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Alas, the long-awaited announcement of the winners of the much-coveted digital banking licence issued by Bank Negara Malaysia (“BNM”), has been released. Among the 29 applications received by BNM, only 5 made the cut. You may be familiar with some of the names behind the successful applicants, which include the likes of people behind popular digital brands such as Grab, Boost, Shopee, Aeon Credit/MoneyLion, and reportedly, the popular credit card comparison site, Ringgit Plus. Read the full BNM announcement here What does this mean for us, and what can we expect? New Players in the Banking Industry. Traditional banking features such as savings and current accounts, prepaid, debit and credit cards, loan and credit facilities, etc. could all be rolled out as additional financial and credit products in the e-wallets we know today, on top of the existing buy-now-pay-later features.   Fully Digitalised Banks. A digital bank is a bank that operates entirely, or almost entirely, online. Credit and loan applications will be done fully online, which eliminates the need to be physically present at bank branches. E-KYC will be safer, and more effective as ever. Customer service could become fully 24/7, and the online chat functions could be improved tremendously. There will be no need to fight the heat and wait in long queues. Gone are the days where you would need to take a half-day leave to sort out personal banking matters at a branch nearest to you.   Cheaper Fees. With the lower overhead costs incurred by digital banks in the long-run, and to stay competitive, consumers could look forward to lower transaction fees across the board.   Greater Accessibility to Financial Products. In the BNM announcement, BNM Governor Tan Sri Nor Shamsiah said, “Digital banks are expected to further advance financial inclusion. By adopting digital technology more widely for everyday transactions, we can significantly increase opportunities for our society to participate in the economy — by overcoming geographical barriers, reducing transaction costs and promoting better financial management.” We could see innovative models and variations of the financial products packaged today specially for the underserved or unserved markets.   Personalised Features. With the evolution of digital services and advancement in big data analytics, we could see in-app tracking and monitoring of spending habits improve. Of course, only time will tell what these new digital bank players have in store to boost user engagement. Putting all excitement aside, it may take between 12 to 24 months before we can see these features in action as these successful applicants will need to undergo a period of operation readiness that will be audited and validated by BNM before they can commence operations.   What other features do you think will there be in the digital banks of the future? Your guess is as good as ours. The traditional banking that we know today will probably still stick around for a while. But one thing is for sure – digital banks will positively disrupt the banking industry. It certainly is exciting times ahead. ***** About the author: This article was written by Neoh Jia Shern, Corporate Associate at LPP Law – a law firm in Kuala Lumpur, Malaysia.   The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.

Having a new business idea is great but finding a suitable funding source is equally as important, and often challenging. Without the backing of stable investments, a business will not be able to achieve its full potential regardless of how appealing the idea is. This article sets out the funding options that entrepreneurs can consider when starting a business. Bootstrapping Bootstrapping is one of the most common ways to fund a startup as you will be required to run your business using your own funds. This could come from personal savings, credit cards or selling assets such as your car or house to generate cash for the purpose of financing your business. This may seem like an easy way to obtain funds but keep in mind, if your business fails to succeed, you may end up with a substantial amount of debt in hand.   Friends and Family Obtaining funds from friends and family is a classic simple option to kickstart a business. Your friends and family are usually supportive and would be willing to help fund your business unlike investors or banks who requires convincing and lots of consideration. However, the downside of this is that there is a risk of relationships being ruined, therefore you should always take steps to prevent this from happening. For example, setting up clear repayment terms and signing an agreement with them. Incubators and Accelerators This became popular in recent years amongst younger entrepreneurs who are seeking funds to start their businesses. These platforms are part communal workspace and part mentorship development centres, where young businesses can get a great start while partnering with some amazing people. Incubators are like a parent to a child, who nurture the business, provide shelter tools, training and network to a business, while accelerators help to run or take a giant leap. However, they are often focused on tech- heavy businesses, so you might struggle to find one that works for your company, if your business is not in the technology space. Winning Contests There has been an increase in the number of contests recently who can help entrepreneurs in fundraising. In order to win these contests, you have to ensure that you have a comprehensive and unique business plan to convince people that your idea is worth investing in. This is very interesting as not only you would be able to gain funds, you will also get some media coverage if you win these contests. Popular contests in Malaysia includes “Young Entrepreneur X Factor”, “MaGIC University Startup Challenge”, “Dream Factory Startup Contests” etc. Get an angel investor on board There has been a rise in online angel investment networks, as well as local investor groups you can pitch in to in person. Angel investors are usually high net worth individuals