Abdull Hamid Embong JCA:

Background

[1] The paramount objective of Part IV Division 5 of the Companies Act 1965 (the Act) is to provide adequate protection to potential investors or purchasers of 'interest', in a wide range of investments that go beyond shares and debentures of a company, by regulating public offering of 'interest' other than shares and debentures. Section 91 of the Act provides:

A person shall not issue or offer to the public for subscription or purchase or invite the public to subscribe for or purchase any interest unless, at the time of the issue, offer or invitation, there is in force, in relation to the interest, a deed that is an approved deed.

The respondents did not obtain an approved deed under s. 86 of the Act when making the offer to the public in relation to their business. The respondents contended that their business does not fall within the meaning of 'interest' as defined under s. 84 of the Act, and thus does not require any approved deed. The main issue before the learned judge and here was whether the respondents' business falls within the meaning of 'interest' under s. 84 of the Act.

[2] At the High Court, the respondents asked for and obtained the following declarations:

(i) That the respondents' business in respect of the urn compartments and the burial plots does not fall within the meaning of 'interest' under s. 84(1) of the Act;

(ii) That an approved deed under Part IV Division 5 of the Act is not required for the respondents to offer the services to the public; and

(iii) That by offering the services to the public without an approved deed under Part IV Division 5 of the Act, the respondents do not contravene s. 91 of the Act.

The learned judge ordered each party to bear their own costs.

Facts

[3] The 1st respondent is an investment holding company a provider of management services. The 2nd respondent is the 1st respondent's agent for the sale of urn compartments and burial plots in memorial parks. As a group of companies, the respondents develop, promote and maintain memorial parks all over Malaysia. They acquire lands to be developed into memorial parks which provide burial plots, urn compartments, columbaria structure and supporting infrastructure like temples, chapels and rest areas. They advertise and offer these urn compartments and burial plots for sale to the public. Upon purchase of the urn compartment or burial plot, a purchaser will enter into an agreement with the 2nd respondent.

[4] The respondents undertook to maintain the infrastructure, landscaping, columbarium and the tombs in the memorial parks. In consideration for these services, the purchasers are required to pay a continuity fee, which is paid concurrently with payment of purchase price for the urn compartment or burial plot. This continuity fee is kept in a Continuity Fund, which is set up and managed by trustees appointed by the respondents. The identity and terms of appointment of these trustees are unknown. The trustees are empowered to invest the monies in the said Fund in any authorized investments as stipulated under s. 4 of the Trustee Act 1949. The respondents claimed that all interests and profits earned from the investments shall be used for the maintenance of the memorial parks and the upkeep of the landscaping, infrastructure and common areas. None of the profits or interests from the Continuity Fund would be distributed to the purchasers.

[5] The sole issue for determination in the appeal is as worded in the submission by learned counsel of the appellant as the regulator under the Act, which is:

Whether the Respondents' business falls within the meaning of 'interest under section 84(1) of the Act and therefore comply with the requirements under Part IV Division 5 of the Act.

[6] W-02-523-2006 is a related appeal by the respondents against the learned judge's order in respect of costs.

What Is A s. 84 'Interest'?

[7] It is not in dispute that the respondents had offered to the general public t