LAWS OF MALAYSIA

Act 758

Financial Services Act 2013

Date of Royal Assent 18 Mar 2013

Date of publication in the Gazette 22 Mar 2013

An Act to provide for the regulation and supervision of financial
institutions, payment systems and other relevant entities and the
oversight of the money market and foreign exchange market to
promote financial stability and for related, consequential or
incidental matters.

[30 June 2013,
except s.129 and Schedule 9.]

PU(B) 276/2013.

ARRANGEMENT OF SECTIONS

PART I

PRELIMINARY

1. Short title and commencement

2. Interpretation

3. Prescription by Minister of additional business or activity

4. Prescription by Bank of additional agreement, dealing, transaction or
person

5. Classification of, and construction of references to, insurance
business

PART II

REGULATORY OBJECTIVES AND POWERS AND
FUNCTIONS OF BANK

6. Regulatory objectives

7. Powers and functions of Bank

PART III

AUTHORIZATION AND REGISTRATION

Division 1

Page 1 of 180

Authorized business

8. Authorized business to be carried on by authorized person

9. Application for authorization

10. Grant of licence by Minister

11. Approval by Bank

12. Requirements on minimum capital funds or surplus of assets over
liabilities

13. Additional conditions of licence or approval

Division 2

Restriction on dealings of authorized persons

14. Authorized person to carry on authorized business only

15. Authorized person and operator of designated payment system
permitted to carry on certain Islamic financial business

16. Licensed insurer to carry on life or general business

Division 3

Registered business

17. Registered business to be carried on by registered person

18. Registered person to comply with standards

Division 4

Representative office

19. Requirements for representative office

Division 5

Revocation, deregistration, surrender or cessation of business or
operations

20. Grounds for revocation of authorization

21. Grounds for deregistration

22. Surrender of licence or notification on cessation of business or
operations

23. Effect of revocation, deregistration, surrender, notification on
cessation of business or operations, and expiry

Division 6

General matters

24. Form of establishment

25. Establishment or relocation of office of authorized persons

26. Fees

27. Publication of names of authorized persons and registered persons

28. Holding out as authorized person or registered person

29. Acting on behalf of unlicensed person

PART IV

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PAYMENT SYSTEMS

Division 1

Designation of payment systems and payment instruments

30. Designation and revocation of designation of payment systems

31. Designation of payment instruments

Division 2

Requirements for operation of payment systems and issuance of
designated payment instruments

32. Application of this Act on payment systems

33. Power of Bank to specify standards for payment systems

34. Direction to participants of designated payment system

35. Operational arrangements

36. Power of Bank to inspect

Division 3

Finality of payment and netting arrangement

37. Interpretation

38. Power of Bank to issue certificate of finality

39. Revocation of certificate of finality

40. Application of this Division

41. Transfer order made after appointment of insolvency administrator

42. Finality of payment and netting arrangement

43. Preservation of rights

44. Non-recognition of insolvency order by foreign court

45. Requirement to notify in event of insolvency, etc.

PART V

PRUDENTIAL REQUIREMENTS

46. Interpretation

Division 1

Standards on prudential matters

47. Power of Bank to specify standards on prudential matters

48. Institution, director and officer to comply with standards

49. Registered operator of payment system to comply with standards

50. Single counterparty exposure limit for licensed person

51. Restriction on payment of dividend by licensed person

52. Maintenance of assets in Malaysia by licensed person

Division 2

Corporate governance

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53. Interpretation

54. Chairman, directors and chief executive officer of institution

55. Requirements to be chairman, director, chief executive officer or
senior officer

56. Functions and duties of board of directors

57. Duties of directors

58. Duty to disclose interests in material transaction or material
arrangement

59. Disqualifications

60. Fit and proper requirements

61. Cessation from office

62. Notice of cessation from office

Division 3

Transparency requirements

63. Interpretation

64. Maintenance of accounting records and information

65. Compliance with approved accounting standards

66. Publication of financial statements

Division 4

Auditors

67. Appointment of auditor by institution

68. Appointment of auditor by Bank

69. Duties of auditor

70. Notice of cessation as auditor

71. Information to be provided to auditor

72. Reporting obligations of auditor

73. Qualified privilege and duty of confidentiality

Division 5

Appointed actuaries

74. Appointment of actuary by licensed insurer

75. Appointment of actuary by Bank

76. Duties of appointed actuary

77. Cessation as appointed actuary

78. Notice of cessation as appointed actuary

79. Information to be provided to appointed actuary

80. Qualified privilege and duty of confidentiality

Division 6

Insurance funds

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81. Establishment and maintenance of insurance funds

82. Requirements relating to insurance funds

83. Withdrawal from insurance funds

84. Assumption of risk

Division 7

Subsidiaries

85. Establishment or acquisition of subsidiaries and acquisition or
holding of material interest in corporation

PART VI

OWNERSHIP, CONTROL AND TRANSFER OF BUSINESS

86. Application and non-application

Division 1

Interest in shares of licensed person

87. Acquisition of interest in shares requiring approval

88. Control over licensed person prohibited in some cases

89. Disposal of interest in shares requiring approval

90. Application procedures for section 87, 88 or 89

91. Power of Bank to specify standards on shareholder suitability

92. Maximum permissible holdings

93. Notification on acquisition or disposal of interest in shares of
licensed person

Division 2

Action by Bank in event of breach

94. Order against defaulting persons

95. Additional provisions relating to order under subparagraph 94(2)(a)
(v)

Division 3

Interest in shares of approved person

96. Interpretation

97. Acquisition of interest in shares of approved person

Division 4

Transfer of business, reconstruction or amalgamation of licensed
person

98. Interpretation

99. Approval required for reconstruction or amalgamation of licensed
person

100. Approval required for business transfer scheme

101. Notification of business transfer scheme

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102. Application to High court for confirmation of business transfer
scheme

103. Bank to be party to proceedings

104. Orders sought by transferor and transferee

105. Publication of court order under section 102

106. Reimbursement of Bank’s expenses

107. Prohibition of payment out of insurance fund

PART VII

FINANCIAL GROUPS

108. Purpose of this part

109. Disapplication of sections 110 and 111 to licensed persons

110. Application to be financial holding company

111. Power of Bank to require submission of application

112. Approval of application as financial holding company under section
110 or 111

113. Bank may approve more than one financial holding company

114. Business of financial holding company

115. Prudential requirements on financial holding company and
subsidiaries

116. Power to issue directions to financial holding company and
subsidiaries

117. General provisions dealing with directions

118. Consequences for failing to comply with directions

119. Additional provisions relating to paragraph 116(3)(e)

120. Power to remove director or chief executive officer of financial
holding company

PART VIII

BUSINESS CONDUCT AND CONSUMER PROTECTION

Division 1

Interpretation

121. Interpretation

Division 2

Business conduct, complaints, disputes, etc.

