LAW 309-Chapter 3
LAW 309-Chapter 3
LAW 309-Chapter 3
PUBLIC UNDERTAKINGS
LEARNING OBJECTIVES
Public undertakings have become the order of the day in all democratic
countries. The reasons for the growth of public undertakings are:
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Chapter Three: Public Undertakings
Although the government has a good deal of control over corporation’s working,
and even the entire capital of the corporation may be subscribed by the
government, the two, are deemed in law to have distinct personalities.
Its property is not government property; it does not enjoy any of immunities or
privileges available to the government. Its servants are not civil servants and it is
bound by law as much as any other person.
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Chapter Three: Public Undertakings
The court pointed out that the said corporation was establishes as a legal entity
under an Act of the State Legislature and, therefore, it cannot by any stretch of
imagination be equated with the Government of Malaysia.
These bodies deal with financial matters. Bank Negara is the body falling
in this category. It is required to help build a sound financial structure for a
growing economy and, further, to assist, formulate and implement the country’s
monetary policy.
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Chapter Three: Public Undertakings
Taking the role of the public sector undertaking into account, the fifth Malaysian
Plan divides them into the following three groups:
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Chapter Three: Public Undertakings
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Chapter Three: Public Undertakings
matter was to come again before the Legislature which alone can amend its
own statute; in case of a company, articles can be amended administratively.
FAMA, a body corporate, has its apex body consisting of the following members
appointed by the Minister of Agriculture: a Chairman; a Deputy Chairman; a
representative of the Treasury; a representative of the Ministry of Trade and
Industry; a representative each from – the Ministry of Agriculture and Fisheries
and Agricultural Division of this Ministry, Ministry of Primary Industries;
Economic Planning Unit of the Prime Minster Department; and not more than
five other persons having experience of, and who have capacity in matter
relating to, agricultural production, marketing, finance or administration.
The Minister is to give due consideration to the need of the various regions in
Malaysia to be represented. The Minister is to determine the salaries,
remuneration or allowances payable to the members of the Authority. The
quorum for meetings of the Authority is seven.
The term of appointed is not specified in the Act. A member is appointed for
such term as may be specified in his instrument of appointment and is eligible
for re-appointment.
The functions of FAMA are specified in Section 3 of the Act. These are to co-
ordinate activities of various bodies and persons concerning marketing of
agricultural produce; to improve existing markets and marketing methods of
agricultural produce and promote new markets; to collaborate with persons and
bodies to promote efficient marketing of agricultural produce; to provide credit
Apex= top. Head
Remuneration= compensation, payment
Engage= deal
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Chapter Three: Public Undertakings
On the other hand, it is felt necessary to have some public control over them, and
not to leave them completely free, so as to make them act in public interest and
within the parameters of the government policy.
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Chapter Three: Public Undertakings
3.6.1 Audit
In the ultimate analysis, the financial burden of these undertakings, if they do not
make good, falls on the government fund and thus on the taxpayer.
Under the Audit Act (Reprint 1983) the Auditor-General has been authorised to
examine and carry out audit on the accounts of statutory public enterprises if it is
so provided by law in any case.
The Auditor-General is also responsible to ensure that the funds are used for the
approved objectives and those efforts towards achieving the objectives are
carried out efficiently without wastage.
In case of statutory corporations, usually the parent statute would provide that
their audited accounts be laid on the table of the Houses of Parliament. But
usually no discussion takes place in Parliament on these accounts.
Parliament is too large and busy body and cannot adequately probe into working
of the public enterprises as such. An opportunity to debate the operations of an
undertaking may arise if any money is needed to be appropriated by Parliament
to the undertaking. An annual report is submitted to Parliament by every
statutory enterprise.
3.6.3Ministerial Control
Ministers, on the other hand, exercise a good deal of control over the public
enterprises both formally as well as informally. Each corporation is normally
responsible to a Minister who is in charge of the sector of functions in which the
corporation operates.
Laid on= made available
Exercise= use, apply
In accordance with= consistent with
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Chapter Three: Public Undertakings
The Minister concerned has power to appoint the members of the corporation.
This power is conferred on the Minister concerned through the parent statute
creating the corporation.
Every company having a share capital has to file an annual return with the
Company Commissioner of Malaysia giving particulars pertaining to the share
capital and membership of the company. The annual return is also accompanied
by a copy of the last audited balance sheet and profit and loss account of the
company.
The courts exercise some control over public undertakings through the doctrine
of ultra vires. A statutory corporation or a government company is set up for
defined objectives and has defined powers.
The courts apply the doctrine of ultra vires to a company as well as to a statutory
corporation. It means that it must not act outside its objects clause in the
memorandum, or the parent statute, as the case may be.
Judicial control can be effective only when corporate powers are precisely
defined in the parent law or in the memorandum, but this is not usually done.
Doctrine= policy
A suit= a case brought to a law court
Litigation= lawsuit
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Chapter Three: Public Undertakings
Where Petronas took over Bank Bumiputra. A member of the public filed a suit
as a matter of public interest litigation challenging the take-over on the ground
that acquisition of a bank or engagement in banking activity was not an activity
within the objective and purposes of the Petroleum Development Act 1974.
The plaintiff contended that his interest as a Malaysian citizen, a tax payer and a
member of the electorate of the Government of Malaysia had been affected by
the take-over. The suit raised significant legal points not only as regards the
interpretation of the scope of the object clause, but also whether an action by
way of public interest litigation could lie against public undertakings.
However, before the court could hear the matter, the suit was aborted by
Parliament amending the Petroleum Act. As a consequence, the High Court
awarded costs to the plaintiff. The Supreme Court later on refused to interfere
with the High Court’s discretion saying that the costs are within the discretion of
the Court.
3.7 PRIVATISATION
For some time now emphasis has been shifting in Malaysia from public
enterprise to privatisation. This means that the role of the public enterprise will
shrink and that of private enterprise expand.
Contend= argue
Abort= to end at an early stage
Plaintiff= somebody who begins a lawsuit against another person (defendant) in a civil court
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Chapter Three: Public Undertakings
1. Briefly, explain the characteristics of undertakings and the reasons for its
growth.
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