who provide industry knowledge, financial backing, as well as industry or business experience to early stage start-ups or entrepreneurs, while expecting to share the company’s financial rewards in return. Some of the popular angel investor platforms in Malaysia are Angel Investment Network, Capital, BizAngel and Cradle Fund. Usually, angel investors do not take more than 10-20% equity when investing in a start- up, allowing enough incentives to the business founders. The downside of this method is that they generally offer less financial backing compared to banks and venture capital funds. Venture Capitalist This is somewhat similar to angel investors where they provide funds based on their trust in your ability to create a successful, profitable venture. Often times, venture capitalists support start-up ventures (for an equity stake) or small companies that wish to expand but do not have access to equities markets, as they would be able to earn a massive return if these companies succeed. Of course, in order to convince them to invest in your idea, you will need a business model that stands out from the rest in the market. Popular venture capitalist companies in Malaysia and South East Asia includes NEXEA, RHL Ventures, 500 Start- ups etc. On the other hand, venture capital funds have a short shelf life in nature as they generally seek to recover their investments, obtain profit and move on to the next potential start- up. Government Grants and Loans While this method doesn’t cut a massive check, there are dozens of grants offered by federal and state governments that you can consider. In Malaysia, the government has implemented various financial schemes and incentives to help local startups and enterpreneurs to kick start their business. The main drawback of this method however is the fierce competition, as well as the box- ticking requirements to qualify for such grants. Personal Loans These loans are generally easier to get than a business loan and is suitable for businesses that don’t need a large amount of capital. The advantages of this option are you can retain full equity, can feasibly obtain a large figure, and that you can build your credit. The downside of this method is that personal loans generally have lower financing limits and higher interest rates. You also risk going into bankruptcy if you are unable to pay everything back, including interest.    Small Business Loans While most banks do offer loans to small businesses, they tend to be more careful when doing so, ensuring that you have a good credit score. In Malaysia, banks usually grant such loans based on your bank statements, credit history, and other relevant financial information. Although these loans have higher financing limits and lower interest rates compared to personal loans, it can be difficult for business to qualify.   Crowdfunding Crowdfunding is a rather new method for businesses to raise funds from individuals that support the projects or companies through small contributions. There are two types of crowdfunding: Reward- Based Crowdfunding and Equity- Based Crowdfunding. Reward- Based Crowdfunding is more similar to consumption rather than investing as the funders may not necessarily obtain back the money invested, instead they will receive certain rewards. Equity Crowdfunding is where people invest in a business

  With technology, we can easily save a picture and download a song with the click of a mouse. We are free to access, share, copy and generate creative works as we like. We take these for granted and often neglect the phrase “this image is subject to copyright”.  We are not aware that our actions may infringe on someone else’s copyright. In the worst-case scenario, we may be sued for copyright infringement. This article aims to share with you the basics of Copyright law in Malaysia. Let’s be a responsible digital citizen and interact with creative works ethically and legally! What is copyright? It is an automatic right granted to the author or creator of the copyrighted work.  It prevents others from copying the copyrighted work without their permission. Depending on the categories of the copyrighted works, a copyright protection lasts during the lifetime of the author or creator plus around 50 years or more after his death.  For example, if you had created a piece of music in 2021 and published it online, you will have copyright over the song for your whole life plus another 50 years after your death.  What are some examples of copyright infringement? Posting a video that features copyrighted images or music. Using copyrighted images or music on your work or social media account. Downloading music or films without paying for their use. Copying any artistic work without a license. What rights are protected by copyright law? Economy rights: The copyright owner has the exclusive right to: reproduce the work in any material form; communicate the work to the public; perform, showing or playing the work to the public; distribute the work to the public by sale; and rent the work to the public based on commercial rental. Moral rights: The copyright owner has the right to: be identified as the author of the work; and prevent the copyrighted work from being distorted or modified in a way that affects his reputation. How can you “copy” the work legally? Understand copyright. Firstly, copyright in Malaysia is protected by the Copyright Act 1987. This right is granted to the author without any form of registration. Unlike purchasing a house, you must first be a registered owner before you can claim the house belongs to you. This Act was amended in 2012 where Parliament introduced a voluntary notification procedure. The author can submit a notification to the MyIPO to further protect their right. Secondly, copyright applies regardless of the quality and the purpose of creating the work. That means a ten-year-old child will have copyright over his superman drawing. As long as the author puts in efforts to create the work, he is entitled to a copyright protection. Thirdly, copy 20% of the work also amounts to copyright infringement. Many will think that copy