122. Application

123. Standards on business conduct

124. Prohibited business conduct

125. Approved insurance broker, approved financial adviser and approved
issuer of designated payment instrument to establish customer
account

126. Financial ombudsman scheme

Page 6 of 180

Division 3

Insurance issues

127. Obtaining insurance outside Malaysia

128. Provisions relating to policies

129. Pre-contractual disclosure and representations, and remedies for
misrepresentations

130. Payment of policy moneys under life policy and personal accident
policy

Division 4

Information and secrecy

131. Interpretation

132. Restriction on inquiring specifically into affairs of particular
customer

133. Secrecy

134. Permitted disclosures

Division 5

Restrictions relating to consumer protection

135. Application of this Division

136. Deposit

137. Restriction on accepting deposits

138. Advertisements for deposits

139. Restriction on use of certain words

PART IX

MONEY MARKET AND FOREIGN EXCHANGE MARKET

140. Power of Bank to specify standards or issue codes

141. Prohibited conduct in money market and foreign exchange market

142. Arrangement with relevant supervisory authority

PART X

SUBMISSION OF DOCUMENT OR INFORMATION

143. Submission of document or information to Bank

144. Submission of statistical information, etc.

145. Secrecy requirements under sections 143 and 144 not to apply

PART XI

EXAMINATION

146. Examination of authorized person, etc.

147. Duty to provide access to, and produce documents, information, etc.

148. Examination of other persons

149. Appearance before Bank

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150. Examination or assessment by auditor or actuary

151. Confidential information

152. Examination by relevant overseas supervisory authority

153. Disclosure of information by Bank to relevant overseas supervisory
authority

PART XII

DIRECTIONS OF COMPLIANCE

154. Interpretation

155. Circumstances for exercising power to issue directions

156. Power to issue directions to institution

157. General provisions dealing with directions

158. Consequences of failing to comply with directions

159. Additional provisions relating to paragraph 156(2)(b)

PART XIII

INTERVENTION AND REMEDIAL ACTION

160. Application of this Part to member institution

Division 1

Removal of director, chief executive officer or senior officer

161. Interpretation

162. Power to remove director, chief executive officer or senior officer

163. Provisions relating to removal

Division 2

Power to take intervention and remedial action

Subdivision 1 - Circumstances for exercising intervention and
remedial action

164. Interpretation

165. Circumstances for exercise of Bank’s power

Subdivision 2 - Assumption of control

166. Interpretation

167. Power to assume control

168. Effect of assumption of control

169. Information and facilities

170. Additional provisions relating to assumption of control

Subdivision 3 - Power to appoint receiver and manager

171. Interpretation

172. Appointment of receiver and manager by Bank

173. Appointment of receiver and manager by persons other than Bank

174. Provisions in relation to appointment of receiver and manager

Page 8 of 180

Subdivision 4 - Compulsory transfer of business, assets or liabilities

175. Interpretation

176. Order for compulsory transfer of business, assets or liabilities

177. Additional provisions relating to compulsory transfer

178. Continuity obligations

Subdivision 5 - Provisions relating to bridge institution

179. Designation of bridge institution

180. Publication of notice

181. Bridge institution authorized to carry on business

182. Bridge institution not liable for past obligations in respect of officers

183. Stay in respect of bridge institution

184. Financial assistance to bridge institution

Subdivision 6 - Restructuring of share capital

185. Interpretation

186. Power to reduce share capital of institution

Subdivision 7 - Financial assistance

187. Interpretation

188. Liquidity or financial assistance to institution

Subdivision 8 - Moratorium

189. Interpretation

190. Application for moratorium

Division 3

Winding up

Subdivision 1 - General provisions on winding up

191. Interpretation

192. Application of Companies Act 1965 in relation to winding up of
institution

193. Bank to apply for winding up

194. Restriction on voluntary winding up

195. Winding up by High court on application by persons other than Bank

196. Appointment and remuneration of liquidator

197. Control of liquidator

198. Statement of affairs

199. Offences by officers of institution

Subdivision 2 - Provisions specific to licensed insurers

200. Valuation of assets and liabilities

201. Termination of insurance policy

202. Waiver of strict proof of debt

Page 9 of 180

203. Prohibition against issuance of policy

204. Continuation of life business

Subdivision 3 - Priority of payments in winding up

205. Priority of payments in winding up of licensed investment bank

206. Priority of payments in winding up of licensed investment bank
carrying on Islamic banking business

207. Application of insurance fund in winding up

Division 4

General provisions in relation to actions taken by Bank

208. Power of Bank to take action under this Part

209. Qualified financial agreement

210. Assessor committee

PART XIV

OTHER POWERS OF BANK

Division 1

Regulation of prescribed financial institutions

211. Interpretation

212. Power of Minister to prescribe financial institutions

Division 2

International and domestic transactions

213. Interpretation

214. Measures relating to international and domestic transactions

215. Power of Bank to impose levies or charges

216. Power of Bank, with approval of Minister, to issue directions

Division 3

Holiday for licensed person

217. Power of Minister to declare holiday for licensed person

PART XV

ENFORCEMENT AND PENALTIES

Division 1

Investigation powers

218. Investigation by Bank

219. Appointment of investigating officer

220. Powers of investigating officer

221. Powers of entry, search and seizure with warrant

222. Powers of entry, search and seizure without warrant

223. List of seized property, etc.

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224. Release of seized property, etc.

225. Search of person

226. Obstruction to exercise of powers by investigating officer

227. Requirement to provide translation

228. Power to examine persons

229. Service of orders or notices generally, etc.

230. Surrender of travel documents

231. Agent provocateur

232. Assistance to police or other public officer

233. Investigating officer deemed to be public servant and public officer

Division 2

Administrative actions

234. Power of Bank to take action

235. Lodgment of amount not distributed with Registrar of Unclaimed
Moneys

236. Power of Bank to prescribe monetary penalty

237. Application for appeal of decisions

238. Monetary penalty Review committee

Division 3

Civil actions

239. Civil action by Bank

240. Orders by court

241. Civil action to seek compensation

242. Interim orders

243. Contravention of court order

244. No undertaking as to damages

245. Other actions

246. Evidence obtained in investigations may be used in civil proceedings

Division 4

Criminal offences

247. Imprisonment

248. Offences in relation to entries in documents

249. Offence committed by any person acting in official capacity

250. Offence by employees, etc.

251. Seizable offence

252. Duty of investigating officer to make over arrested person to police

253. Power to compound

254. Attempts, abetments and conspiracies

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255. Prosecution

Division 5

General matters

256. Protection in relation to disclosure of information to Bank

257. Evidential provision

258. Power of Bank to publish information

PART XVI

GENERAL PROVISIONS

259. Enforceable undertakings

260. Regulations

261. Provisions relating to approvals, consents, standards, codes,
specifications, notices, requirements, directions or measures

