Financial Performance Review of Hup Seng Perusahaan Makanan

Financial Performance Review of Hup Seng Perusahaan Makanan REVIEW OF THE FINANCIAL PERFORMANCE Hup Seng Perusahaan Makanan (M) Sdn.Bhd has performed very strongly in our financial year ended 31 December, 2008. Not only the revenue has surpassed the RM200 million mark for the first time in HSIBs history, profit before tax hit a record high of RM21 million for the financial year ended 31 December, 2008 increased from preceding year corresponding period of RM6 million by a hefty RM15 million or 250%. The Groups record profit is respectable indeed, considering a challenging operating environment in which high cost pressures are the order of the day in better part of the year. By keeping close momentum with volatile movement of major material prices, the Group has promptly reacted with cost recovery exercises in February 2008 and again in June 2008 to protect the margin. Nevertheless, prices for most of the key input materials were falling from historical high towards the end of third quarter impacted by fear of global recession as a result of credit crunch. The continued efforts to enhance operating efficiency within the Group have also contributed greatly towards the bottom line of the year, best ever achieved in the Groups history. Revenue rose by 14% to RM220 million as compared with preceding year corresponding period of RM193 million amid a lower production volume. The increase was largely due to selected price adjustments necessitated by the steep increases in raw material costs. The Group has no borrowings and has a cash balance of RM21 million as at the end of the financial year. Net asset per share stood at RM2.10 and earnings per share (EPS) improved significantly from 7.9 sen in 2007 to 26.8 sen. Background Hup Seng Perusahaan Makanan (M) Sdn. Bhd., established in 1958, has been a household name synonymous with quality biscuit manufacturing. Today, it is one of Malaysias leading biscuit manufacturers with many accumulated outstanding achievements. Through continuous upgrading, our products have been honoured with numerous awards worldwide, marking important milestones for the companys history. In recognition of Hup Sengs stringent quality management system, the company was awarded the prestigious MS ISO 9002 Quality System Certification from SIRIM in 1995 and upgraded to MS ISO 9001:2000 Quality System Certification in 2003. In 2005, the Prime Minister Dato Seri Abdullah Badawi awarded Hup Seng with the Industry Product Excellence Award (Eminent Product Performance Award). Being responsible to consumers and upholding Malaysian food prestige internationally, rigorous food safety and hygienic control strategies are employed to ensure safety and hygiene of products. In mid-2007, Hup Seng was accorded with the HACCP (Hazard Analysis Critical Control Points) and BRC (British Retail Consortium) Certification. This has educated consumers on food safety and hygiene and at the same time fostered their confidence in Hup Sengs products. With an international market coverage that spans Asia, Africa, Oceania, Europe and North America, Hup Sengs products have captured the hearts of consumers, young and old in many corners of the world. Henceforth, Hup Seng shall continue to upgrade, improve and reach new peaks of excellence. ACHIEVEMENT The subsidiary, Hup Seng Perusahaan Makanan (M) Sdn Bhd., was accredited with the Certification of HACCP (Hazard Analysis Critical Control Point) and BRC (British RetailConsortium) in Year 2008. CORPORATE SOCIAL RESPONSIBILITY The Group recognizes the importance of a corporate culture that emphasizes good corporate social responsibility. The Group is committed to play its role as a caring corporate citizen. In line with this, the Group has taken initiative in making contributions toward the local community, for instances donations to various schools and associations. In the workplace, the Group places high importance on safety, health and employees development. For example, a committee relating to workplace safety is set up to promote awareness of safety in workplace. Various sports activities were organized for healthy and balanced working lifestyle for employees besides encouraging networking and socializing between colleagues and peer. OUTLOOK AND PROSPECTS Malaysia economic expansion disappeared in fourth quarter 2008 and it barely remained above water with a negligible growth of 0.1 % that led a full year growth of 4.6% as compared to 6.3% of 2007. The slower growth was due to the worsening global economy that had caused a significant drop in the countrys exports. The global economy is getting more critical and all signs indicate deeper and prolonged recession. Any improvement will hinge on the state of development in the US and other bigger economies in the world. The countrys grossdomestic product forecast for this year has been revised downwards to between -1% and 1%, from 3.5% earlier. The management expects 2009 to be another very challenging year for the Group in view of growing global economic uncertainty. In this environment, the Groups strategy remains focused on product and service quality, flawless operation and cost control. At the same time, the Group will continue to look for ways to sustain its competitive position whil e remaining focused on operational efficiency so that satisfactory results are achieved in the coming year. FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS 2004 2005 2006 2007 2008 Financial year ended 31 December RM'000 RM'000 RM'000 RM'000 RM'000 Turnover 186,482 180,968 188,338 193,115 220,329 Profit After Tax 6,564 5,098 6,807 4,757 16,071 Net Earnings Per Share 11 sen 8.5 sen 11.3sen 7.9sen 26.8 sen Board of Directors Keh (Kerk) Chu Koh Keh (Kerk) Chu Koh, Malaysian aged 66, is the Chairman of the Company. He became a member of the Board of Directors on 4 October, 1991 and was appointed as the Managing Director on 3 August, 2000. Subsequently, he is redesignated as Chairman on 1 February, 2003. He was the Deputy Managing Director of Hup Seng Perusahaan Makanan (M) Sdn. Bhd. (HSPM) on 13 October, 1974 and then the Managing Director of the same on 1 April, 1977. He was appointed