a small portion of the copyrighted work is fine. It is a wrong assumption. Copyright infringement does not depend on the quantity you copied but the quality of the copyrighted work that you copied. If the copied work represents the most recognizable part of the copyrighted work, you are most likely infringing the copyright. Think twice and look carefully Before right-clicking your mouse, see carefully whether the work has been subject to copyright. If you search for an image on Google search engine, usually a copyright notice will appear together with the image that you search. Just because you are able to copy/download an image, it does not mean that the image is copyright free. Most likely than not, the image is subject to certain copyright protection. Obtaining permission Directly contact the authors who created the work and ask for permission whether you can use it. You can look carefully at the copyright notice. It may contain the information of the author. You can also directly contact the publisher if there is no information regarding the actual author or owner. Many have the misconception that attribution to the author is sufficient. That is not entirely true. Attribution and obtaining permission are two different things. You will still infringe the copyright even if you attribute the author in your work. However, permission from the author is not required if you used the work for: Research; Private study; Criticism; Review or reporting of news or current events. The above activities are non-commercial activities which amount to fair use. Fair use is a defense to a copyright infringement. That means an unauthorized use of copyrighted material is excusable if it falls under the principle of fair use. However, even though permission is not required when there is fair use, you must attribute the author as required by law. Use a copyright-free material All works that are in the public domain are no longer subject to copyright protection and hence they are free to use. For example, the work has passed the copyright protection duration as it was created long time ago after the passing of the author. In addition, there are certain platforms that offer licensing of copyrighted works, such as image library where by paying a fee, you will acquire a license to use the image in your work. If a work is distributed under a Creative Commons licence, you can also re-use it for free under the conditions set by the said licence. Copy the ideas and not the work itself Copyright protects only the expression of ideas, not the ideas themselves. For example, two artists may paint the same model picture but portray them differently. Both of them do not infringe the copyright of each other just because they may have the same kind of idea. Taking inspiration from someone else’s work is always acceptable. Copying blindly is not acceptable. Conclusion: Generally speaking, anything you see or read on the Internet is usually subject to some form of copyright protection. If you copy, reproduce, display, or otherwise hold out another’s work as your own, you are infringing someone’s copyrighted material even if you are not benefited financially from the use.

Have you ever wondered what happens to your online accounts after your death? Who can access to your online accounts after your death? Who gets to keep all the contents? Will your accounts be closed after a certain period of time? It is understandable that not many of us like thinking about death, especially our own. It is often a topic that people tend to shun away from, or they may think that while that day will come eventually, it may not be so soon, so why worry about it now? This is not quite true. Making plans for what happens after we have gone is important for the people we leave behind. That is why people make a will. It is never too soon to plan who can access your online accounts after your death. There is currently no law that regulates what happens to a person’s online existence after his death. It is entirely governed by the respective websites’ terms of service. Let’s take a look at the various service providers on how they handle online accounts after your death Email Gmail (and also Google +, YouTube, etc) Google launched the Inactive Account Manager in 2013. Basically, it is a service where users can instruct Google what to do with their Gmail messages and data from several other Google services if their account becomes inactive for whatever reason, including death. For example, users can choose to have their data automatically deleted after a period of inactivity (between 3 to 18 months), or they can select trusted contacts to download their data after a period of inactivity. Yahoo Mail According to Yahoo’s No Right of Survivorship and Non-Transferability clause, a user’s Yahoo account is non-transferable and any rights to his Yahoo ID or contents within his Yahoo account terminate upon his death. Yahoo will terminate and permanently delete the user’s Yahoo account upon receipt of a death certificate. Click here to read more. Outlook The Microsoft’s Next of Kin process allows for the release of Outlook.com contents, including all emails and their attachments, address book, and Messenger contact list, to the next of kin of a deceased or incapacitated account holder and/or closure of the Microsoft account, following a short authentication process. All contents will be downloaded onto a data DVD and then shipped to the next of kin. Microsoft will not release the deceased’s password or change the password. Social Networking Facebook There have been several cases where an individual was trying to gain access to his loved one’s Facebook account after the passing of the loved one. Facebook’s terms of service make it very clear that accessing an account that belongs to someone else amounts to a breach of the terms, which would enable Facebook to cut access to it. Like many other websites, Facebook will not disclose the deceased’s password even if such a request comes from family members of the deceased. In response to this, Facebook has provided several options: Family members can request Facebook to