(A) Motion proposed by the Bar Council to increase subscription by RM200
INTRODUCTION
1) At the Annual General Meeting of the Malaysian Bar held on 15 March 2008, a motion (as amended) was tabled by the Bar Council to increase Members’ annual subscription by RM250.
However, the motion was not carried.
2) As a consequence, the Bar Council deliberated on additional cost cutting and income increasing exercises, some of which are detailed in the document titled “Bar Council’s Action Plan”. However, notwithstanding implementation of the measures (some of which are drastic), the Council projected that its finances would remain in deficit in 2008.
3) At the Bar Council meeting held on 5 April 2008, it was unanimously decided to convene an EGM to call on Members to assist the Bar to overcome this financial crisis.
4) After weighing the various options available, the Bar Council requests Members to support the motion to increase the annual subscription by RM200.
WHEREAS:
1) The Bar Council has exercised its powers under Section 46(1) of the Legal Profession Act 1976 to fix the amount of the annual subscription to be paid by members of the Malaysian Bar.
2) The current subscription for the Main Fund is RM350 per annum, which amount was first set by the Malaysian Bar at its annual general meeting in the year 1997.
3) In the last five (5) years (since 2002), expenditure has been more than income, resulting in increasing deficit in the Main Fund.
4) The annual deficit in the past five (5) years has had the effect of rapidly depleting the reserves in the Main Fund.
5) In spite of the various austerity and cost–saving measures put in place by the Bar Council, the income in the Main Fund is insufficient to defray the Malaysian Bar’s annual expenditure for cost items chargeable to the Main Fund.
6) The projection of the financial statement of the Bar Council after the austerity and cost–cutting measures are put in place indicates that there are only sufficient funds to defray expenses till February 2009.
THE MALAYSIAN BAR NOW RESOLVES as follows:–
Pursuant to Section 46(4) of the Legal Profession Act 1976, that the annual contribution for the Main Fund in 2008 shall be increased from RM350 to RM550, so that the total subscription payable under Section 46(1), the levies payable under Section 46(3) and the annual contribution payable under Section 80 shall henceforth be RM1,020 per annum which shall comprise the following:–
Main Fund – RM550.00Building Fund – RM100.00Legal Aid Fund – RM100.00Compensation Fund – RM100.00LawCare Fund – RM100.00Discipline Fund – RM60.00Sports Fund – RM10.00
The BC’s motion was put to a vote. It was not carried. [343 voted in favour, 251 against, and 4 abstentions].
(B) Motion proposed by Ananthasivam T and seconded by T Kuhanandan to increase subscription by RM100
PREAMBLE
The Bar Council’s (“BC”) requisition for an Extraordinary General Meeting (“EGM”) on 9 May 2008 for a motion to be adopted to increase the member’s subscription by RM200.00 after a similar motion by the BC to increase the member’s subscription by 100% to RM350.00 (original motion) was defeated at the Annual General Meeting (“AGM”) on 15 March 2008 despite the fact the RM600.00 counter proposed by the BC was also not adopted by the members at the AGM.
Thus the original rate of RM350.00 remained.
The BC is now convening this EGM to revise the rate to RM550.00 when at the AGM the Treasurer had when presenting the original motion stated that at RM500.00 or RM600.00 subscription per member, it would be insufficient to meet expenses of the Malaysian Bar which will continue to be in deficit leading to insolvency.
The Hon. Treasurer has stated on the slide presentation that for 2008, they expect to collect RM4.8 million plus per annum as subscriptions at the original rate of RM350.00.
With an increase of 100% to RM700.00, they would collect RM9.6 million per annum (14,000 members inclusive of new admission and multiply that by RM700.00 gives you RM9.8 million).
This motion was rejected by the members at the AGM.
The BC now wants the members to sanction an increase of RM200.00 per year to RM550.00 which will mean an additional RM2.8 million per annum. (Note: The above is apart from the other sources of income the BC receives)
The undersigned Proposer, having practiced as an Accountant in his previous professional life and now practicing as an Advocate & Solicitor, has perused the Annual Statement of Accounts for 2007 and wishes to propose for adoption at this forthcoming EGM the following motion which provides for an RM100.00 revision on the subscription.
The BC would receive RM1.4 million as additional income per annum plus the subscriptions of incoming new members, and this, the proposer believes shall be more than sufficient to meet the annual expenses under the Main Fund and have sufficient reserves.