as the Deputy Managing Director on 21 April, 1977 and subsequently the Vice Chairman of Hup Seng Hoon Yong Brothers Sdn. Bhd. (HSHY) on 1 January, 1990. He is the brother of Kuo Choo Song and Kerk Chiew Siong, and uncle of Kerk Chian Tung, Teo Lee Teck and Kerk Kar Han. His family relationship with shareholders of HSB Group Sdn. Bhd. (major shareholder of Hup Seng Industries Berhad (HSIB)) is disclosed in page 12 of this Annual Report. He does not have any conflict of interest with the Company except for certain recurrent related party transactions of revenue or trading nature that is necessary for day-to-day operations of the Group. He has no convictions for any offences over the past 10 years. As one of the founders of H up Seng Co., he has approximately 50 years of experience in the biscuits industry. He plans the Groups strategic business development and production development which includes the installation of various production facilities in the Groups factory and heads the research and development team which researches new varieties of biscuits. He contributed in obtaining the Certification of HACCP (Hazard Analysis Critical Control Point) BRC (British Retail Consortium) for HSPM in year 2008, to ensure that product safety and quality are in line with global standard. He travels abroad extensively to keep abreast with the latest developments in the biscuits manufacturing industry and to assess new market prospects for the Group. Kerk Chiew Siong Kerk Chiew Siong, Malaysian aged 56, became a member of the Board of Directors on 4 October, 1991 and was appointed as an Executive Director on 3 August, 2000. His position as Executive Director was redesignated to Non-Executive Director on 1 February, 2003. On 17 August, 2006, he then became the Non-Executive Vice Chairman of the Company. He was appointed as the Director of HSPM on 12 March, 1981 and then as an Executive Director on 1 January, 1990 before being redesignated as Vice Chairman on 1 February, 2003. He was a Director of HSHY on 15 February, 1988 and then became the Deputy Managing Director of the same on 1 January, 1990 before being redesignated as Executive Director on 1 February, 2003. He is the brother of Kuo Choo Song and Keh (Kerk) Chu Koh, and uncle of Kerk Chian Tung, Teo Lee Teck and Kerk Kar Han. His family relationship with shareholders of HSB Group Sdn. Bhd. (major shareholder of   (HSIB) is disclosed in page 12 of this Annual Report. He does not have any conflict of interest with the Company except for certain recurrent related party transactions of revenue or trading nature that is necessary for day-to-day operations of the Group. He has no convictions for any offences over the past 10 years. He has more than 33 years of experience in the manufacturing and marketing of biscuits. As head of the Quality Assurance and Business Development Department, he is responsible for devising strategies for market development and researching the potentials of the Groups products in existing as well as new markets. He also ensures the Groups biscuits manufacturing quality control system meets the MS ISO9001:2000 requirements. Kuo Choo Song Kuo Choo Song, Malaysian aged 77, is the Managing Director of the Company. He became a member of the Board of Directors on 4 October, 1991 and was appointed as the Executive Chairman of the Company on 3 August, 2000. Subsequently, he is redesignated as Managing Director in HSIB on 1 February, 2003. He had been a member of the Audit Committee until 12 December, 2007. He was appointed as the Managing Director of HSPM on 13 October, 1974 and as the Chairman of the same since 1 April, 1977. He was subsequently redesignated as Vice Chairman of HSPM on 1 February, 2003. He has been the Chairman of HSHY since 21 April, 1977. He has over 50 years of experience in the biscuits industry at management and board levels. He is one of the founders of Hup Seng Co. which was established in 1958 and subsequently became HSPM in 1974. He is the elder brother of Keh (Kerk) Chu Koh and Kerk Chiew Siong, and uncle of Kerk Chian Tung, Teo Lee Teck and Kerk Kar Han. His family relationship with shareholders of HSB Group Sdn. Bhd. (major shareholder of HSIB) is disclosed in page 12 of this Annual Report. He does not have any conflict of interest with the Company except for certain recurrent related party transactions of revenue or trading nature that is necessary for day-to-day operations of the Group. He has no convictions for any offences over the past 10 years. His job responsibilities include planning the Hup Seng Groups business development programs and representing the Group at various external functions. Other are: Kerk Chian Tung  (Executive Director),  Teo Lee Teck  (Non-Executive Director), Kerk Kar Han  (Non-Executive Director), Woon Chin Chan  (Independent Non-Executive Director),  Norita Binti Jaafar  (Independent Non-Executive Director), Mazrina Binti Arifin  (Independent Non-Executive Director),  Raja Khairul Anuar Bin Raja Mokhtar  (Non-Executive Director) and Wee Hoe Soon @ Gooi Hoe Soon  (Alternate Director to Woon Chin Chan). Distribution Network Besides the domestic market, We also export our products to over 40 countries in Asia, Europe, America, Africa, Mid-Asia etc. We are proud of our record in building profitable and successful business in the most demanding and competitive of international markets. Our challenge lies in gearing to meet the future demands of the markets we serve. PRICE/EARNINGS RATIO The price/earnings ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. In year 2004, the price/earnings ratio for Hup Seng Industries Berhad is 0.13 times and increases by 0.05 times to 0.18 times in year 2005. The price/earnings ratio decreases back to 0.13 times in year 2006. However, the price/earnings ratio has been increases by 0.03 times again to 0.16 times in 2007. In year 2008, the price/earnings ratio decreases sharply by 0.12 times to 0.04 times only. A higher price/earnings ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower price/earnings ratio.   