PRIVATE & CONFIDENTIAL

3rd August 2022

By Sumitra Woodhull

LEGAL OPINION & RESEARCH – TRANSFER OF PRIVATE CAR OWNERSHIP TO A CORPORATE ENTITY
PURSUANT TO THE LAWS OF MALAYSIA

A) Foreword

This legal opinion has been prepared in response to a query posed by the Finance
Department of IA International Assistance Sdn. Bhd. (968370-D) [‘Company’] via an e-mail
sent on 3 August 2022 by the Finance Manager, Mr. Navin Tamil Sellvan wherein queries had
been made in relation to the matter of the transfer of private car ownership to a corporate
entity pursuant to the laws of Malaysia.

B) Initial Point Of Reference – Basic Tenets of A Contract - Malaysian Contracts Act 1950

According to the Contracts Act 1950 [Act 136], in order to form a valid contract, the element
of ‘consideration’ must be present. Consideration often includes the form of monetary, or
both parties must have the obligation to give the other party something which is beneficial.
Section 26(a) of the Contracts Act 1950 renders a contract made without consideration to
be valid if it is expressed in writing and registered, and is made on account of natural love
and affection between parties standing in a near relation to each other. The meaning of
‘natural love and affection’ is not defined in the Contracts Act 1950, so reference can be
made to case laws that provide interpretations to the provision.

Reference is made to Section 26(a) of the Contracts Act 1950 which stipulates that:

“An agreement made without consideration is void, unless –

It is in writing and registered

(a) It is expressed in writing and registered under the law (if any) for the time being in force
for the registration of such documents, and is made on account of natural love and
affection between parties standing in a near relation to each other.”

In Chua Eng Wei & Anor v. Liow Eng Keong & Anor [2015] 4 CLJ 1027, the court held that
the words ‘near relatives’ refer to those who are closely related such as one’s parents,
brothers or sisters.

In Tang Meng Hock v. Tang Ming Seng [2010] 1 MLJ 33, the court held that the phrase
‘natural love and affection’ cannot be read in isolation. It must be linked to the requirement
that the parties must be ‘standing in a near relation to each other.’ In this case, both the
parties are biological brothers and they are clearly ‘standing in a near relation to each other.’

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 Cases seem to suggest that immediate family members in the same bloodline fall under the
category in Section 26(a).

In this scenario, the relationship between the private owners and the corporate entity is not
one of ‘natural love and affection’ as interpreted with reference to Section 26(a) and
therefore, there is a need for ‘consideration’ to be present.

C) Provisions In the Company’s Articles Of Association

The Company Secretary should be consulted regarding the powers of Directors of the
Company to make purchases of assets for use by the Company as enshrined in the Articles of
Association. As ‘consideration’ is to be present, this would involve a purchase of the vehicles
by the Company.

D) Transfer of Ownership Of Vehicle

 Under section 13(1) of the Road Transport Act 1987, any application of vehicle
ownership transfer should be forwarded to the respective State RTD Director within
seven (7) days of the transaction. Failure to do so, the seller and buyer can be fined
not exceeding RM1,000 or imprisoned not exceeding three (3) months or both. For
the second and consequent a fine not exceeding RM2,000 or imprisonment not
exceeding six (6) months or both.

Responsibility of the car seller

1. When you sell a vehicle, you, as the registered owner must compulsorily
inform the State RTD Director regarding the ownership transfer by filling
and signing up Section A, of the JPJ K3 Form.

2. The JPJ K3 for has to be forwarded to the buyer inclusive of other

documents as follows:

 Original vehicle registration card (RC)

 Verified photocopy of National Identity Card
 Letter of Indemnity

3. You have to confirm that ownership transfer have been registered with
RTD by the buyer within seven (7) days of the transfer. Failure to do so
will result in you prosecuted under Section 13(1) of the Road Transport
Act 1987.

Responsibility of the car buyer

1. When you are buying a used vehicle, you should get the following
documents from the seller

 JPJ K3 Form that has been filled and signed by the registered
owner

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  Verified photocopy of IC of the registered owner
 Original registration card (RC)
 Letter of Indemnity

2. You need to fill and sign the Section B, of the JPJ K3 Form

3. If you have doubts about the real identity of the vehicle, you can bring it
to PUSPAKOM for inspection before buying it.

4. The buyer has to confirm that ownership transfer has been registered
with RTD within seven (7) days of the transfer. Failure to do so will result
in you prosecuted under Section 13(1) of the Road Transport Act 1987.

Documents that are required for vehicle ownership transfer

1. Private car ownership transfer

 JPJ K3 Form that have been filled and signed by the registered
owner and new owner (buyer)
 Verified photocopy of I.C. of the registered owner and buyer or
photocopy business / company registration certificate
 Indemnity Release letter
 Original vehicle registration card (RC)
 Letter of Indemnity (if seller has taken a car loan from a
financial instruction)
 Letter of Indemnity (if buyer has taken car loan from financial
institution)
 Insurance cover note / Insurance policy on buyer’s name
 Payment

E) Concluding Remarks

In conclusion, based upon the information stated herein, the Company is advised to be
guided accordingly. The transaction involves the sale and purchase of the vehicles and
thereafter a transfer of ownership of these vehicles.