At the time of writing this, Malaysians are well into Phase 4 of the Movement Control Order (MCO) which has been extended to 12.5.2020 https://www.nst.com.my/news/nation/2020/04/586998/mco-phase-4-april-29-may-12 We will be close to 60 days in MCO at the end of Phase 4, that is, if it is not extended further. Most businesses would have ceased operations for more than 60 days. Even if businesses are operating under the category of Essential Services, most of them would be operating only at 50% capacity.
Speaking to some business owners and CEO’s, I find that they are under mistaken believe that things can wait. You must speak to a Commercial Lawyer now! Waiting longer will only make things more difficult for your business and increase the risks of lawsuits.
1. Business Agreements
Now, more than ever, is the time your business agreements will come and rescue you (if it is drafted correctly). MCO is an extra ordinary event that no one foresaw happening. With a proper business agreement, there would be saving provisions in your agreements. At the very least, you would have options. This is were advice from a Commercial Lawyer is important – you know your options (that are legal) so that you can make a business decision on what to do. The biggest mistake a business owner can do is to ignore their agreements or not look at their business agreements until after MCO. You run the risks of a breach of contract, which will lead to a lawsuit.
2. Rental and Tenancy Agreements
Whether your business is renting or you are the landlord, it is important to get a lawyer to review and advice you on your Rental and Tenancy Agreements. Banks have granted moratorium on loans https://www.nst.com.my/news/government-public-policy/2020/03/577922/six-month-moratorium-bank-loans-restructuring-credit, This does not mean that rental payments are also automatically granted moratorium. There are many cases of landlords insisting on full rental payments. Whether you plan to pay full, half or non at all, you will need to negotiate and put whatever is agreed in writing.
3. Employment Issues
The main concern of all business owners early in the MCO and still is a major concern. Another mistaken believe is that businesses need to pay salary even if it results in the business closing down. The law allows for employers and business owners to reduce staff and overheads. However, it must be done right. Do it wrongly and you will spend most of your post-MCO time deep in law suits filed by your employees. The primary concern for the government (and the law) is that businesses do not take advantage of the MCO to fire employees. If you do have a genuine reason to cut overheads and remove your employees, you can do so. You just need to do it right.
4. Debt Recovery, Debt Management & Debt Restructuring
Cash flow will and has started to become a problem for all businesses. With almost no income or significantly less than usual, most businesses will be struggling with debts – either collecting them or paying them. There is the recent amendment that companies are allowed 6 months instead of 21 days to reply to a winding-up notice https://www.ssm.com.my/Lists/Announcement/AnnouncementDetails.aspx?ID=162 . However, it still does not protect companies against other forms of execution like garnishee and writ of seizure & sale. There are also further provisions in the Companies Act like Corporate Voluntary Arrangement (CVA) and Judicial Management (JM).
Do not wait until after MCO do see your Commercial Lawyer. Make sure you have your legal options ready so that you are ready to execute your plan the moment after MCO is lifted. Waiting after MCO do speak to your lawyer will guarantee wasted valuable time to manage your business. Seeking advice now will allow you to options that you can make for your business (that is legal). Making a decisions without proper advice will almost guarantee you will be sued (and waste valuable time and resources on something can could have been avoided).