262. Opportunity to make representations

263. Exemptions

264. Power of Minister to amend Schedule

265. Decision of Minister to be final

266. Power of Bank to issue guidance

267. Protection against suits and legal proceedings

268. Application of Companies Act 1965

269. Application of certain provisions of Act to labuan entities

270. Breach or contravention not to affect contract, agreement or
arrangement

PART XVII

REPEAL, SAVINGS AND TRANSITIONAL

271. Repeal

272. Savings and transitional

273. Savings in respect of licences granted under repealed Acts

274. Savings in respect of Islamic financial business

275. Savings and transitional provision in respect of specific provisions of
repealed Insurance Act 1996

276. Conversion to single insurance business

277. Designated payment systems deemed certified

278. Savings in respect of approvals granted, notification given and
prescription made under repealed Payment Systems Act 2003

279. Savings in respect of interest in shares

280. Savings in respect of financial holding company

281. Savings in respect of deposits accepted by co-operative societies

SCHEDULE 1

SCHEDULE 2

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SCHEDULE 3

SCHEDULE 4

SCHEDULE 5

SCHEDULE 6

SCHEDULE 7

SCHEDULE 8

SCHEDULE 9

SCHEDULE 10

SCHEDULE 11

SCHEDULE 12

SCHEDULE 13

SCHEDULE 14

SCHEDULE 15

SCHEDULE 16

PART I

PRELIMINARY

Short title and
commencement

1.   (1)   This Act may be cited as the Financial services Act 2013.

  (2)   This Act comes into operation on a date to be appointed by the
Minister by notification in the Gazette and the Minister may appoint
different dates for the coming into operation of different parts or
different provisions of this Act.

Interpretation 2.   (1)   In this Act, unless the context otherwise requires—

   “adjuster” means a person who carries on adjusting business;

   “adjusting business” means the business of investigating the cause
and circumstances of a loss and ascertaining the quantum of the loss
in relation to insurance or takaful claims;

   “advertisement” means the disseminating or conveying of
information, invitation or solicitation by any means or in any form
including oral and written communication by means of print,
electronic and any other media;

   “agreement” means an agreement whether formal or informal, oral
or written, express or implied;

   “annuity” means the right to a series of periodical payments at
intervals of one year or less under a contract with a life insurer;

   “annuity certain” means an annuity where the duration of periodic
payments is pre-determined and does not depend on the death or
survival of the policy owner;

   “applicant” means—

(a) in Part III and Schedule 5, the person who submits, on its own

Page 13 of 180

behalf or through an advocate, a secretarial firm or other duly
authorized representative, the application for authorization
under section 9;

(b) in Part VI and Schedule 6, the person who submits, on its
own behalf or through an advocate, a secretarial firm or other
duly authorized representative, the application for approval
under that part; or

(c) in Part VII, the person who submits the application to be a
financial holding company or proposes another company to
be a financial holding company;

   “appointed actuary” means an actuary appointed by a licensed
insurer under subsection 74(1) or by the Bank under section 75;

   “appointed date” in respect of any provision under this Act, means
the date appointed by the Minister under subsection 1(2) as the date
for the coming into operation of that provision;

   “approved business” means any business set out in Division 1 of
Part 1 of Schedule 1;

   “approved financial adviser” means a person approved under
section 11 to carry on financial advisory business;

   “approved insurance broker” means a person approved under
section 11 to carry on insurance broking business;

   “approved issuer of a designated payment instrument” means a
person approved under section 11 to issue a designated payment
instrument;

   “approved money-broker” means a person approved under section
11 to carry on money-broking business;

   “approved operator of a payment system” means a person
approved under section 11 to operate a payment system set out in
paragraph 1 of Division 1 of Part 1 of Schedule 1;

   “approved person” means a person approved under section 11 to
carry on an approved business;

   “approved representative office” means a representative office in
Malaysia of a foreign institution approved by the Bank under
subsection 19(4);

   “arrangement” means an arrangement whether formal or informal,
oral or written, express or implied;

   “associate corporation” means a corporation in which not less than
twenty per cent but not more than fifty per cent of the voting shares
of that corporation are held by another corporation, where the first-
mentioned corporation is an associate corporation of the other
corporation;

   “authorization” means the grant of a licence under section 10 or
the grant of an approval under section 11;

   “authorized business” means a licensed business or an approved
business;

   “authorized person” means a person licensed under section 10 or
approved under section 11 to carry on an authorized business;

Act 701.    “Bank” has the same meaning as defined in subsection 2(1) of the
Central Bank of Malaysia Act 2009 [Act 701];

Page 14 of 180

   “banking business” means—

(a) the business of—

(i) accepting deposits on current account, deposit account,
savings account or other similar account;

(ii) paying or collecting cheques drawn by or paid in by
customers; and

(iii) provision of finance; and

(b) such other business as prescribed under section 3;

Act 125.    “books” has the same meaning assigned to it in subsection 4(1) of
the Companies Act 1965 [Act 125];

   “bridge institution” means a body corporate established or acquired
by the Bank, and designated as a bridge institution under subsection
176(1);

   “business transfer scheme” means a scheme of transfer for banking
business, investment banking business or insurance business;

   “chief executive officer”, in relation to—

(a) a body corporate or unincorporate, means an individual,
however styled, who, either individually or jointly with one or
more other persons, is responsible under the authority of the
directors, for the conduct of the business and the
administration of such body; or

(b) an authorized person which is established as a branch in
Malaysia, means an officer principally responsible for the
business of the branch in Malaysia;

   “child” includes an illegitimate child, a step-child and a child
adopted under any written law of Malaysia or of any place outside
Malaysia, or under a custom recognized by a class, category or
description of persons in or outside Malaysia;

   “company” has the same meaning assigned to it in subsection 4(1)
of the Companies Act 1965;

Act 56.    “computer” has the same meaning assigned to it in section 3 of the
Evidence Act 1950 [Act 56];

   “computer output” means a statement or representation, whether in
written, printed, pictorial, film, graphical, acoustic or other form—

(a) produced by a computer;

(b) displayed on the screen of a computer; or

(c) accurately translated from a statement or representation so
produced;

   “constituent document” has the same meaning assigned to it in
subsection 2(1) of the Central Bank of Malaysia Act 2009;

   “corporate group” means a group of corporations which are related
to each other;

   “corporation” has the same meaning assigned to it in subsection 4
(1) of the Companies Act 1965;

Act 502.    “co-operative society” has the same meaning assigned to it in
section 2 of the co-operative societies Act 1993 [Act 502];

   “credit facility” means—

Page 15 of 180

(a) the giving of any advance, loan or other facility in whatever
form or by whatever name called;

(b) the giving of a guarantee; or

(c) any other dealing or transaction as prescribed under section 4;

   “deposit” means a sum of money accepted or paid on terms under
which it will be repaid in full, with or without interest or any other
consideration in money or money’s worth, either on demand or at a
time or in circumstances agreed by or on behalf of the person
making the payment and the person accepting it, but excludes money
paid bona fide—

(a) by way of an advance or a part payment under a contract for
the sale, hire or other provision of property or services, and is
repayable only in the event that the property or services are
not in fact sold, hired or otherwise provided;

(b) by way of security for the performance of a contract or by
way of security in respect of any loss which may result from
the non-performance of a contract;