Thus, we notice that the stock in year 2008 is the cheapest where the investor will pay less for each unit of net income. PRICE/CASH FLOW RATIO Price/cash flow ratio is a measure of the markets expectations of a firms future financial health. It is calculated by dividing the companys market price by the companys operating cash flow per share in the most recent fiscal year. In year 2004, the price/cash flow ratio for Hup Seng Industries Berhad is 18.90 times. During year 2005, the price/cash flow increases by 1.65 times to 20.55 times. The ratio for 2006 is decreases by 0.95 times to 19.6 times. In year 2007, the price/cash flow ratio is 13.21 times and decreases by 3.66 times to 9.55 times in year 2008. The lower a stocks price/cash flow ratio, the better value that stock. PRICE/ BOOK VALUE RATIO The price/book value ratio is provides an assessment of how investors view the firms performance. It is calculated by dividing companys market price by the companys shareholders equity per share. Firms expected to earn high returns relative to their risk typically sell at higher price/book value ratio multiples. In year 2004, the price/book value ratio for Hup Seng Industries Berhad is 1.15 times and increases to 1.21 times by 0.06 times in year 2005. It is decrease by 0.11 times to 1.1 times in year 2006. Then, the price/book value ratio is decreases again to 0.98 times in year 2007. After that, it decreases again to 0.87 times in year 2008. The higher the ratio, the higher the premium the market is willing to pay for the company above its hard assets. PRICE/SALES RATIO The price/sales ratio is a valuation metric for stocks. It used to determine the value of a stock relative to its past performance. It may also be used to determine relative valuation of a sector or the market as a whole. It is calculated by dividing the companys market price by the companys revenue per share in the most recent fiscal year. The price/sales ratio of Hup Seng Industries Berhad for year 2004 is 8.75 times. In year 2005, it rises up to 9.79 times with increases by 1.04 times. In year 2006, it decreases by 0.41 times to 9.38 times. After that, the price/sales ratio decrease sharply by 2.54 times to 6.84 times in year 2007 and decreases again to 5.39 times in year 2008. A low price/sales ratio is usually thought to be a better investment since the investor is paying less for each unit of sales. Forecast For Year 2009 After we estimated for the growth of 7% for year 2009, we can make the forecast market value for year 2009. In year 2009, we expect that the price/earnings ratio still maintain with 0.04 times which has the same times with year 2008. As a result, the expected market value will decrease to RM1.10. Therefore, we expect the investors still paying less for each unit of net income, so the stock will become cheaper. For the price/cash flow ratio, we expect that it will decrease by 0.63 times to 8.92 times. As a result, the expected market value will decrease to RM1.10. Thus, the lower of stocks price/cash flow ratio give the better value that stock in year 2009. For the price/book value ratio, we estimate that it will decrease by 0.05 times to 0.82 times which will decrease to RM1.10 in the market value in year 2009. So we estimate that it has the lower premium that market is willing to pay for Hup Seng above its hard assets. For the price/sales ratio, we expect that it will decrease by 0. 35 times to 5.04 times. As a result, the expected market value will decrease to RM1.10. Thus, it seem that it will be a better investment opportunity in year 2009 for investors. Other Ratios Analysis Of Hup Seng Industries Berhad 2004 2005 2006 2007 2008 Leverage Ratios: Interest Burden 1.00 times 1.00 times 1.00 times 1.00 times 1.00 times Leverage 1.01 times 1.01 times 1.01 times 1.01 times 1.01 times Compound Leverage Factor 1.01 times 1.01 times 1.01 times 1.01 times 1.01 times Liquidity Ratios: Current Ratio 36.73 times 14.03 times 13.46 times 14.55 times 16.72 times Quick Ratio 36.73 times 14.03 times 13.46 times 14.55 times 16.72 times Cash Ratio 36.28 times 13.99 times 13.39 times 14.47 times 16.69 times Profitability Ratios: Return On Assets 9.57% 9.25% 8.59% 11.35% 13.39% Return On Equity 6.87% 6.08% 6.17% 8.32% 9.97% Profit margin 77.43% 75.74% 73.89% 79.97% 81.92% Comparison With Competitor (Hwa Tai Industries Berhad) Hwa Tai Industries Berhad is our strong competitor, so we compare our company with them through ratio analysis which are the ratio as table below: Hup Seng Industries Berhad Hwa Tai Industries Berhad (Year 2008) (Year 2008) Price/Earnings Ratio 0.04 times (1.12) times Price/Cash Flow Ratio 9.55 times (7.84) times Price/Book Value Ratio 0.87 times 1.28 times Price/Sales Ratio 5.39 times 0.33 times Since Hwa Tai Industries Berhad has net loss, so we cannot compare the price/earnings ratio of our company with it. According to statement of cash flow in Hwa Tai Industries Berhad, we notice that cash outflow is more than cash inflow which indicate negative in net cash flow. Therefore, we fail to make comparison among these two company. The higher the price/book value ratio, the higher the premium the market is willing to pay for the company above its hard assets. A low ratio may signal a good investment opportunity, so Hup Seng Industries Berhad has a better investment opportunity to investors because the ratio is only 0.87 times which is lower than Hwa Tai Industries Berhad that is 1.28 times of ratio. The price/sales ratio is one of the tools that will help investors determine which category a stock is in and help them to make an informed investment decision. The lower the price/sales ratio, the better the investment opportunity. Based on the table above, it shows that Hwa Tai Industries Berhad has a better investment opportunity to investors because it has the lower price/sales ratio than Hup Seng Industries Berhad. As a conclude, a smart investor will invest in Hup Seng Industries Berhad to earn more profit because Hup Seng Industries Berhad has high earnings per share which will give investors higher return. Besides that, Hup Seng Industries Berhad also has positive net cash flow which the cash inflow is greater than the cash outflow. As a result, the increasing of reliability of investors towards Hup Seng Industries Berhad will encourage investors to invest in this company.

