TYPES OF A/C HOLDER

a) natural persons
b)Companies

c)Partnerships

d)Sole proprietorships
e)Societies, clubs and other unincorporated bodies
f)Minors

g)Executors, administrators and trustee

h)Lawyers

i)Agents
GENERAL
 Identity of customer is ascertained
• IC / passport / introducer
• Proper person to conduct the a/c
• Has legal capacity and authority

Code of Good Banking Practice (CGBP)

Anti-Money laundering and Counter Financing of
Terrorism – Deposit Taking Institutions (Sector 1)
- Obtain identification/true identity of customer
- Identify ownership of all a/c holders
- Obtain evidence of identity from customer
- Be aware of unusual transaction of customer business
MINOR
s11 Contract Act 1950
 competent to contract - age of majority, sound mind and not
disqualified from contracting (e.g. bankrupt).

Age of Majority Act 1971

 below 18 years old is considered minor.
 Minor cannot have bank account on his own.
 Can have trust a/c and parents have beneficial rights in the a/c.

s22 Bills of Exchange Act 1949

 when a bill is drawn by a minor, he is entitled to receive
payment of the bill and to enforce against any party of the
contract but minor cannot be sued for bill issued by him.
CONT…
Halijah v. Morad (1972) 2MLJ 166
 A contract for repayment of money lent
is void as against parties to the contract
who were minors when they signed the
contract.
AGENT
 Appoint by power of attorney or mandate to manage the
a/c of principal.
 A power of attorney is a legal document giving one person
(the agent) the power to act for another person (the
principal).
 The agent can have broad legal authority or limited
authority to make legal decisions about the principal's
property, finances or medical care.
 The power of attorney is frequently used in the event of
a principal's illness or disability, or when the principal
can't be present to sign necessary legal documents for
financial transactions.
CONT…
 s135 Contract Act 1950- An agent is person employed
to do any act for another or to represent another in
dealings with persons. The person for whom such act is
done, or who is so represented is called the principal.
 Kavena Said Mydin v. Komarappa Chitty – agent who
sign a promissory note in his name is personally liable
although there is principal’s firm name on the note.
 Wan Salimah bt. Wan Jaffar v. Mahmood Omar (1998) 5
MLJ 162–
A power of attorney created in some other way other than
what is stated in the PA Act 1949 must be struck down as null
and void and of no effect.

 Magnum finance Bhd. v. Ling Sing Ping (1988) @MLJ 403 –

When construing a power of attorney, a general word need to
be viewed in the light of the stated objects of the power of
attorney.

 BBMB v. Henry Ginai Anak Langgie (1990) 1 MLJ 296 –

A power of attorney is construed strictly by the courts
according to well-recognized rules. The powers of attorney
are interpreted as giving only such authority as they confer
expressly or by necessary implication.
 EXECUTOR AND ADMINISTRATOR
 If amount in the a/c is small – bank use discretionary
power to allow the heir to close the a/c.
 However, if the amount is large, executor or
administrator will be appointed.
 Executor a/c – if the deceased customer has a will.
 An executor is legally responsible for sorting out the
finances of the person who died, generally making sure
debts and taxes are paid and what remains is properly
distributed to the heirs.
 Administrator a/c – appointed via letter of
administration (if the deceased customer has no will).
 Where a person dies intestate, i.e., without a will, the
court may appoint a person to settle their debts, pay
any necessary taxes and funeral expenses, and
distribute the remainder according to the procedure
set down at law.
CONT…
 Chay Chong Hwa & Ors v. Seah Mary (1987)
1MLJ 173 When administrator seek to sell interest
of a deceased in property, LA of the estate of
deceased are necessary for completion of the sale.

 Khoo Cheong Puay v. The Oversea Chinese

Banking Corp. (1935) MLJ 93
Where the will does not contain any restriction on
the executors’ power of sale over the deceased’s
immovable property, the executors can sell w/out
an order of court.
 TRUST A/C & TRUSTEE
 A trustee is a person or firm that holds and administers property or
assets for the benefit of a third party. A trustee may be appointed
for a wide variety of purposes, such as in the case of bankruptcy,
for a charity, for a trust fund, or for certain types of retirement
plans or pensions. Trustees are trusted to make decisions in the
beneficiary's best interests and often have a fiduciary responsibility
to the trust beneficiaries.
 s36 Trustee Act – trustee cannot be more than 4 person except if
the trust is for religion, welfare and public purpose.
 s42 Trustee Act – if a trustee is declare bankrupt, appoint a new
trustee.

 Rowlandson v. National Westminster Bank (1987) 3 All ER 370

A banker has a fiduciary duty to the beneficiaries of trust a/c and will
be responsible to the beneficiaries if he help to release the trust
money dishonestly .
JOINT ACCOUNT
 An account which is conducted by two or more persons
 When a banker opens a joint account, he should obtain
a written mandate signed by all parties to the account.
 The mandate must specify which and many of the
parties have authority to sign cheques or carry out any
other transaction connected with the account.
 Bank mandates must be in writing (usually in the bank’s
standardized format) signed by all the parties and
contain instructions regarding the mode of operation of
the account.
LAWYERS

 Yeo Gek Lang v. Alice Wee (1979) 1MLJ 213–

in the absence of specific authority, solicitors are not agents
of clients to conclude a contract for them.