(c) without limiting paragraph (b), by way of security for the
delivery up or return of any property, whether in a particular
state of repair or otherwise; and

(d) in such other circumstances, or to or by such other person, as
set out in Schedule 2;

   “depositor” means a person entitled to the repayment of a deposit,
whether the deposit was made by him or any other person;

   “derivative” means any agreement, including an option, a swap,
futures or forward contract, whose market price, value, delivery or
payment obligations is derived from, referenced to or based on, but
not limited to, securities, commodities, assets, rates (including
interest rates or exchange rates) or indices;

   “designated payment instrument” means a payment instrument
prescribed as a designated payment instrument under section 31;

   “designated payment system” means a payment system prescribed
as a designated payment system under subsection 30(1);

   “director” includes any person who occupies the position of a
director, however styled, of a body corporate or unincorporate, and
includes—

(a) a person in accordance with whose directions or instructions
the directors or officers of the body are accustomed to act;

(b) an alternate or substitute director; or

(c) in particular, without limiting the foregoing, in the case of—

(i) a corporation, has the same meaning assigned to it in
subsection 4(1) of the Companies Act 1965;

(ii) a co-operative society, means a member of the board, or
other governing body howsoever called, of the co-
operative society;

(iii) a statutory body, means a member of the board,
committee, council or other governing body howsoever
called, of the statutory body;

(iv) a partnership, means a partner;

Page 16 of 180

(v) a sole proprietorship, means the sole proprietor; and

(vi) any other body, association or group of persons, whether
corporate or unincorporate, means any person having the
direction and control of the management of its affairs or
business;

   “document” has the same meaning assigned to it in section 3 of the
Evidence Act 1950 and includes books;

   “electronic money” means any payment instrument, whether
tangible or intangible, that—

(a) stores funds electronically in exchange of funds paid to the
issuer; and

(b) is able to be used as a means of making payment to any
person other than the issuer;

   “electronic terminal” means an electronic device, operated by or on
behalf of an authorized person or a registered person, through which
a person may initiate an electronic fund transfer, and includes a
point-of-sale terminal, automated teller machine or cash or cheque
deposit machine;

   “factoring business” means—

(a) the business of acquiring debts due to any person; and

(b) such other business as prescribed under section 3;

   “financial adviser’s representative” means an individual, however
styled, in the direct employment of, acting for or by arrangement
with an approved financial adviser, who performs for the financial
adviser any services relating to financial advisory business;

   “financial advisory business” means any of the following:

(a) analyzing the financial planning needs of a person relating to
an insurance product;

(b) recommending an appropriate insurance product to a person;

(c) sourcing an insurance product from a licensed insurer for a
person;

(d) arranging of a contract in respect of an insurance product for
a person; or

(e) such other business, service or activity in relation to a
financial service as prescribed under section 3;

   “financial group” means a financial holding company and a group
of related corporations under such financial holding company
primarily engaged in financial services or in other services in
connection with or for the purposes of such financial services which
includes at least one licensed person;

   “financial holding company” means a company which—

(a) holds an aggregate of more than fifty per cent of interest in
shares of a licensed person, or has an aggregate interest in
shares of fifty per cent or less but has control over a licensed
person; and

(b) has obtained the approval of the Bank pursuant to subsection
112(3) to be a financial holding company of such licensed
person;

Page 17 of 180

   “financial year” has the same meaning assigned to it in subsection
4(1) of the Companies Act 1965;

   “foreign company” has the same meaning assigned to it in
subsection 4(1) of the Companies Act 1965;

   “foreign currency” means any currency other than ringgit;

   “foreign institution” means a foreign company, not being an
authorized person or a registered person, which carries on any
business outside Malaysia which corresponds, or is similar, to the
business of any authorized person or registered person, whether or
not such person has an approved representative office;

   “foreign insurer” means an insurer incorporated outside Malaysia;

   “Governor” and “Deputy Governor” have the same meaning
assigned to them in subsection 2(1) of the Central Bank of Malaysia
Act 2009;

   “holding company” has the same meaning assigned to it in section
5 of the Companies Act 1965;

   “individual” means a natural person;

   “insurance” includes reinsurance;

   “insurance agent” means a person who does all or any of the
following:

(a) solicits or obtains a proposal for insurance on behalf of an
insurer;

(b) offers or assumes to act on behalf of an insurer in negotiating
a policy; or

(c) does any other act on behalf of an insurer in relation to the
issuance, renewal or continuance of a policy;

   “insurance broker” means a person who, as an independent
contractor, carries on insurance broking business and includes a
reinsurance broker;

   “insurance broking business” means the business of soliciting,
negotiating or procuring a policy with an insurer, or the renewal or
continuance of the policy by a person, for a policy owner other than
for himself and includes reinsurance broking for an insurer;

   “insurance claim” means a demand for payment of an amount due
under a policy;

   “insurance fund” means an insurance fund established and
maintained under section 81;

   “insurer” includes a professional reinsurer;

   “interest in shares” shall be construed as set out in Schedule 3;

Act 759.    “investment account” has the same meaning assigned to it in
subsection 2(1) of the Islamic Financial Services Act 2013 [Act 759];

   “investment banking business” means—

(a) the business of—

(i) accepting deposits on deposit account; and

(ii) provision of finance;

Act 671. (b) any regulated activity carried on pursuant to a Capital

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Markets Services licence under the Capital Markets and
Services Act 2007 [Act 671]; and

(c) such other business as prescribed under section 3;

   “investment company” has the same meaning assigned to it in
subsection 319(1) of the Companies Act 1965;

   “investment-linked policy” means a contract of insurance on
human life or an annuity where the benefits are, wholly or partly, to
be determined by reference to units, the value of which is related
to—

(a) the income from property of any description; or

(b) the market value of such property;

   “issuer” means any person, acting alone or under an arrangement
with another person, who undertakes to be responsible for the
payment obligation in respect of a payment instrument resulting
from a user being issued with or using the payment instrument;

   “leasing business” means—

Act 212. (a) the business of letting or sub-letting movable property on hire
for the purpose of the use of such property by the hirer or any
other person in any business, trade, profession or occupation
or in any commercial, industrial, agricultural or other
economic enterprise whatsoever and, where the lessor is the
owner of the property, regardless whether the letting is with
or without an option to purchase the property, but excludes
the business of hire-purchase which is subject to the Hire-
Purchase Act 1967 [Act 212] and for the purpose of this
definition, “movable property” includes any plant, machinery,
equipment or other chattel attached or to be attached to the
earth or fastened or to be fastened, permanently or otherwise,
to any thing attached to the earth; and

(b) such other business as prescribed under section 3;

   “liabilities” includes debts or obligations of every kind, whether
present or future, or whether vested or contingent;

   “licence” means a licence granted under section 10;

   “licensed bank” means a person licensed under section 10 to carry
on banking business;

   “licensed business” means banking business, insurance business or
investment banking business;

   “licensed insurer” means a person licensed under section 10 to
carry on insurance business;

   “licensed investment bank” means a person licensed under section
10 to carry on investment banking business;