Matrix Organizational Structure Essay

After reading the case, do you thing matrix organization structure can always bring success? A1. Matrix structure is effective in relatively large companies that cater to the needs of diverse markets with varying requirements. It is based on the basis of decentralizing power to various functional and operational heads so that they understand their respective domains or geographical regions and frame strategies accordingly. It is especially effective when an organization is in the growth phase and wants to go global with its products and services. There is a well defined hierarchy and the decisions taken by the individual domain of functional heads are more often than not in sync with each other. It lends the company flexibility and allows it to focus on multiple business goals. It also enables the company to establish economies of scale and facilitates in innovative solutions to complex, technical problems. On the contrary if a company is a start up phase their might be a fight for resources between the individual departments. Here a matrix structure can lead to a state of ambiguity as the divisional officers have to report to multiple divisional heads which creates conflict. The individual units end up competing with each other. Also there are additional costs owing to additional management and administration requirements. In such scenarios, centralized decision making system would be more effective than the matrix organizational structure. Q2. Identify some companies which have failed subsequent to introduction of matrix structure. List the reasons for failure and suggest what could be the appropriate structure for them? A2. In the 1990’s, some of the leading auto makers of the world resorted to the matrix structure-Toyota, Renault, Nissan, Ford, Mitsubishi etc. They were not entirely successful in their implementation. More power was delegated to the functional heads and leads to carry out the individual processes with their resources. The reasons for their failure could be: 1. The system became very complicated and difficult for the functional heads to carry out their functions. 2. There were too many functional divisions but not many engineers with the desired specializations 3. Coordination across projects was lacking 4. Each manger had to handle too many projects. 5. Production costs were higher 6. There wasn’t adequate sharing of common components among divisions 7. Led to competition between the individual segments for the limited resources so as to reduce cost. These industries should balance the need for a matrix structure with the specialized manpower and machines at their disposal. Instead of resorting to too much specialization in allocating divisions, they should club specialized divisions having common raw materials and technology requirements so that the costs of production are reduced and there is efficient use of resources. Also there would be better coordination and synergy between the constituent divisions in such a case.

Common Law Versus Civil Law Systems Essay

The two principal legal systems in the world today are those of civil law and common law. Continental Europe, Latin America, most of Africa and many Central European and Asian nations are part of the civil law system; the United States, along with England and other countries once part of the British Empire, belong to the common law system. The civil law system has its roots in ancient Roman law, updated in the 6th century A.D. by the Emperor Justinian and adapted in later times by French and German jurists. The common law system began developing in England almost a millennium ago. By the time England’s Parliament was established, its royal judges had already begun basing their decisions on law â€Å"common† to the realm. A body of decisions was accumulating. Able lawyers assisted the process. On the European continent, Justinian’s resurrected law-books and the legal system of the Catholic Church played critical roles in harmonizing a thousand local laws. England, in the midst of constructing a flexible legal system of its own, was less influenced by these sources. It never embraced the sentiment of the French Revolution that the power of judges should be curbed, that they should be strictly limited to applying the law such as the legislature might declare. Thus, British colonists in America were steeped in this tradition. Indeed, among the grievances enumerated in the American Declaration of Independence were that the English king had deprived the colonists of the rights of Englishmen, that he had made colonial judges â€Å"dependent on his will alone for the tenure of their offices† and that he had denied the people â€Å"the benefits of Trial by Jury.† After the American Revolution, English common law was enthusiastically embraced by the newly independent American states. In the more than 200 years since that time, the common law in America has seen many changes — economic, political and social — and has become a system distinctive both in its techniques and its style of adjudication. It is often said that the com mon law system consists of unwritten â€Å"judge-made† law while the civil law system is composed of written codes. For the most part, law in the United States today is â€Å"made† by the legislative branch. To some extent, however, the judge-made law analogy is true. Judicial independence is a hallmark of the American legal system. As a co-equal branch of government, the judiciary — to a remarkable degree — operates free of control by the executive and legislative branches, deciding cases impartially, uninfluenced by popular opinion. The American people respect their courts and judges, even if they sometimes criticize them. In this contrast of common v. civil law, U.S. District Court Judge Peter Messitte (Maryland), considers some basic aspects of both systems and explains how the American common law system compares with that of civil law.Historically, much law in the American common law system has been created by judicial decisions, especially in such important areas as the law of property, contracts and torts — what in civil law countries would be known as â€Å"private delicts.† Civil law countries, in contrast, have adopted comprehensive civil codes covering such topics as persons, things, obligations and inheritan ce, as well as penal codes, codes of procedure and codes covering such matters as commercial law. But it would be incorrect to say that common law is unwritten law. The judicial decisions that have interpreted the law have, in fact, been written and have always been accessible. From the earliest times — Magna Carta is a good example — there has been â€Å"legislation,† what in civil law systems would be called â€Å"enacted law.