Thursday, May 15, 2008

Active Directors of Consulting Engineering Firm & Treasury Registration

Back in around 2003/2004 (i think), I was drafted into a working group (WG) convene by the board of engineers malaysia (BEM) to look into the issue of definition of 'active' directors and treasury condition for registration.

The original initiative was by Dato' Ir. Dr. Abdul Rashid who was (at that time, during the tenure of Dato' Zaini) a board member of BEM & council member of ACEM. The reasons for this WG:

1) Treasury registration for consultant company include the onerous condition where all directors must be 'active'
2) Since the govt is a major user of consulting services, treasury registration for consulting firms is therefore a major issue.
3) However, current BEM definition of 'active' means that the director must lodge his license to sign in the particular company of which he is 'active'. Professional engineers are allowed to be share holder and directors in more than one consulting company but they are only allowed to be 'active' in one company.
4) In current trend of globalisation and 'going up the economic ladder' for our country, the service sector is an important sector for nurturing by the govt. Building capacity is one initiative towards growing this sector. However in capacity building, directors of consulting company will find themselves having cross-holding shares in multiple companies. Many companies will find themselves affected due to their treasury registration which cannot be ignored.
5) When the WG was convened, it was felt that,
a) treasury condition on 'active directors' is an impediment to capacity building for many consulting company. The principle reason for the wg was to address this issue.
I certainly agree with this agenda!
Note: many members may not be aware that registration with treasury is a REQUIREMENT if you intend to take on federal/state govt projects. Many members have this idea that registration with treasury is only restricted to bumiputra company. THIS IS NOT TRUE. Non-bumiputra and even foreign company can register with treasury. However the particular govt agency awarding project MAY impose conditions on bumiputra participation or the % of bumiputra shareholding. Thus NOT registering with treasury is a SERIOUS MARKETING MISTAKE by ANY company. However the impediment to registration is that ALL directors MUST BE ACTIVE.

b) there were some difference in opinion by members as to whether it would be wise to change bem definition of 'active'; i.e. do you allow engineers to be 'active' in more than 1 company? Some members feel bem definition of 'active' unnecessarily "tie-up" our members restricting expansion (for ambitious engineers). The more conservative (wg) members reminded that the original definition of 'active' was instituted back in the 1980s when engineering failures were attributed to engineers who were over extended.
Note: Though I am somewhat neutral on this issue, I find that most senior engineers are against whilst younger engineers are for redefining 'active' by allowing engineers to be 'active' in more than 1 company

The BEM is currently convening this WG again. While I am not at liberty to post the working papers on this blog, I would certainly welcome comments and feedback on this issue.