   “licensed person” means a person licensed under section 10 to
carry on a licensed business;

   “life business” means the business of undertaking liability under a
life policy;

   “life policy” means a policy by which payment of policy moneys is
insured on death or survival, including extensions of cover for
personal accident, disease or sickness and includes an annuity but
excludes a personal accident policy;

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Act 720.    “Malaysia Deposit Insurance Corporation” means the Malaysia
Deposit Insurance Corporation referred to in the Malaysia Deposit
Insurance Corporation Act 2011 [Act 720];

   “Malaysian policy” means a policy which is issued in Malaysia by
a licensed insurer and is—

(a) a life policy where the policy owner’s address, as specified in
the policy or any other address subsequently notified in
writing by the policy owner to the insurer, is or was an
address in Malaysia;

Act 53. (b) a general policy which relates to risks arising in Malaysia, or
where the policy owner is a resident of, or a permanent
establishment in, Malaysia within the meaning of the Income
Tax Act 1967 [Act 53]; or

(c) a reinsurance contract with another licensed insurer;

   “market participant” means any person who—

(a) issues, sells, purchases, repurchases, borrows, lends or
otherwise deals with currencies or other financial instruments
traded in the money market or foreign exchange market
including over-the-counter derivatives whose price, value or
payment obligations are derived from, referenced to or based
on interest rates or exchange rates; or

(b) arranges transactions in the money market or foreign
exchange market as an intermediary,

whether acting as a principal or an agent, and includes any other
persons as prescribed under section 4;

   “member”, in relation to a body corporate or unincorporate which
is—

(a) a corporation, means a shareholder;

(b) a co-operative society, means a member of the co-operative
society;

(c) a partnership, means a partner;

(d) any other body corporate having a membership, means a
member of the body; and

Act 335. (e) a society registered under the Societies Act 1966 [Act 335],
means a member of the society;

   “merchant acquiring services” means a business of an operator of a
payment system that enters into a contract with a merchant for the
purpose of accepting payment instruments for payment of goods or
services;

   “Minister” means the Minister for the time being charged with the
responsibility for finance;

   “money-broking business” means the business of arranging
transactions between buyers and sellers in the money market or
foreign exchange market as an intermediary in consideration of
brokerage fees paid or to be paid, but excludes the buying or selling
of Malaysian currency or foreign currencies as a principal in such
markets;

   “office” refers to a place where or at which any business of any
person is carried out, including the head office in Malaysia, or any
other office, a branch, an agency (except for an insurance agency in

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the case of a licensed insurer), a mobile place of business, a place of
business set up and maintained for a limited period only or an
electronic terminal;

   “officer”, in relation to a body corporate or unincorporate, includes
any employee or the chief executive officer of the body corporate or
unincorporate;

   “operator” means any person, acting alone or under an
arrangement with another person, responsible for the rules,
procedures and operations of a payment system;

   “operator of a designated payment system” means any person who
operates a designated payment system;

   “participant” means any person who is permitted by the rules
governing a payment system to send payment instructions or
settlement instructions to the payment system and who is bound by
the rules governing the payment system;

   “participating life policy” means a life policy conferring a right to
the policy owner to participate in allocations, of which the amount or
timing is at the discretion of the insurer, from the assets of an
insurance fund under subsection 81(2);

   “payment instruction” or “settlement instruction”, in relation to a
payment system, includes an instruction to transfer, clear or settle
transactions in funds or securities, as the case may be;

   “payment instrument” means any instrument, whether tangible or
intangible, that enables a person to obtain money, goods or services
or to make any payment;

   “payment system” means any system or arrangement for the
transfer, clearing or settlement of funds or securities;

   “person” includes an individual, any corporation, statutory body,
local authority, society, trade union, co-operative society, partnership
and any other body, organization, association or group of persons,
whether corporate or unincorporate;

   “personal accident policy” means a policy providing fixed
pecuniary benefits or benefits in the nature of indemnity, or both,
against risks of the person insured sustaining injury or dying as the
result of an accident or becoming incapacitated in consequence of
disease;

   “policy” means an insurance policy and includes a cover note or a
contract of insurance, whether or not embodied in or evidenced by
an instrument in the form of an insurance policy, and references to—

(a) issuing a policy shall be construed as entering into a contract
of insurance, whether or not a formal contract has been
issued; and

(b) a policy of an insurer includes a policy or a bond in respect of
which the insurer is under any liability, whether the policy
was issued by the insurer or the liability was transferred to the
insurer from another insurer;

   “policy moneys” includes any benefit, whether pecuniary or not,
which is secured by a policy;

   “policy owner” means the person who has legal title to a policy
and includes—

(a) where a policy has been assigned, the assignee;

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(b) where a personal representative of a deceased policy owner is
entitled as against the insurer to the benefit of a policy, the
personal representative;

(c) in relation to a policy providing for the payment of annuity,
an annuitant; and

(d) where under a policy, moneys are due or payable, whether
periodically or otherwise, the person to whom the moneys are
due or payable;

   “premises” includes any land, building, structure or place;

   “premium” means the amount payable to an insurer under a policy
as consideration for the obligations assumed by the insurer;

   “prescribe” means to prescribe by an order published in the
Gazette, and a power to prescribe includes the power to prescribe
differently for different persons, payment systems or payment
instruments or different classes, categories or descriptions of
persons, payment systems or payment instruments;

   “professional reinsurer” means a reinsurer which is licensed to
carry on solely reinsurance business;

   “property” means any movable or immovable property, whether
tangible or intangible and includes—

(a) any right, interest, title, claim, chose in action, power or
privilege, whether present or future, or whether vested or
contingent, in relation to any property, or which is otherwise
of value;

(b) any conveyance executed for conveying, assigning,
appointing, surrendering, or otherwise transferring or
disposing of immovable property of which the person
executing the conveyance is the proprietor or has possession
or in which he is entitled to a contingent right, either for the
whole interest or for any less interest;

(c) any security, including any stock, share, debenture and fund;

(d) any negotiable instrument, including any bank note, bearer
note, Treasury bill, dividend warrant, bill of exchange,
promissory note, cheque and negotiable certificate of deposit;
or

(e) any mortgage or charge, whether legal or equitable,
guarantee, lien or pledge, whether actual or constructive,
letter of hypothecation, trust receipt, indemnity, undertaking
or other means of securing payment or discharge of a debt or
liability, whether present or future, or whether vested or
contingent;

   “provision of finance” includes—

(a) lending of money;

(b) leasing business;

(c) factoring business;

(d) purchase of bills of exchange, promissory notes, certificates
of deposit, debentures or other negotiable instruments; and

(e) the acceptance or guarantee of any liability, obligation or duty
of any person;

Page 22 of 180

   “public company” has the same meaning assigned to it in
subsection 4(1) of the Companies Act 1965;

   “registered adjuster” means a registered person carrying on
adjusting business;

   “registered business” means any business set out in Part 2 of
Schedule 1;

   “registered operator of a payment system” means a registered
person operating a payment system set out in paragraph 9 of Part 2
of Schedule 1;