† In the United States, this includes constitutions (both federal and state) as well as enactments by Congress and state legislatures. In addition, at both the federal and state levels, much law has in fact been codified. At the federal level, for example, there is an internal revenue code. State legislatures have adopted uniform codes in such areas as penal and commercial law. There are also uniform rules of civil and criminal procedure which, although typically adopted by the highest courts of the federal and state systems, are ultimately ratified by the legislatures. Still, it must be noted that many statutes and rules simply codify the results reached by common or â€Å"case† law. Judicial decisions interpreting constitutions and legislative enactments also become sources of the law themselves, so in the end the basic perception that the American system is one of judge-made law remains valid. At the same time, not all law in civil law countries is codified in the sense that it is organized into a comprehensive organic, whole statement of the law on a given subject. Sometimes individual statutes are enacted to deal with specific issues without being codified. These simply exist alongside the more comprehensive civil or penal codes of the system. And while decisions of the higher courts   in a civil law jurisdiction may not have the binding force of law in succeeding cases (as they do in a common law system), the fact is that in many civil law countries lower courts tend to follow the decisions of higher courts in the system because of their persuasive argumentation. Nevertheless, a judge in the civil law system is not legally bound by the previous decision of a higher court in an identical or similar case and is quite free to ignore the decision altogether. The Concept of Precedent In the United States, judicial decisions do have the force of law and must be respected by the public, by lawyers and of course, by the courts themselves. This is what is signified by the â€Å"concept of precedent,† as expressed in the Latin phrase stare decisis — â€Å"let it [the decision] stand.† The decisions of a higher court in the same jurisdiction as a lower court must be respected in the same or similar cases decided by the lower court. This tradition, inherited by the United States from England, is based on several policy considerations. These include predictability of results, the desire to treat equally everyone who faces the same or similar legal problems, the advantages to be gained when an issue is decided that affects all subsequent cases and respect for the accumulated wisdom of lawyers and judges in the past. But it is also understood that primary responsibility for making law belongs to the legislative authority; judges are expected to interpr et the law, at most filling in gaps when constitutions or statutes are ambiguous or silent. Thus, there are important limiting features to the concept of precedent. First and foremost, a court decision will only bind a lower court if the court rendering the decision is higher in the same line of authority. For example, a decision of the U.S. Supreme Court on a matter of constitutional or ordinary federal law will bind all U.S. courts everywhere because all courts are lower and in the same line of authority as the Supreme Court in such matters. But decisions of one of the several U.S. Courts of Appeals — the intermediate federal appeals courts — will only bind federal trial courts within their respective regions. Decisions of a state supreme court on the meaning of a state law where that court sits will be binding everywhere, so long as the state court’s decisions do not conflict with constitutional or federal statutory law. American judges tend to be very cautious in their decision-making. As a rule, they only entertain actual cases or controversies brought by litigants whose interests are in some way directly affected. In addition, judges usually decide cases on the narrowest possible grounds, avoiding, for example, constitutional issues when cases may be disposed of on non- constitutional grounds. Then, too, the â€Å"law† that judges state is only so much of their decision as is absolutely necessary to decide the case. Any other pronouncement on the law is unofficial. Another important limiting feature of the concept of precedent is that the later case must be the same or closely related to the previous one. Unless the facts are identical or substantially similar, the later court will be able to distinguish the earlier case and not be bound by it. The highest court of a jurisdiction, e.g., the U.S. Supreme Court for the United States or a state supreme court within its own state, can overrule a precedent even where the facts of the later case are identical or substantially similar to the earlier case. In 1954, for example, in the famous school integration of Brown v. Board of Education, the U.S. Supreme Court overruled an analogous decision it had rendered in 1896. But such direct over-ruling is not common. What is more likely is that the high court, by distinguishing later cases over time, will move away from an earlier precedent which has become undesirable. But for the most part, the long standi ng precedents of the high courts remain. An Organized Law Where does one go to find the law in America? It might be supposed that with both enacted law and judicial decisions comprising the law, the search would be difficult. But the task in fact is relatively easy. Even though much American law is not codified, it still has been systematized and organized by subject matter. Legal encyclopedias and treatises written by learned professors and practitioners set out the law in logical sequence, typically providing historical perspectives as well. These books of authority contain references to the principles and specific rules of law in a given branch of law, as well as citations to relevant statutes and judicial decisions. Accessing statutes in â€Å"codebooks† and cases in bound volumes called court reports, and nowadays accessing both by computer, is a relatively straightforward undertaking. But it also bears noting that in the common law system, treatise writers do not have the same importance that they do in the civil law system. In civil law countries, such authorities are sometimesconsidered sources of law, looked to for the development of the doctrine relative to a given subject matter. Their statements are given considerable weight by civil law judges. In the United States, in contrast, doctrine developed by treatise