation is timely, particularly in light of Malaysia’s aspiration to become an AI Nation by 2030 under the recently launched Malaysia Digital 2030 Action Plan. As the country seeks to position itself at the forefront of AI innovation and adoption, a robust governance framework will be essential in building trust, ensuring safety, and maintaining competitiveness on the global stage.

The consultation is also in line with the National Policy on Good Regulatory Practice (NPGRP), reflecting the Government’s commitment to inclusive, transparent, and evidence-based policy-making. Thus, all stakeholders are encouraged to take this opportunity to contribute to the shaping of Malaysia’s AI governance landscape.

This alert is for general information only and is not a substitute for legal advice.

Key Changes. Merger-Control Benched.

Introduction

Two Bills were tabled in Parliament to amend the Competition Act 2010 (Act 712) and the Competition Commission Act 2010 (Act 713), introducing key reforms.

However, as surprising as a star player missing a World Cup opening match was the omission of the long-awaited merger controls.

This article summarises the principal reforms introduced by the Bills.

Key Reforms in the Competition (Amendment) Bill 2026

The Competition (Amendment) Bill 2026 introduces a wide range of institutional and procedural reforms to strengthen MyCC’s investigation, enforcement and decision-making framework. Principal changes include:

Expanded scope:

• The Act would apply to any “commercial or economic activity”. Activities with an economic character—even if not expressly commercial—may now be subject to scrutiny.
• This wider framing captures non-traditional commercial arrangements and economic conduct that may not fit neatly within the previous definition, for example trade associations.
• Businesses should consider whether activities previously assumed to fall outside competition law—such as arrangements involving non-profit elements or activities with an economic character but not expressly commercial—may now be subject to scrutiny.
• Question: Does this raise questions on previous decisions where non-commercial enterprises, such as not for profit trade associations, were found liable for anti-competitive conduct?

Broader section 4 prohibition:

• The prohibition would apply to “any agreement”, not just horizontal or vertical agreements.
• Businesses should review all commercial arrangements for potential exposure. Any agreement—regardless of the parties’ position in the supply chain or industry—may be caught if it has the object or effect of significantly preventing, restricting or distorting competition.
• Question: Does this raise questions on previous findings against hub-and-spoke cartels?

Other key amendments:

• Enhanced information-gathering: MyCC would have wider powers to compel information from Government entities (such as ministries and statutory bodies) and conduct market reviews.
• Warning letters and interim measures: MyCC may issue warning letters after preliminary inquiries and impose interim directions during ongoing investigations. The Bill expands interim-measures powers so that MyCC can act to prevent serious and irreparable harm while an investigation is ongoing. Businesses may face binding directions to suspend agreements or cease conduct at an earlier stage, before any final infringement decision.
• Settlement mechanism: Enterprises admitting liability may receive up to 40% penalty reduction, in addition to any leniency discount. Enterprises under investigation may now resolve matters more efficiently by admitting liability and accepting a settlement. In return, MyCC may reduce the financial penalty by up to 40%. This creates a clear incentive for early co-operation, potentially shortening investigation timelines for both the regulator and the enterprise. The settlement discount is in addition to any leniency reduction available under section 41.
• Leniency programme updates: Up to 100% penalty reduction remains available, but enterprises that coerced others into the cartel will likely receive lower reductions. This change sharpens the incentive for whistle-blowing by non-coercive cartel members and increases the risk for ringleaders.
• Decision-making procedures: Formalised process for proposed decisions, written and oral representations, and supplementary proposed decisions.
• Appeals: CAT decisions are no longer final. Appeals to the High Court are available on questions of law or penalty quantum only. This provides an additional layer of judicial oversight but does not open a full merits review. Enterprises planning to challenge MyCC decisions should anticipate a two-tier appellate process.
• Whistleblower and informer protections: Informer identities are protected and rewards may be paid.
• Confidentiality and obstruction: Enhanced confidentiality obligations and offences for attempted destruction of records.