   “registered person” means a registered person under subsection 18
(1);

   “reinsurance” means insurance cover effected by an insurer with a
second insurer on the risks, wholly or partly, it has accepted and
includes any similar arrangement by a branch of the insurer in
Malaysia with its branch outside Malaysia (the head office of the
insurer being, for this purpose, treated as a branch);

   “related”, in relation to a corporation, means related within the
meaning of section 6 of the Companies Act 1965;

   “relative”, in relation to an individual, subject to subsection (2),
means—

(a) the spouse of the individual;

(b) the brother or sister of the individual, or of the spouse of the
individual;

(c) any lineal ascendant or descendant of the individual, or of the
spouse of the individual;

(d) the spouse of any individual referred to in paragraph (b) or
(c);

(e) any lineal descendant of an individual referred to in paragraph
(b) or (d);

(f) any uncle, aunt or cousin of the individual, or of the spouse of
the individual; or

(g) any spouse, or any lineal ascendant or descendant, of an
individual referred to in paragraph (f);

Act 372.
Act 17.

Act 553.
Act 627.

   “repealed Acts” means the Banking and Financial Institutions Act
1989 [Act 372], the Exchange Control Act 1953 [Act 17], the
Insurance Act 1996 [Act 553] and the Payment Systems Act 2003
[Act 627];

   “risk to financial stability” has the same meaning assigned to it in
section 29 of the Central Bank of Malaysia Act 2009;

   “senior officer” means a person, other than the chief executive
officer or a director, having authority and responsibility for planning,
directing or controlling the activities of an authorized person,
operator of a designated payment system or a financial holding
company including the chief operating officer, members of decision-
making committees and other persons performing key functions such
as risk management, compliance, internal audit or other functions as
may be specified by the Bank under section 47;

   “share”, in relation to a corporation, means an issued share of the
corporation and includes stock except where a distinction between
stock and share is expressed or implied;

Page 23 of 180

   “specify” means to specify in writing by way of standards or any
other forms, and a power to specify includes the power to specify
differently for different persons, payment systems or payment
instruments or different classes, categories or descriptions of
persons, payment systems or payment instruments;

   “standards” includes any obligation or requirement as specified by
the Bank under this Act and such standards may contain any
interpretative, incidental, supplemental, consequential and
transitional provisions as the Bank considers appropriate;

   “statutory body” means any authority or body, whether corporate
or unincorporate, established, appointed or constituted by any
written law, but excludes any local authority;

   “subsidiary” has the same meaning assigned to it in section 5 of the
Companies Act 1965;

   “systemic risk” in relation to a designated payment system,
means—

(a) a risk that the failure of a participant or operator to meet his
payment or settlement obligations will cause another
participant to be unable to meet his payment or settlement
obligations when due; or

(b) a risk that the failure of a participant or operator to meet his
payment or settlement obligations may cause significant
liquidity or credit problems that might threaten the stability of
the financial system;

   “takaful claim” has the same meaning assigned to it in subsection 2
(1) of the Islamic Financial Services Act 2012;

   “user” means any person to whom a designated payment
instrument has been issued or any person who uses a designated
payment instrument to obtain money, goods or services or to make
any payment;

   “voting share” has the same meaning assigned to it in subsection 4
(1) of the Companies Act 1965.

Relative

  (2)   For the purpose of the definition of “relative” in subsection
(1)—

(a) the adoption of any person by another under any written law
of Malaysia or any country, territory or place outside
Malaysia, or under any custom recognized by any class of
persons in Malaysia or in any country, territory or place
outside Malaysia, shall be treated as creating between the
adopter and the adopted person the same natural relationship
as the adoptive relationship, and other relationships in relation
to it shall be determined accordingly; and

(b) references therein to a relationship include, where relevant, a
relationship by half-blood.

Control

  (3)   For the purposes of this Act, a person shall be presumed to
have control over a licensed person or corporation if such person—

(a) has an interest of more than fifty per cent of the shares in the
licensed person or corporation; or

Page 24 of 180

(b) unless proven otherwise—

(i) has the power to elect, appoint, remove or prevent from
election, appointment or removal, or cause to be elected,
appointed, removed or prevented from being elected,
appointed or removed, a majority of the directors of the
licensed person or corporation;

(ii) has the power to make or cause to be made decisions in
respect of the business or administration of the licensed
person or corporation, and to give effect to such decisions
or cause them to be given effect to; or

(iii) is a person in accordance with whose directions,
instructions or wishes the directors, chief executive officer
or senior officers of the licensed person or corporation are
accustomed or under obligation, whether formal or
informal, to act,

and the phrase “controlled” or “controller” shall be construed
accordingly.

Acting in concert

  (4)   For the purposes of this Act—

(a) “persons acting in concert” means persons who, pursuant to
an agreement, arrangement or understanding, co-operate to—

(i) acquire jointly or severally interests in the shares of a
corporation for the purpose of obtaining or consolidating
control of that corporation; or

(ii) act jointly for the purpose of exercising control over a
corporation; and

(b) without limiting the generality of paragraph (a), the following
persons shall be presumed to be persons acting in concert,
unless proven otherwise:

(i) a corporation and its related and associate corporations;

(ii) a corporation and any of its directors, or the parent, child,
brother or sister of any of its directors, or the spouse of
any such director or of any such relative, or any related
trusts;

(iii) a corporation and any pension fund established by it;

(iv) a person and any investment company, unit trust fund or
any other fund whose investments such person manages
on a discretionary basis;

(v) a person and his client which is a corporation, where the
person manages on a discretionary basis the client’s funds
and has ten per cent or more interest in shares of the
client; or

(vi) a person who owns or controls twenty per cent or more of
the voting shares of a corporation falling within
subparagraph (i) and any parent, child, brother or sister of
such person, or the spouse of such person or any such
relative, or any related trusts together with one or more
persons falling within subparagraph (i).

Qualified financial agreements

  (5)   For the purposes of this Act—

Page 25 of 180

(a) “qualified financial agreement” means—

(i) a master agreement in respect of one or more qualified
financial transactions under which if certain events
specified by the parties to the agreement occur—

(A) the transactions referred to in the agreement terminate
or may be terminated;

(B) the termination values of the transactions under
subparagraph (i) are calculated or may be calculated;
and

(C) the termination values of the transactions under
subparagraph (i) are netted or may be netted, so that a
net amount is payable,

and where an agreement is also in respect of one or more
transactions that are not qualified financial transactions,
the agreement shall be deemed to be a qualified financial
agreement only with respect to the transactions that are
qualified financial transactions and any permitted
enforcement by the parties of their rights under such
agreement;

(ii) an agreement relating to financial collateral, including a
title transfer credit support agreement, with respect to one
or more qualified financial transactions under a master
agreement referred to in subparagraph (i); or

(iii) any other agreement as prescribed under section 4;

(b) “qualified financial transaction” means—

(i) a derivative, whether to be settled by payment or delivery;
or

(ii) a repurchase, reverse repurchase or buy-sell back
agreement with respect to securities;

(c) “financial collateral” means any of the following that is
subject to an interest or a right that secures payment or
performance of an obligation in respect of a qualified
financial agreement or that is subject to a title transfer credit
support agreement:

(i) cash or cash equivalents, including negotiable instruments
and demand deposits;

(ii) security, a securities account or a right to acquire
securities; or

(iii) futures agreement or futures account;

(d) “title transfer credit support agreement” means an agreement
under which title to property has been provided for the
purpose of securing the payment or performance of an
obligation in respect of a qualified financial agreement.