writers lacks binding force, although it may be cited for its persuasive effect. Common Law v. Civil Law Apart from these features, there are a number of institutions associated with the common law system not usually found in civil law systems. Principal among these is the jury which, at the option of the litigants, functions in both civil and criminal cases. The jury is a group of citizens, traditionally 12 in number, summoned at random to determine the facts in a lawsuit. When a trial by jury is held, the judge will instruct the jury on the law, but it remains for the jury to decide the facts. This means that ordinary citizens will decide which party will prevail in a civil case, and whether, in a criminal case, the accused is guilty or innocent of the charge against him or her. The institution of the jury has had an important shaping effect on the common law. Because jurors are brought in on a temporary basis to resolve factual issues, common law trials are usually concentrated events, sometimes only a matter of days (although occasionally possibly weeks or months in duration). Empha sis is on the oral testimony of witnesses, although documents also are presented as evidence. Lawyers have responsibility for preparing the case; the trial judge performs no investigation of the case prior to trial. Lawyers, acting as adversaries, take the lead in questioning the witnesses at trial, while the judge acts essentially as a referee. Testimony is recorded verbatim by a court reporter or electronically. The trial court, which is the â€Å"court of first instance† (i.e., where the case is first heard) in the American system, is where the factual record of the case is made. Generally speaking, appeals courts confine their review of the lower court record to errors of law, not of fact. No new evidence is received on appeal. All this stands in marked contrast to what is usually found in civil law systems, where jury trials are for the most part unknown. In a given case, instead of a single continuous trial, a series of court hearings may be held over an extended period. Documents play a more important role than witness testimony. The judge actively investigates the case and also conducts the questioning of the witnesses. Instead of a verbatim record of the proceedings, the judge’s notes and findings of fact comprise the record. Appeals may be taken both on the facts and the law, and the appeals court can and, sometimes does open the record to receive new evidence. Despite their differences, both the common and civil law systems have as their goal the just, speedy and inexpensive determination of disputes. U.S. courts have become particularly sensitive in recent years for the need to continuously reappraise their processes in order to improve the quality of justice. As a consequence of these efforts, there are many other aspects of court activity in the U.S. These range from alternate dispute resolution mechanisms (including arbitration and mediation) to such procedural devices as default and summary judgment, used by judges to decide cases at an early stage without having to proceed to a formal trial.

Judiciary of Malaysia - Free Essay Example

Sample details Pages: 9 Words: 2725 Downloads: 7 Date added: 2017/09/25 Category Advertising Essay Type Argumentative essay Did you like this example? Question 1 (1168 words) Jurisdiction Chosen: Country – Malaysia Malaysia has a unique legal system as it is the only country in the world that adapts a dual-track legal system where Islamic courts co-exist alongside with civil-institutions. Apparently, because of the dual legal system, Malaysia inherits legal tradition from both the Islamic law and the common law. The more interesting discussion of this research would elaborate how co-existence is possible in Malaysia without conflict. Before British colonization in Malaya (confined to all states in the Peninsular Malaysia and excluding Sabah and Sarawak in the Borneo islands), Islamic law is only applicable in the state of Malacca. In Malacca the law was compiled in the Malacca Laws and when the Malacca Empire fell versions of the Malacca Laws were applied in the other States (Liam Yock Fang (Editor) Undang-Undang Melaka, The Hague, 1976 ). Subsequent to the fall of Malacca Empire and as a result inter-state migrat ion that took place during that time, Islamic laws were then being spread across to other states of Malaya. However, when British colonized Malaya in year 1920, the influence of Islamic law became less significant. The British law was implemented in form of codes enacted from India which includes the Contract Act, Criminal Procedure Code and civil Procedure Code. Interestingly enough, the land law legislation introduced at that point of time was based on Torrens System from the Australia. However, the fact that the Torrens system was introduced during the British colonization in both Australia and Malaya clearly explains how the land law legislation originated in Australia was being implemented in Malaya. In the today world, the Torrens system land law legislation has been widely implemented in most commonwealth country. As a result of the implementation of the British laws in Malaya the Shariah law is no longer applicable to those areas covered by the British laws. The Britis h proceeded to set up courts that were headed by British judges trained in the English Common Law. The Civil Law Ordinance 1956 stated that in the absence of any written law, the court shall apply in West Malaysia the Common Law of England and the rules of equity as administered in England on the 7th day of April 1956. Civil Law Ordinance. 1956, Federation of Malaya Ordinance No. 5 of 1956). As a result of the enactment of Civil Law Ordinance, although Islamic law is the law of the land in Malaya, in actuality, English law became the basic law of the land in Malaya at that juncture. In the case of Ramah v Laton a majority of the Court of Appeal in the Malay States held that Islamic Law is not foreign law but it is the law of the land and as such it is the duty of the courts to declare and apply the law. (Ramah v Laton (1927) 6 FMSLR 128). However during the hearing of that case, the judge does not have prior knowledge of Islamic law and hence have to refer questions of Islamic La w and customs to the State Executive Council. Due to the complication and constant references back to the Mufti during hearing, Muslim Law was enacted in the States and the Shariah Courts to deal with cases under the enactments. The important fact to take note is that the Shariah courts deals only with Muslims in the Malaya and therefore the Islamic laws are confine to