remove their loved one’s account from Facebook provided such request is accompanied with either a death certificate, court document confirming power of attorney, birth certificate or last will and testament. Family members and friends can request Facebook to memorialize their loved one’s account. The profile page will be turned into a memorial page for friends and family members to gather and share memories after a person has passed away. Some of the key features are such as the word “Remembering” will be shown next to the deceased’s name on his profile page, content the deceased previously shared will still be visible and that the memorialized profile will not appear in public spaces such as in suggestions for People You May Know, ads or birthday reminders so as not to upset the family members and friends. Facebook allows users to appoint a legacy contact i.e. someone that the user chooses to look after and manage his account if it is memorialized. Of course, the legacy contact will not be able to take full control of the account as if he becomes the new owner of the account. Twitter Twitter only offers one option: Family members or an authorized person who acts on behalf of the deceased can request to have the deceased’s account deactivated provided information such as a copy of the requestor’s ID and a copy of the deceased’s death certificate be submitted to Twitter. LinkedIn LinkedIn allows family members, friends and even colleagues to request LinkedIn to remove the deceased’s profile and close his account by filling out a death verification form and providing the necessary information to LinkedIn. Instagram Instagram also allows family members to request Instagram to close and delete the deceased’s account or have it memorialised. Instagram will also require proof of death such as link to an obituary or a death certificate and a legal document that shows that the request person is legally authorised to make such a request. Many of these websites claim that their users have placed a strong expectation of privacy and security when using their products/services. It is for this very reason that they will always refuse to disclose the deceased’s password to anyone. That said, they do provide ways for people to remove the deceased’s accounts. Some allow restricted access to certain information, while others only allow removal of account. What is certain is that none of the websites would allow full and unrestricted access to the account. “We spend a huge part of our lives online, so it is becoming more and more apparent that we should plan for our own deaths online” – James Norris, founder of DeadSocial, a UK company that helps individuals create social media “goodbye messages” for their loved ones. Proponents of the right to digital life after death advocate that since Internet companies often grant access to law enforcement agencies, it is only right that they should also grant access to family members of the deceased. Some of the states in the

In this world, nothing is certain except death and taxes – Benjamin Franklin (1706-90), one of the Founding Fathers of the United States. In October 2014, the Hungarian government submitted its proposed Internet tax law for 2015. One of the features under that tax law is the introduction of “Internet tax” that will be imposed on Internet users at a rate of HUF 150 (approximately USD 0.60) for every gigabyte of data or part thereof. For example, downloading a movie in HD quality (8.5 GB) would attract a tax charge of approximately USD 5. This proposal caused a huge uproar and received negative criticisms from the public and the industry players. It was even condemned by the European Union. Some people perceived this as a way for the Hungarian government to control the Internet and stifle free expression and access to information. The Hungarian government was later pressured into changing its stance slightly.  They did so by stating that the new tax will be capped at HUF 700 (approximately USD 2.8) for home users and HUF 5,000 (USD 20) for business users, with Internet Service Providers (“ISPs”) expected to pick up the rest of the tab. That did not help much as the public still believed that the ISPs will pass on the costs of complying with this law onto the consumers eventually. The Hungarian government has finally backed down and decided to shelve this law after large-scale protests from its people. From the inception of the Internet until the late 1990s, the Internet was free of regulation by governments all over the world. However, things began to change when the government realized that Internet services are a potential source of tax revenue, especially in the e-commerce sphere where the world is becoming one big marketplace. As a result, many governments have amended their Internet tax law to accommodate to this new way of doing business. In the United States, President Bill Clinton signed the Internet Tax Freedom Act into law in 1998, in an effort to promote and preserve the commercial, educational and informational potential of the Internet. This law bans federal, state and local governments from imposing a tax on internet access and other discriminatory Internet-only taxes such as bit tax, bandwidth tax and email tax. The law also prohibits multiple taxes on e-commerce, although it does not exempt sales tax made through online transactions. A tax on internet access is not the same thing as a tax on internet sales. The former is what the Hungarian government was trying to introduce, whereas the latter is becoming a norm in many parts of the world. Internet Tax in Malaysia Likewise, the Malaysian government is not left out when it comes to taxing internet sales. In March 2013, the Inland Revenue Board of Malaysia (“IRB Malaysia”) published a “Guidelines on Taxation of Electronic Commerce” (“E-Commerce Guidelines”) which as the name suggests, aims to provide guidance on the tax treatment of e-commerce transactions. E-commerce is defined to mean any commercial transaction conducted through electronic networks including the provision of information, promotion, marketing, supply order or delivery of