  (6)   Any reference in this Act to “this Act”, the “Islamic Financial
Services Act 2013” or the “Central Bank of Malaysia Act 2009”
shall, unless otherwise expressly stated, be deemed to include a
reference to any rule, regulation, order, notification or other
subsidiary legislation made under this Act, the Islamic Financial
Services Act 2013 or the Central Bank of Malaysia Act 2009, as the
case may be.

Page 26 of 180

Prescription by Minister
of additional business or

activity

3.   The Minister may, on the recommendation of the Bank,
prescribe—

(a) any business or activity as an addition to the definition of—

(i) “banking business”;

(ii) “investment banking business”;

(iii) “financial intermediation activities”;

(iv) “factoring business”; or

(v) “leasing business”,

and upon such prescription, the definition as added to shall be
deemed to be an integral part of this Act as from the date of
commencement of such prescription, or from such later date
as may be specified in the order; and

(b) any business, service or activity in relation to a financial
service as a financial advisory business for the purposes of
the definition of “financial advisory business” under
subsection 2(1).

Prescription by Bank of
additional agreement,
dealing, transaction or

person

4.   The Bank may, with the concurrence of the Minister, prescribe—

(a) any agreement in respect of a financial transaction that may
be entered into by parties in the financial markets, other than
a standardized derivative or an agreement in respect of
securities transactions entered into under the rules of a stock
exchange and approved clearing house as defined in
subsection 2(1) of the Capital Markets and Services Act 2007
as a qualified financial agreement for the purposes of the
definition of “qualified financial agreement” in subsection 2
(5);

(b) any dealing or transaction as a credit facility for the purposes
of the definition of “credit facility” in subsection 2(1); and

(c) any other person as a market participant for the purposes of
the definition of “market participant” in subsection 2(1).

Classification of, and
construction of references

to, insurance business

5.   (1)   For the purposes of this Act, insurance business shall be
divided into two classes—

(a) life business, which in addition to all insurance business
concerned with life policies shall include any type of
insurance business carried on as incidental only to the life
insurer’s business; and

(b) general business, which means all insurance business which is
not life business.

  (2)   For the purposes of this Act, the reinsurance of liabilities under
insurance policies shall be treated as belonging to the same class and
description as the insurance policies being reinsured.

  (3)   Notwithstanding anything in subsection (1) or the

Page 27 of 180

determination of a policy to a particular insurance fund by a licensed
insurer, if the Bank is satisfied that any part of the licensed insurer’s
business which belongs to a particular class or description of
insurance business ought in that licensed insurer’s case to be treated
as belonging to another class or description, the Bank may direct that
it shall be so treated for the purposes of this Act.

  (4)   For the purposes of this Act—

(a) the activity of—

(i) effecting a contract of insurance; or

(ii) carrying out a contract of insurance,

by way of business shall constitute the carrying on of
insurance business;

(b) a person is deemed to effect, or carry out, a contract of
insurance by way of business if he—

(i) engages in such activity in a manner which in itself
constitutes the carrying on of a business;

(ii) holds himself out as willing and able to engage in such
activity; or

(iii) regularly solicits other persons to engage with him in
transactions constituting such activity; and

(c) a reference to carrying on insurance business includes
carrying it on through an agent, or as an agent, but “insurer”
does not include an insurance agent as such nor in the case of
a person who is both insurer and insurance agent, any
business done by that person as an insurance agent.

  (5)   For the purposes of this Act—

(a) the Minister may, on the recommendation of the Bank,
prescribe any business or activity as insurance business;

(b) the Bank may determine such business or activity to belong to
a particular class referred to in subsection (1) or description,
of insurance business; and

(c) the businesses set out in schedule 4 shall not be treated as
insurance business.

PART II

REGULATORY OBJECTIVES AND POWERS AND
FUNCTIONS OF BANK

Regulatory objectives 6.   The principal regulatory objective of this Act is to promote
financial stability and in pursuing this objective, the Bank shall—

(a) foster—

(i) the safety and soundness of financial institutions;

(ii) the integrity and orderly functioning of the money market
and foreign exchange market;

(iii) safe, efficient and reliable payment systems and payment
instruments; and

Page 28 of 180

(iv) fair, responsible and professional business conduct of
financial institutions; and

(b) strive to protect the rights and interests of consumers of
financial services and products.

Powers and functions of
Bank

7.   (1)   The Bank shall exercise the powers and perform the
functions under this Act in a way which it considers most
appropriate for the purpose of meeting the regulatory objectives of
this Act and the Governor shall exercise such powers and perform
such functions of the Bank on its behalf.

  (2)   The powers and functions of the Bank under this Act are in
addition to, and not in derogation of, the powers and functions of the
Bank under the Central Bank of Malaysia Act 2009.

  (3)   The Bank shall, from time to time, keep the Minister informed
on matters relating to the exercise of its powers and performance of
its functions under this Act.

  (4)   The Bank may authorize a Deputy Governor or an officer of
the Bank to exercise any of its powers or perform any of its functions
under this Act.

  (5)   The Bank may establish and authorize a committee consisting
of members as the Bank may determine for the purpose of exercising
any of the powers or performing any of the functions of the Bank
under this Act.

  (6)   The Bank may, either generally or in a particular case, appoint
a person, whether in or outside Malaysia, who is not an officer of the
Bank—

(a) to render such assistance in the exercise of any of its powers
or performance of any of its functions under this Act; or

(b) to exercise any of its powers or perform any of its functions
on behalf of and in the name of the Bank,

as may be specified by the Bank.

PART III

AUTHORIZATION AND REGISTRATION

Division 1

Authorized business

Authorized business to be
carried on by authorized

person

8.   (1)   No person shall carry on any authorized business unless it
is—

(a) licensed by the Minister, on the recommendation of the Bank,
under section 10 to carry on banking business, insurance
business or investment banking business; or

(b) approved by the Bank under section 11 to carry on any of the
businesses set out in Division 1 of Part 1 of Schedule 1.

  (2)   Paragraph (1)(b) shall not apply, in respect of financial

Page 29 of 180

advisory business, to persons set out in Division 2 of Part 1 of
Schedule 1.

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

Application for
authorization

9.   An applicant for a licence under section 10 or an approval under
section 11 to carry on an authorized business shall submit the
application in writing to the Bank together with such documents or
information as may be specified by the Bank.

Grant of licence by
Minister

10.   (1)   In assessing an application duly made under section 9 to
carry on any licensed business, the Bank shall have regard to all the
factors set out in part 1 and Part 2 of Schedule 5 and such other
matters that the Bank considers relevant.

