Legal Tips: Starting Your E-Commerce Business

1. Register your eCommerce Business

First of all, before engaging in any business, you must determine what kind of business entity you want to form. Which type of entity is the most suitable will largely depend on the size, nature, and the needs of your business.

In Malaysia, there are generally 4 different types of entity, namely:

 

  • Sole Proprietorship: A business solely owned by a single individual using a personal name or trade name
  • Partnership: Same as a sole proprietorship, except there are more than one owner
  • Private Limited Company (Sdn. Bhd.): A separate legal entity formed by several persons that can own property and enter into contracts
  • Limited Liability Partnership (LLP): A hybrid between a private limited company and a partnership

Every online business is required to register with the Companies Commissions of Malaysia (SSM). Failure to do so may make you be liable for an offence under the Registration of Business Act 1956, which carries a penalty up to RM50,000, or an imprisonment up to 2 years.

 

2. Set out clear eCommerce Terms & Conditions (T&C)

Online T&C forms a contract between you and your customers.

 

Engaging a good lawyer is important as they will help you to set up clear T&C that suit your online business and protect you from liabilities and potential disputes.

In creating online business, you should also be aware of the legal requirements under the Consumer Protection (Electronic Trade Transactions) Regulations 2012. This regulation requires online business owners to disclose certain information on their websites, including:

 

  • Name of the business and the registration number (if any)
  • Email address and telephone number
  • Descriptions of the main characteristics of the goods and services
  • Full price of the goods and services including transportation costs and taxes
  • The method(s) of payment
  • Terms and conditions, and estimated time of delivery

3. Aware of your obligations under the data protection laws

In Malaysia, the Personal Data Protection Act 2010 (PDPA) sets out how you should collect, use and handle personal and sensitive of your customers and suppliers.

 

This includes information such as names, contact details, NRIC numbers, and passport numbers.

It should be note that the failure to comply with the PDPA could have serious consequences. It could result in unlawful release of your online customers’ data, and consequently, you may commit an offence which is liable for a fine, or even imprisonment.

 

4. Protect your Intellectual Property (IP)

If your online business involves an original creation, a product design, logo, or an invention, you may want to protect them from being stolen or copied by the others.

 

There are usually 4 types of IP protection – copyright, trademark, designs and patent. Each type of IP is different and has different regulations that govern them. For example, if your business brand has a logo which you want to use them exclusively, you may want to register them under the Trademarks Act.

 

Putting together all these can be a daunting process, so it is advisable that you seek a Commercial Lawyer to assist you in the process of setting up your eCommerce business. In doing so, you will be more aware of your legal rights and responsibilities, and it can save you from disputes and liability in the long run.

 

Disclaimer: This article is written by ZY Ho. The above article is intended for general informational and education purposes only and not for the purpose of providing legal and professional advice. Need further information? Contact members of Chern & Co. at info@chernco.com.my.

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