Malays or other races that have converted to Muslims. Judicial Independence Montesquieu puts forward the idea that there is no liberty, if the judiciary power is not separated from the legislative and the executive. He said if it were joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control; the judge would then be the legislator. If it were joined with the executive, the judge would behave with violence and oppression Montesquieu, The Spirit of the Laws, Book XI). In Malaysia, the judges of courts are appointed by the Yang-Dipertuan-Agong (Monarch) on the advice of the Prime Minister. The prime minister, before advising the Monarch is required to consult the Chief justice beforehand. The judges are usually appointed from the Judicial and Legal Service or the bar council. The independence of judiciary in Malaysia is questionable for a couple of reasons. In Article 22 of the Federal Constitution, judicial commissioners can be appointed to perform the role of a judge of the High Court. However the appointment is for an initial term of 2 years. If the commissioner performs his duty up to a satisfactory level, he may then be recommended by the Prime Minister to be a judge. As the judicial commissioners does not have a secured tenure and is playing the role of probationary judge being evaluated subjectively by the Prime Minister, his ability to not be subjected by external influences in this case the parliament headed by the Prime Minister himself can be questionable. Moreover, the fact that judicial independence in Malaysia is questionable is fu rther evidenced during the Malaysia judicial crisis in 1988. It all began with the then Supreme courts decision in JP Berthelsen vs Director General of Immigration Malaysia Ors [1987] 1 MLJ 134). The Supreme Court overruled the decision of the Minister and allowed Bethelsen to lawfully stay in the country. The then Prime-minister made a remark during the parliamentary debate that the minister should have the final say of how long a foreigner stays in the country. In May 1988, 20 judges and the then Chief justice wrote to the monarch expressing the concerns of the executive criticism of the judiciary publically. As a result, the prime minister invoked the procedure provided under Article 125 Federal Constitution (Malaysia) to remove the chief justice on the ground of misbehavior. These series of event leading to the sacking of the then chief justice appeared to be the darkest history in Malaysia’s judicial independence. Comparison to judiciary independence in Australia Australia, in comparison to Malaysia, though being a Commonwealth country that shares common legal tradition from the British has a judicial system that is much more independent. Since 1900, the Australian government has adapted a tripartite separation of power of their political system. The roles and responsibly of the tripartite are clearly elaborated in the three chapters of the Australian Constitution. Chapter 1 explained the parliament as the party that deals with legislation, chapter 2 on the Executive Government on providing executive powers and chapter 3 the Judicature exercising their judicial independence via the High court and federal courts. Under Chapter 3 section 72 Australian Constitution (Australia), the judges’ tenure of services is protected and can only be removed by the house of parliament and not by prime minister alone as opposed to Malaysia. Moreover, section 72 also clearly mentioned that the remuneration of the judges may not be reduced while they are in office. In Malaysia, the judiciary does not have control of their own budget and hence the remuneration of the judges could be affected by the Ministry of Finance. ? Question 2 (1140 words) As Malaysia has a law tradition that rooted from British law during the British colonization, common law of contracts became the base of jurisdiction in enforcing promises. However, the fact that Syariah law exist, it is not uncommon for financial institutions to offer products under the Islamic law of contract. However, the discussions here are generalized to the common law as it still appears to be the most relevant contract law in Malaysia. The common law in Malaysia, similar to common law in British, has freedom as the fundamental of promises between parties. Hence, a promise that benefits a single party more than the other is not uncommon in promises agreed in Malaysia. As long as the contract is clearly communicated in writing, and the other party is well informed of the conten t of the contract, it will be held valid. Unlike Islamic law of contract, a verbal promise will not qualify as a contract. The validity of a contract in common law requires ‘consideration’ which basically implies that a contract must be bilateral. Although most promises are made in order to get something in return, in rare occasion, the in return promise could be abstract. In the case of a father giving money to a man to marry his daughter, the consideration for that case is the fact that the father simply wanted to see his daughter getting married (Sharrington vs Strotton (1556) Plowden at 303) . Contrasting with the Islamic law, a single sided promise is held valid in Wa’d which means unilateral promise in Arabic. In the case of purchase of goods in Malaysia, the purchaser is obliged to perform his own due diligence on the goods before the purchase. It is an obligation in any commercial (sale-purchase) that the seller is to allow the buyer prior to enter into agreement to inspect the goods in order to ensure that it is defect free. Such an obligation on the seller is known at Common law as Caveat Emptor. (Caveat Emptor, Mozley Witheleys Law Dictionary, 1993) Jowitts Dictionary of English Law (1997), explains that a purchaser or buyer must be on the alert for he has no right to remain in ignorance of the fact that what is buying belongs to someone other than the vendor, and that any purchaser who fails to investigate the vendors title does so at his own isk (Caveat Emptor, Mozley Witheleys Law Dictionary, 1993). This clearly distinguished contracts in Malaysian common law with Islamic law of contract where the purchaser could void a contract if he later found out that the goods purchased are defective even if he has not done his due diligence. If there is a breach of contract on either side, the innocent party has the right to terminate the contract and to subsequently claim the party in breach for damages that would put the innoce nt back in a position had the contract been fulfilled. In the example of Choo Yin Loo vs Visuvalingam Pillay(1930) 7 FMSLR 135, the plaintiff sued the defendant for not having