International law firms have been given the go-ahead to open offices in Malaysia after amendments to the Legal Profession Act officially came into force on June 3.

The changes, which were passed by the Malaysian parliament last year and have finally become law this month, are the first steps by the country to liberalise its legal market, a process which the local bar says will be "gradual and progressive".

Under the new rules, five foreign outfits are now permitted to hold Qualified Foreign Law Firm (QFLF) licences, allowing them to hire Malaysian lawyers who can practice local law in selected areas, so long as the Malaysian professionals make up at least 30% of the office's fee-earners.

Also allowed are joint law ventures between foreign and local firms known as an International Partnerships (IP), where the name of the IP must be a combination of the two firm brands and the Malaysian outfit needs to have at least 60% of the equity and voting rights and number of lawyers.

Licences for IPs and QFLFs are valid for three years and renewable, but those applying for QFLFs are required to submit a business plan showing expertise in international Islamic finance work and a willingness to support the government's Malaysian International Islamic Finance Centre (MIFC) initiative.

Malaysian law firms are meanwhile able to hire international lawyers, on the condition that the number of foreigners does not exceed 30% of the partnership.

So far one UK law firm has applied for a QFLF, while two other firms have made inquiries about how to proceed with an application.

Firm names have not been announced, but those to have expressed an interest in the country in the past include Allen & Overy, Norton Rose Fulbright, Herbert Smith Freehills and Trowers & Hamlins; the latter having opened a non-trading representative office in Kuala Lumpur in 2012 and previously confirmed its intention to apply for the QFLF.

For those who choose not to open an office on the ground, the revised regulations still allow them to advise Malaysian clients in the country on a 'fly-in fly-out' basis, so long as their stay does not exceed 60 days per lawyer, per calendar year.

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