goods or services although payment and delivery of such goods and services may be conducted off-line. The IRB Malaysia acknowledged that as there are no specific provisions under the Income Tax Act 1967 (“ITA”) that address e-commerce transactions, hence it is hoped that the E-Commerce Guidelines will provide the much-needed guidance to clear the confusion as to whether online businesses need to pay income tax or not. The E-Commerce Guidelines adopts the principle of neutrality where both conventional and online businesses are subject to the same tax treatment under the ITA. What this means is that there is no difference between a seller who sells goods in a physical shop and a seller who sells goods on a website (online shop) – both of them need to pay income tax. With the coming into force of the E-Commerce Guidelines, it signals an end of the tax-free ride era enjoyed by e-commerce players since the beginning of the e-commerce industry in 1997. In general, the income of a person accruing in or derived from Malaysia is subject to income tax in Malaysia. Where business operations are carried out in Malaysia, the income attributable to those business operations is deemed to be derived from Malaysia. Whether an income is considered to be derived from Malaysia or not is subject to the business operations test i.e. whether there are substantial business activities being carried out in Malaysia. Para 5.1 of the E-Commerce Guidelines states that a server/website by itself does not carry any meaning in determining derivation of income. Para 5.2 provides 3 examples of situations where income from e-commerce is deemed to be derived from Malaysia even though the company conducts business through a website which is hosted on a server located outside Malaysia. Para 6 examines the various permutations of e-commerce business models with varying assumptions, in each case, stating the IRB Malaysia’s position on whether or not business income is deemed to be derived from Malaysia. The Sales and Services Tax (“SST”) took effect from 1 September 2018, replacing the Goods and Services Tax (“GST”). SST comprises two legislative acts: The Sales Tax Act 2018 governing the manufacturing and oil and gas industries; and the Service Tax Act 2018 on selected service providers. The current version of SST is an enhanced version of the Sales Tax Act 1972 and Service Tax Act 1975. The tax rate for Sales Tax is 10% while the Service Tax is 6%. Unlike GST which is a multi-stage indirect tax, SST operates on a single-stage basis, which means that the sales tax or service tax is imposed only once at the manufacturing stage (sales tax), importer stage (sales tax) or service provider stage (service tax). The threshold for businesses to imposed SST is RM500,000 and above on taxable income. (For Foods and Beverages Business – threshold is RM1,500,000) For example, manufacturing will add in sales tax of 10%

The selection of a business structure for your business will be a key decision to be made when starting up your business. This decision requires careful thought and consideration as the consequences of choosing an unsuitable business structure could risk you losing your personal savings and even expose you to the risk of bankruptcy. The few primary aspects which you should take into consideration when choosing your business structure include: Budgets and procedures Firstly, ascertain the budget which you would allocate for the formation and running of your business. The costs of forming certain business structure are higher as it takes a longer time to set up and the process of setting up these business structures are more tedious. The operating and administrative costs are also higher as these business structures are required to comply with the mandatory bookkeeping requirements imposed under the law. Confidentiality concerns For certain business structures, information with respect to its owners and the basic financial information of the business is publicly available. If confidentiality is a huge concern for owners of the business, a business structure which does not require the information of its owners and its financial information to be published will be the more favoured option. Future funding If you aspire for your business to grow and expand, it is likely that your business would require additional funding and capital in the future. It is therefore important to choose the right business structure which will enable you to grow and expand your business. Certain business structures will render the business with limited access to capital where the owners will have to rely on their own funds or creditworthiness to secure a loan for growing or expanding the business. Business continuity/ transferability Certain business structures are closely connected to the identity of its owner(s). These are structures which will dissolve following bankruptcy, death or resignation of one or more of its owners. If your intention is to keep the business despite bankruptcy, death or resignation of the owners, choosing a business structure which provides for business continuity and allows for the ownership of the business to be transferred should be the key consideration. Liabilities of owner/ shareholders Certain business structures do not have not a separate legal identity from its owners. The owners of the business are responsible for all the debts and liabilities incurred by the business and must bear all losses of the business. This gives rise to the risk of bankruptcy of the owners as there is no distinction between the assets of the business and the owners. In Malaysia, the most common types of business vehicles are as follows: Unincorporated structures: (i) Sole proprietorship and (ii) Partnership Incorporated structures: (i) Limited liability partnership (LLP) and (ii) Private limited company (Sdn Bhd) A summary of the key considerations in respect of each of these business structures are as follows. ***** About the Author: This article was written by Zuan Yin, Poh (Spring),  Partner of LPP Law – law firm in Kuala Lumpur, Malaysia. The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.