Competition Commission (Amendment) Bill 2026

The companion Bill amends Act 713 primarily to:

• rename the “Competition Commission” as the “Malaysia Competition Commission”;
• clarify and expand the Commission’s functions to include advising the Minister or other public or regulatory authority on policies, procedures and programmes relating to competition;
• empower the Commission to impose financial penalties, late-payment charges, fees, and administrative charges;
• permit delegation of the Commission’s functions and powers; and
• update provisions relating to the appointment of Commission officers and secrecy provisions.

What happened to the Merger-Control Proposals?

Not all proposals from the 2022 public consultation have been carried into the 2026 amendments. Most significantly, the proposed merger-control regime is absent from both Bills.

In April 2022, MyCC issued a public consultation proposing to add a comprehensive merger-control chapter to the Competition Act 2010. The key elements of that proposal were:

• a prohibition on mergers (or anticipated mergers) that result, or may result, in a substantial lessening of competition;
• a hybrid notification model combining mandatory pre-notification for transactions exceeding prescribed thresholds with voluntary notification for those below;
• a standstill obligation prohibiting consummation of mandatorily notifiable anticipated mergers pending MyCC’s determination; and
• ancillary provisions for penalties and merger-specific investigation powers.

The Competition (Amendment) Bill 2026 however does not include the proposed merger provisions.

Practical Implications

• No merger filing obligation: There remains no statutory requirement to notify mergers or acquisitions to MyCC.
• Not withstanding the absence of merger notification requirements, parties to mergers involving competitors should be aware that the Chapter 1 prohibition continues to apply. Merger parties who are competitors in the same market must therefore take care during the transaction process to ensure that any exchange of information or coordination does not amount to an anti-competitive agreement.
• Accordingly, parties to mergers between competitors should implement sufficient safe guards to mitigate competition law risk during the pre-completion period. These safeguards typically include clean team protocols to restrict access to competitively sensitive information, strict confidentiality obligations, and information barriers that prevent commercial teams from accessing the other party’s pricing, customer or strategic data until closing.
• Sector-specific regimes still apply: The aviation and communications sectors retain their own merger-control rules under the Civil Aviation Authority of Malaysia Act 2017 and the Communications and Multimedia Act 1998 respectively.
• Future developments: The omission of merger control from the present Bills does not preclude its introduction in a subsequent legislative exercise.

Alternative Pathway: Merger Control Through Subsidiary Legislation

Does the Competition Act 2010 need to be amended to introduce merger controls?

• The Minister has broad powers under the Competition Act 2010 to make regulations necessary or expedient for giving full effect to the provisions of the Act.
• Accordingly, the Minister could issue regulations to regulate mergers under section 65, prescribing notification thresholds, stand still obligations and assessment procedures. This approach would allow Malaysia to establish a functional merger-control framework without the need for further primary legislation.
• This regulatory approach mirrors the model adopted by the Malaysian Communications and Multimedia Commission (“MCMC”) in the communications sector. The Communications and Multimedia Act 1998 does not contain any express provisions for merger notification and assessment. Nevertheless, MCMC published its Guidelines on Mergers and Acquisitions, establishing a voluntary merger-assessment framework under existing provisions of the Act—specifically sections 133 and 139(1), which prohibit conduct that substantially lessens competition. MCMC achieved this without any amendment to its primary legislation, relying instead on its general regulatory powers and the broad prohibition on anti-competitive conduct.
• MyCC could adopt a similar approach under the Competition Act.

This briefing is for general informational purposes only and does not constitute legal advice. Please contact us if you require advice on how these developments may affect your business.

This publication highlights an in-depth analysis of Malaysia’s product liability regime, highlighting the legal responsibilities of manufacturers, importers, and suppliers, as well as the remedies available to consumers. Covering statutory, contractual, and tortious liability, it also explores key procedural considerations, recent developments, and the anticipated introduction of “lemon law” protections, providing valuable guidance for businesses operating in Malaysia’s consumer market.

This publication was first published in ICLG- Product Liability Laws and Regulations 2026.