 Dato’ Seri Au Ba Chi v. Malayan United Finance Bhd (1989)

3 MLJ 434
the duty of stake holder is to hold the stake as trustee for
both parties to await that event and until that event is known,
it is his duty to keep it in his own hands.
 SOLE PROPRIETOR ACCOUNT
 A sole proprietorship is a type of enterprise that is
owned and run by one person and in which there is no
legal distinction between the owner and the business
entity.
 Registration of Business Act 1956
a. Age of majority
b. Sound mind
c. Not disqualified by law
d. Provide specimen of his signature
e. Provide details e.g add, phone no., occupation,
employer’s name & add
f. Current a/c – introducer
g. Not blacklisted by Biro Maklumat Cek
PARTNERSHIP
 A partnership is a formal arrangement by two or more
parties to manage and operate a business and share its
profits. Generally in a partnership business, all partners
share liabilities and profits equally
 Registration of Business Act 1956
 S3 Partnership Act 1961 – relationship between persons
carrying on business in common with a view to profit.
 Registration of Business Act 1956 (Peninsular Malaysia) ;
Trades Licensing Ord1948 (Sabah) ; Business Prof & Trade
Licensing (S’wak)
 Wong Yoon Yar v. Lin Yin Thai (1987) 2 MLJ7 14
a partnership or sole proprietorship has no legal entity
nor personality of its own.
 IAC (S’pore) Pte Ltd v. Koh Meng Wan (1979)
AAC was a partnership. D became partner 26/2/70
and ceased to be on 30/6/75. On 9/4/75 D and
partner executed guarantee document for payment of
air-conditioners supplied to AAC. P claimed price of
the air-conditioners.
Held - a guarantee agreement entered into by a
partner to answer for debts of the partnership does
not amount to a guarantee. The liability of the
partner wd have been the same even if they had not
executed the so-called ‘guarantee’.
 Malayan Banking Berhad v. Lim Chee Leng (1985) 1
MLJ 214
a partner remains liable for debts incurred before his
resignation or retirement from the firm and cannot
escape liability merely pleading resignation or
retirement.

 Mayban Finance (s’pore) Ltd. v. Yap Thiam Sen

(1991) 1 MLJ 204 –
3rd parties are entitled to treat a withdrawing partner
as still being a member of the firm until they receive
notice of the change in the constitution of the firm.
The withdrawing or retiring partner is liable for all
partnership debts or obligations incurred before his
withdrawal or retirement.
 Tan Sin Moh v. Lebel Ltd(1988) @ MLJ 51
If a partner withdraws from a partnership, notice
of withdrawal must be specifically given to
persons who had habitual dealings with the firm.

 Leong Sin v. Perusahaan Kuari (Melaka Pindah)

Sdn Bhd (1997) 5MLJ 657
Where a partnership has been terminated, an
action may still be taken against the partnership
firm in the firm’s name, actions is commenced
against the correct party, so long as caused of
action accrued before the termination of
partnership.
SOCIETIES, CLUBS AND OTHER
UNINCORPORATED BODIES
 Karting Club S’pore v. David Mak(1985) 2MLJ 280
An unincorporated member club, not being a legal
entity cannot sue or be sued in the club’s name.

 M’sian Shipyard & Engineering Sdn Bhd v. Bank

Kerjasama Rakyat M’sia Bhd (1985) 2MLJ 359
Where there is no express provision in either the
Cooperative Societies Act or Rules enabling a
cooperative society to issue guarantees, such
society has no power to do so. Guarantees issued
are void ab initio.
 COMPANY

 Companies Act 2016

 Types of company
I. Public Co
II. Private Co
III. Limited by shares
IV. Limited by guarantee
Separate Legal Entity
 A company is a separate legal entity as
distinct from its members, therefore it is
separate at law from its shareholders ,
directors , promoters etc and as such is
conferred with rights and is subject to
certain duties and obligations.
 Salomon v Salomon & Company Ltd [1897]
AC 2
Lifting the Corporate Veil
 It refers to the situation where a shareholder may
be held personally liable for the actions of a
corporation.
 e.g. when a person sets up a company with the
aim of avoiding the prior obligation incumbent
upon him or her.
 Jones v Lipman
Doctrine of Ultra Vires

 The Doctrine of Ultra Vires is a fundamental rule

of Company Law.
 Hence, if the company does an act, or enters into
a contract beyond the powers of the directors
and/or the company itself, then the said
act/contract is void and not legally binding on the
company.
 The term Ultra Vires means 'Beyond Powers'.
Turquand’s Rules
 Royal British Bank v Turquand (1856) 6 E&B 327 is
a UK company law case that held people
transacting with companies are entitled to assume
that internal company rules are complied with,
even if they are not.
 This "indoor management rule" or the "Rule in
Turquand's Case" is applicable in most of the
common law world.