enough worker to work on his land and hence breached the contract. As a result, the defendant was ordered to pay damages to the plaintiff. Islamic law of contract The Islamic law of contracts emphasizes ethics in its promise; hence the promise itself must be fair and honest. In Islamic law of contracts, a promise made in verbal is also acceptable which make it very different from common law. The contract must not relate to item that is considered haram (prohibited item) by religion such as pork or swine product, alcohol, gambling equipment or drugs. Another aspect of Islamic law is that it seeks to eliminate gharar, which represent risk, fraud, hazard and uncertainty (Kamali 2008,84)The subject of the contract must be legally owned at the point of time the contract is being drawn negotiated. Hence, items yet to be in existence or built may not qualify as a subject of contract. Usually this translates into making contract of insurance impermissible (Stovall 2002,9). As a result of contracts not allowing gharar, many financial investment contracts such as futures and options are also not permitted in the Islamic law of contract. Laws governing joint-stock companies do not allow for the distribution of share options, which hinders entrepreneurships (Azzam 2002,64) Riba which means interest is also prohibited in the Islamic law of contract. As a result, loan contract between borrower and bank will not be able to include interest in their repayment. However, in modern Islamic countries, the alternative of charging interest are being done in the form of Ijara where a borrower will sign an agreement to sell the property to the bank at the margin of finance agreed and then sign another contract to purchase back the property at the end of the finance tenure. For instance, in Shariah c ompliant mortgage, the property must change hands twice- from seller to bank and from bank to customer(World Bank Policy Research Working Paper 4053, November 2006). This has been by far the most popular Islamic financing contract for real estate, however the fact that a buyer could be selling a property at one price and buying it back at 3 times the price 20 years later contradicts greatly with the idea of prohibiting Riba as obviously a bank is having a windfall gain out of the contract. The interesting argument revolving this is the fact that windfall gain is prohibited in a single contract but questionable if it is done in two different co-related contracts. However, when an investment deposit is made by an investor to a bank, the bank does not give interest to the investor but is merely giving profit-sharing. Islamic theory in contrary to western notions of finance: it holds that money should be use only to facilitate the sale of goods and services, but should not be comm oditized itself because it is both socially and morally injurious (Holland 2002, 42) In Islamic law, a Wa’d (unilateral promise) is permissible, thus greatly highlighting the distinction between common law of contract and Islamic law. Consideration is not required in Islamic law and a one-sided promise can be accepted legally as much as a bilateral promise. The danger however, is the fact that when an offer is made, even when the other party does not respond to it may imply acceptance of the contract. In Islamic contract law, there are many self-help remedies available under the Khiyar. A contract can be terminated under Khiyar-al-aib if the subject sold is later discovered to be faulty. This indeed is very different from caveat emptor where the buyer should have done his due diligence before purchasing it. In Khiyar-al-aib, it becomes the responsibility of the seller to ensure that goods sold are fault free to avoid the purchaser from voiding a contract. ? Question 3 ( 458 words) Malaysia jurisdiction recognizes corporation as a separate entity from the owner. The corporation can be used to enter into contract as a legal entity that is entirely independent of the owner. The advantage of this setup allows the owner of the company to limit his own liability in event a contract turns sour and the innocent party is seeking damages from the owner. However, it is important to take note that not all companies incorporated in Malaysia thru the Companies Corporation of Malaysia Act 2001 have limited liability to its owner. A company may be according to (Section 14. ACT 125,COMPANIES ACT 1965) a)A company limited by shares b)A company limited by guarantee c)A company limited by both shares and guarantee d)An unlimited company Hence, for owner to have limited liability the company formed must not be an unlimited company. To the question of how much liability is an owner limited to, will depends on the paid up capital declared during the formation of the c ompany. In situations where there is more than one owner, a Memorandum of Association will be presented to clearly outline the number of shares each shareholder has and thus limiting the liability of different owners according to their shareholding. The Memorandum of Association is used to define the nominal amount of paid up capital and more importantly the division of that capital into shares to different owners if there is more than one owner. Although formation of limited company allows the owner to have limited liability, it is important to take note that the owner may not be immune to wrongdoings conducted by the company. For example, if the company has committed an offence, the director of the company can be held liable and tried for the offence committed. Interestingly enough, the owner can choose to be the sole shareholder but appoint/employ others to be the director. Islamic business grouping are done by forming either Mudaraba or Musharaka contract. A mudaraba contr act allows for a person who owns property to invest capital with someone who puts in effort or work to make profit ( Al-Suwaidi 1994, 74). In Musharaka, both will invest in capital for the partnership. The most contrasting characteristic of an Islamic form company compared to company law in Malaysia is the fact that there is no possibility to form a company with a limited liability. Above that, it is also impossible for the partners in the company to have limited liability by their share ownership. The contract law is individually oriented, and collective enterprises, such as corporations, do not enjoy legal rights distinct from the individual owners (Kuran 2004,3). Laws governing joint-stock compaies do not allow for the distribution of share options, which hinders entrepenership (Azzam 2002,64) Don’t waste time! Our writers will create an original "Judiciary of Malaysia" essay for you Create order