Having dealt with a significant amount of Malaysian Startups; Small; and Medium Enterprises, we have realised that a handful of them has broken some laws even without them realising it. The main reason for this is simply ignorance. When it comes to the law, ignorance is not a defence / an excuse. However, we are excluding those laws that are broken intentionally like not paying your taxes. Here are some of the common laws broken by #MalaysianBusiness.
- Not Contributing to their Employees EPF
Employers MUST contribute to EPF even if their employees do not want or even if employees would rather pocket the money themselves. A contribution to EPF is a debt to the Government and not to the individual employee. Thus, it is not for the employee to decide.
- Treating a Private Limited Company (Sendirian Berhad) as your own
Under the law, a Private Limited Company is a separate legal person from its shareholders; directors and founder. This means that, a person cannot treat a Private Limited Company as its own, unlike that of a sole proprietorship or even a partnership. This also applies even if you are the founder, the shareholder, the director and the person running the business. We have seen and heard way too many founders treating the business like its own. This is especially critical in the matters of money. Some examples include:-
- Transferring money from the company account into their personal account;
ii. Using company money to purchase personal items;
iii. Using company bank accounts and personal bank accounts interchangeably; and
iv. Using company money to pay personal debts.
- Not Knowing Who you Are Dealing With
This is of particular importance if your business is dealing or doing business with any person (local & foreign) which falls under Suspicious Transaction which include (i) the transaction has no clear economic purpose and (ii) it does not commensurate with the persons profile or business activity. This is because your business could run afoul of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. Even if you have not done anything illegal, you do not need the headache of Police & Bank Negara Malaysia investigating and potentially disrupting your day-to-day business. Better be safe than sorry.
- Using Protected Intellectual Property
This does not include your night market (“pasar malam”) pirated movies which are the more commonly known Intellectual Property theft. What we mean by this, are businesses that use images and logos which we see being used by in merchandise printing (t-shirts; mugs; posters; banners etc).
- Illegal Deposit Taking
Illegal Deposit Taking is an act of receiving, taking or accepting of deposits (money, precious metals, precious stones etc) from members of the public that promises a repayment of interest or returns in money without a valid license under the Banking and Financial Institutions Act 1989. If your business is taking money for investing it in any scheme with a view of returns, then your business is in serious risk of contravening the law. Illegal Deposit Taking is normally associated with unlicensed pyramid schemes; and get-rich-quick schemes. Upon conviction, you are liable to a fine not exceeding RM10 million or imprisonment of a term not exceeding 10 years, or both.