2 November, 2017
IN THIS ARTICLE, ALEXIS YONG MEY LING HIGHLIGHTS THE CHANGES IN THE NATIONAL LAND CODE (AMENDMENT) ACT 2016 (“NLC Amendment Act”).
Introduction
By Federal Government Gazette P.U.(B) 527/2016 and Federal Government Gazette P.U.(B) 531/2016 both dated 21 December 2016, the NLC (Amendment) Act came into operation in the Peninsular Malaysia and the Federal Territory of Labuan on 1 January 2017 with the exception of sections 34, 35, 45, 48, 49, 56 and 76 thereof.
The NLC (Amendment) Act has, inter alia, amended sections 433B, 433E and 433H of the National Land Code 1965 ("NLC").
Amendment of section 433B(1) of the NLC
Before the coming into force of the NLC (Amendment) Act, a disposal of or dealing in any land or any interest in land which is subject to the category of “agriculture” or “building” or to any condition requiring its use for agriculture or building purposes can only be effected in favour of a non-citizen[1] or a foreign company[2] after the prior approval of the State Authority had been obtained. Such approval, however, was not required for any land or any interest in land which is subject to the category “industry” or to any condition requiring its use for industrial purposes.
Before it was amended, section 433B(1) of the NLC provided as follows:
“(1) Notwithstanding anything contained in this Act or in any other written law —
(a) a non-citizen or a foreign company may acquire land by way of a disposal under Division II;
(b) a dealing under Division IV with respect to alienated land or an interest in alienated land may be effected in favour of a non-citizen or a foreign company;
(c) alienated land, or any share or interest in such land, may be transferred or transmitted to, or vested in, or created in favour of any person or body as ‘trustee’, or of two or more persons or bodies as ‘trustees’, where the trustee or one of the trustees, or where the beneficiary or one of the beneficiaries, is a non-citizen or a foreign company;
(d) the Registrar may in respect of any land register any person or body as ‘representative’ or make a memorial in favour of any person or body as ‘representative’ if such person or body is a non-citizen or a foreign company;
(e) the Registrar may endorse any memorial of transmission on the register document of title to any land in favour of a non-citizen or foreign company,
but only after the prior approval of the State Authority has been obtained upon an application in writing to the State Authority by such non-citizen or foreign company:
Provided that no such approval shall be required in respect of —
(aa) any land or any interest in land which is subject to the category ‘industry’ or to any condition requiring its use for industrial purposes;
(ab) any dealing effected pursuant to a sale and purchase agreement for which an approval has been granted under section 433E and executed by the same parties in such agreement; and
(ac) any dealing or act with regard to alienated land or any interest in land exempted by rules made under paragraph (aa) of subsection (1) of section 14.
And provided further that no such approval shall be required in respect of any dealing effected pursuant to a sale and purchase agreement for which an approval has been granted under section 433E and executed by the same parties in such agreement.”[3]
Pursuant to section 77(a) of the NLC (Amendment) Act, the proviso in section 433B(1) of the NLC was amended by deleting paragraph (aa). Accordingly, with effect from 1 January 2017, a disposal or dealing for any land or any interest in any land which is subject to the category “industry” or to any condition requiring its use for industrial purposes can only be effected in favour of a non-citizen or a foreign company upon the with approval of the State Authority.
Amendment of sections 433B(4), (5) and (6) of the NLC
Similarly, with effect from 1 January 2017, the approval of the State Authority is required to be obtained in order for a non-citizen or a foreign company to bid at a sale where the land is subject to the category “industry” or to any condition requiring its use for industrial purposes[4]. Prior to the amendment, such approval was only required for the land subject to the category “agriculture” or “building” or to any condition requiring its use for any agricultural or building purpose[5].
Amendment of section 433E(1) of the NLC
Pursuant to section 78 of the NLC (Amendment) Act, a person or body who conveys or disposes of, in a manner other than those specified in sub-section (1) of section 433B, any alienated land or any interest in land which is subject to the category “industry” or to any condition requiring its use for industrial purposes in favour of a non-citizen or a foreign company is now also required to obtain the prior approval of the State Authority.
Amendment of section 433H of the NLC
Prior to the amendment, section 433H of the NLC provided as follows:
“This Part shall not apply in the case of bodies and persons referred to in paragraph (c) of section 43.”
Accordingly, Part Thirty-Three (A) of the NLC[6] did not apply to sovereigns, governments, organisations and other persons authorised to hold land under the provisions of the Diplomatic and Consular Privileges Ordinance 1957[7].
Pursuant to section 79 of the NLC (Amendment) Act, section 433H of the NLC is amended:
“(1) This Part shall not apply in the case of bodies and persons referred to in paragraph (c) of section 43[8].
(2) Without prejudice to subsection (1), no corporation considered to be foreign incorporated or registered under any written law shall be capable of holding any land except in accordance with this Part.”
With this amendment, a new subsection 433H(2) makes it clear that foreign companies can only acquire land in accordance with Part Thirty-Three (A) of the NLC.
Conclusion
With the introduction of the NLC (Amendment) Act, the amended sections 433B and 433E have further restricted the ownership of property by non-citizens and foreign companies. This is driven home by the amendment to section 433H.
[1] See definition of “non-citizen” in section 433A.
[2] Section 433A as amended by section 76 of the NLC(Amendment) Act defines “foreign company” as follows:-
(a) a foreign company as defined in the Companies Act 2016;
(b) a company incorporated under the Companies Act 2016 with fifty per cent or more of its voting shares being held by a non-citizen, or by a foreign company referred to in paragraph (a), or by both, at the time of the proposed acquisition of any land or any interest in land or at the time of the execution of the instrument or deed in respect of any alienated land or any interest therein, as the case may be; or
(c) a company incorporated under the Companies Act 2016 with fifty per cent or more of its voting shares being held by a company referred to in paragraph (b), or by a company referred to in paragraph (b) together with a non-citizen or a foreign company referred to in paragraph (a), at the time of the proposed acquisition of any land or any interest in land or at the time of the execution of the instrument or deed in respect of any alienated land or any interest therein, as the case may be.
[3] See the pre-amendment of section 433B(1) of the NLC.
[4] See sections 77(b), (c) and (d) of the NLC (Amendment) Act.
[5] See the pre-amendment of sections 433B(4), (5) and (6) of the NLC.
[6] See Part Thirty-Three (A) of the NLC — Restrictions in respect of Non-Citizens and Foreign Companies.
[7] See the pre-amendment of section 43(c) of the NLC.
[8] See section 43(c) of the NLC as amended by section 8 of the NLC (Amendment) Act.
For further information, please contact:
Alexis Yong Mey Ling, Shearn Delamore & Co
alexis.yong@shearndelamore.com