(Note: The Total Collection per annum would be 14,000 x RM450.00 i.e RM6.3 million per annum)
Should the need actually arise, the Bar Council can always revert to the membership at the future AGMs for any further revision if they find it difficult to meet expenses from the Main Fund. It is suggested that the BC should not be asking the membership for additional sums merely on the anticipation of a deficit cash flow.
CURRENT DEFICIT
1) A perusal of the Statement of Accounts for 2007, shows that depreciation amounts to RM419,921.00 and this contributes to the deficit of RM452,982.00 in the Main Fund.
Depreciation is a book item for tax purposes and not a cash flow expense. The actual cash flow deficit is therefore approximately RM33,061.00 only.
2) Some of the expense items under the Main Fund can be classified or distributed to the other funds proportionately as permitted by the Legal Profession Act and this will bring about a further reduction in the declared Deficit.
IN RESPECT TO THE MOTION
Whereas:
1. The BC’s request for an increase in subscription to have to meet the increased expenditure should be considered in depth positively;
It is however:–
2. Pertinent for the amount of increase to be determined considering that the gross collection over a membership of around 14,000 plus the subscription of new members to be admitted in the ensuing years (currently the admission is about 800 per annum).
3. The rational of an RM100.00 increase is justifiable which would give the BC an additional RM1.4 million plus annually which will be more than sufficient to overcome the deficit and have a hefty surplus as reserves
Note:
(a) The BC had stated that a sum of RM2.5 million (i.e. RM3,851,668.00 less RM1,252,387.00) of the reserves has been utilized by the end of 2007. This is obtained from the BC’s Explanatory Notes on the Originating Motion at the AGM and it is from 2002 –2007.(b) The Proposer and Seconder state that with a RM1.4 million additional collection annually, there would be ample reserves (as over 10 years there would be more than RM14 million collected.(c) The Compensation Fund runs parallel to the Professional Indemnity Insurance paid by members and it would appear as if we are paying for two (2) separate schemes for a similar coverage.
5. At the same time, the levies and other charges imposed by the BC pursuant to the Legal Profession Act should be revisited and revised to lessen the burden of the members and firms. The justification to keep substantial sums in trust accounts has to be re–looked in terms of future collection. The current amount, it is submitted is more than sufficient to meet any contingencies.
6. The following factors have to be taken into consideration.
i) Members have to pay substantially higher premiums for Professional Indemnity (“PI”) with an increase in the rate for mandatory cover per lawyer and the withdrawal of the No Claims Bonus.ii) The payment for higher top–up cover of PI as mandated by various institutions.iii) Higher auditing fees for the Clients’ Account.iv) The current problems of expenditure over income where most firms are finding a heaving financial strain.v) The State Bar Committee subscription to be paid for the partners and the lawyers in the respective states.vi) It cost RM2,400.00 plus per year (subscriptions, levies and PI) to maintain a lawyer apart from the salaries, statutory payments and other essential payment benefits.
THE MOTION
THE MALAYSIAN BAR NOW RESOLVES as follows:–
1. That the annual subscription per member be revised from RM350.00 to RM450.00 and the total subscription payable under S.46(1), the levies payable under S.46(3) and annual contribution for Compensation Fund payable under S.80 Legal Profession Act 1976 (“LPA”) shall be revised and together with the payment to the Discipline Fund under S.103H LPA be maintained at RM790.00 per annum with effect from 1 January 2009, which shall be made up as follows:–
Main Fund (Annual Subscription) – RM450.00
Building Fund – RM50.00
Legal Aid Fund – RM100.00
Compensation Fund – RM50.00
Law Care Fund – RM50.00
Disciplinary Fund – RM 60.00
Sports Fund (Increase) – RM 30.00
Total – RM790.00
Richard’s proposal to amend Ananthasivam’s motion was put to the vote.
That the annual subscription per member be revised from RM350/– to RM450/–, and the total subscription payable under s.46(1), the levies payable under s.46(3) and annual contribution for Compensation Fund payable under s.80 of the Legal Profession Act 1976 (“LPA”) shall be revised and together with the payment to the Discipline Fund under s.103H LPA be maintained at RM920/– per annum with effect from 1 January 2008 which shall be made up as follows as per the motion:–
Main Fund (Annual Subscription) – RM450.00
Building Fund – RM100.00
Legal Aid Fund – RM100.00
Compensation Fund – RM100.00
LawCare Fund – RM100.00
Discipline Fund – RM60.00
Sports Fund – RM10.00
Total Levies – RM920.00
The amended motion was accepted. [326 voted in favour, 56 against].
A vote on the amended motion followed immediately thereafter. It was carried by a two–thirds majority [323 voted in favour, 51 against, and no abstentions].