PUTRAJAYA: All memorial park operators must register their business prospectus with the Companies Commission of Malaysia, the Federal Court ruled in a landmark decision Tuesday.
The apex court ruled in a 2-1 majority.
Chief Judge of Sabah and Sarawak, Justice Richard Malanjum, and Federal Court judge Justice James Foong Cheng Yuen, were unanimous in favour of the commission to regulate the operations of the companies' burial plots and urn compartments, while Federal Court judge Hashim Yusoff gave a dissenting judgment.
Operators will have to comply with the legal requirements under the Companies Act, including registering the appointment of approved trustees and preparing a specific accounts which can be subjected by all investors in the scheme.
The apex court Tuesday dismissed a civil suit appeal by NV Multi Corporation Bhd and its 10 subsidiary companies against the commission.
Justice Richard, who chaired the three-man Bench, ordered the NV Multi-Corporation and 10 others to pay a total of RM50,000 in costs to the commission.
In his judgment, Justice Foong said the companies and the purchasers participated in a common enterprise.
"They are closely connected in the sense that the purchasers, after making the initial payment, are required to pay for the maintenance charges.
"For this, they expect not only the burial plots and storage spaces for urns to be made available for each interment but also the facilities that go with it to be maintained properly.
"Many of these purchasers are anticipated to return from time to time to pay their respects to those buried in the purchased burial plots or at the columbarium where the urns are kept, and they expect these and other facilities provided in the parks to be well kept at all times," he said.
Justice Foong said both parties had a mutual interest to ensure the success of this common enterprise.
"It is, therefore, wrong to say that the transaction between the purchasers and the plaintiffs (companies) is a one-off transaction. The efforts of the plaintiffs are of a continuing nature and do not stop at the sale of the burial plots or spaces in the columbarium.
"They continue thereafter with the purchasers paying for the upkeep and maintenance costs. This continuing efforts of the plaintiffs as promoters are an integral factor to the success of this common enterprise," he added.
In dissenting judgment, Justice Hashim ruled the crucial distiction to be observed is that the appellants' (companies) business was basically a simple sale of burial plots and urn compartments and not an investment.
The ruling means whoever buys a burial plot or urn compartment will be protected as the concerned companies would be monitored by commission, said its chief executive officer Datuk Azmi Ariffin.
Azmi, who is also Senior Federal Counsel that led a five-man prosecution team, told reporters that the ruling would protect the public from losing its investments in companies' activities which offer elements of "interest" in various ways.
Commission senior director Muhammad Redzuan Abdullah told reporters this was a precedent case in Malaysia as there were no other cases on the interpretation of Section 84 of the Companies Act on interest and that wherever a public company offered interest to public at large, it must register a prospectus and trust deed.
According to court papers, public limited company NV Multi Corporation Bhd and 10 others filed an originating summons on May 25, 2004, at the Kuala Lumpur High Court registry, asking for a declaration that their memorial park business operations were not an "interest scheme", pursuant to Section 84 of the Companies Act.
The appellants carry out the business of cemetery development, which provides services to members of the public by providing customers burial plots on land developed by them and compartments for the storage of urns containing the ashes of those cremated.