  (2)   Upon making an assessment under subsection (1) and where
the Bank is satisfied that such applicant may be granted a licence, the
Bank shall make a recommendation to the Minister to grant a licence
under subsection (4) with or without conditions.

  (3)   The Bank shall notify the applicant in writing if the Bank does
not make a recommendation to the Minister under subsection (2).

  (4)   Where the Bank makes a recommendation pursuant to
subsection (2), the Minister may grant a licence to the applicant to
carry on banking business, insurance business or investment banking
business, with or without conditions.

  (5)   The Bank shall notify the applicant in writing of the decision
of the Minister under subsection (4).

  (6)   Where the Minister grants a licence under subsection (4), a
licensed person shall commence its licensed business within a period
or such further period as may be specified by the Minister, on the
recommendation of the Bank.

Approval by Bank 11.   (1)   In assessing an application duly made under section 9 to
carry on any approved business, the Bank shall have regard to all the
factors set out in Part 1 of Schedule 5 and such other matters that the
Bank considers relevant.

  (2)   The Bank may—

(a) approve an application to carry on any approved business,
with or without conditions, or for such period as stated in the
approval; or

(b) reject the application.

  (3)   A person approved under paragraph (2)(a) to carry on
insurance broking business or financial advisory business shall at all
times have in force a professional indemnity insurance or takaful of
such amount as may be specified by the Bank.

  (4)   The Bank shall notify the applicant in writing of its decision
under subsection (2).

  (5)   Where the Bank approves an application under paragraph (2)
(a), an approved person shall commence its approved business

Page 30 of 180

within a period or such further period as may be specified by the
Bank.

  (6)   Any person who contravenes subsection (3) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding ten million ringgit
or to both.

Requirements on
minimum capital funds or

surplus of assets over
liabilities

12.   (1)   No person shall be granted a licence under section 10 or an
approval under section 11 if—

(a) in the case of a company, its capital funds; or

(b) in the case of a branch established in Malaysia by a foreign
institution, its surplus of assets over liabilities,

is less than the minimum amount as may be prescribed by the
Minister in the case of a licensed person, or the Bank in the case of
an approved person.

  (2)   Every authorized person shall, in carrying on its authorized
business, maintain at all times such minimum amount applicable to
it.

  (3)   Notwithstanding subsections (1) and (2), the Minister may
grant a licence under section 10 to a person subject to the condition
that the person meets the minimum amount in the manner and within
the period which are specified by the Bank with the approval of the
Minister.

  (4)   For the purposes of this section, “capital funds” means paid-up
capital and any reserves as may be specified by the Bank.

  (5)   Any authorized person who contravenes subsection (2)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding eight years or to a fine not
exceeding twenty-five million ringgit or to both.

Additional conditions of
licence or approval

13.   (1)   The Minister, upon the recommendation of the Bank, in the
case of a licence granted under section 10, or the Bank in the case of
an approval granted under section 11, may at any time in writing
amend or revoke any existing condition of an authorization or
impose any new conditions thereto.

  (2)   Any authorized person who fails to comply with any of the
conditions imposed by the Minister or the Bank, as the case may be,
under subsection (1) or 10(4), paragraph 11(2)(a) or subsection 12(3)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine not
exceeding ten million ringgit or to both.

Division 2

Restriction on dealings of authorized persons

Authorized person to
carry on authorized

business only

14.   (1)   Unless the Bank otherwise specifies, an authorized person
shall not carry on any business or activity in or outside Malaysia
except in connection with or for the purposes of its authorized

Page 31 of 180

business or as provided in section 15.

  (2)   Notwithstanding subsection (1) and subject to paragraphs 15
(1)(d) and (e), an approved operator of a payment system or
approved issuer of a designated payment instrument which is not a
licensed person may carry on any business or activity which is not in
connection with or for the purposes of its approved business.

  (3)   Except with the prior written approval of the Bank—

(a) a licensed insurer shall not carry on annuity certain business,
financial guarantee insurance business or credit guarantee
insurance business; and

(b) a licensed investment bank shall not accept money on deposit
which is repayable on demand by cheques, drafts, orders or
any other instrument drawn by a depositor on such licensed
investment bank.

  (4)   Any authorized person who contravenes subsection (1) or (3)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding eight years or to a fine not
exceeding twenty-five million ringgit or to both.

Authorized person and
operator of designated

payment system permitted
to carry on certain Islamic

financial business

15.   (1)   Upon an application to the Bank and where the Bank has
granted its written approval—

(a) a licensed bank or licensed investment bank may carry on
Islamic banking business;

(b) an approved insurance broker may carry on takaful broking
business;

(c) an approved financial adviser may carry on Islamic financial
advisory business;

(d) an operator of a designated payment system or approved
operator of a payment system may facilitate participants
engaged in Islamic financial business to transfer, clear or
settle funds or securities; or

(e) an approved issuer of a designated payment instrument may
issue a designated Islamic payment instrument.

  (2)   A person approved under subsection (1) shall be subject to—

(a) the provisions of the Islamic Financial Services Act 2013, in
particular the provisions of Parts IV, VI, IX, X and XIII of the
Act, in so far as those provisions relate to the business such
person is approved to carry on under that subsection; and

(b) any standards, notices, directions, conditions, specifications
or requirements specified or made under that Act relating to
the business such person is approved to carry on under that
subsection.

  (3)   Without limiting the generality of subsection (2), a licensed
bank or licensed investment bank approved under subsection (1)
shall, for the purposes of carrying on Islamic banking business—

(a) establish and maintain at all times an Islamic banking fund
with such minimum amount as may be specified by the Bank
to fund the operations of its Islamic banking business; and

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(b) keep all assets and liabilities of its Islamic banking business
separate from its other assets and liabilities in such manner as
may be specified by the Bank.

  (4)   The Islamic banking fund established under paragraph (3)(a)
shall—

(a) be funded from the capital funds of the licensed bank or
licensed investment bank and other sources of funds as may
be specified by the Bank; and

(b) be segregated from the capital funds of the licensed bank or
licensed investment bank for the operations of its licensed
business under this Act.

  (5)   Unless otherwise specified by the Bank, the assets of a
licensed bank or licensed investment bank in relation to its Islamic
banking business shall not be—

(a) used to fund the operations of its licensed business under this
Act; and

(b) subject to the debts or other obligations of the licensed bank
or licensed investment bank in relation to its licensed business
under this Act.

  (6)   An operator of a designated payment system or approved
operator of a payment system who has obtained the approval of the
Bank under subsection (1) shall—

(a) put in place operational arrangements of the payment system,
including liquidity facilities which are; or

(b) ensure its business conduct is,

not contrary to Shariah in so far as the operational arrangements and
the business conduct relate to the business which such operator is
approved to carry on under subsection (1).

  (7)   The board of directors of—

(a) a licensed bank or licensed investment bank; or

(b) an approved person or operator of a designated payment
system which is required by the Bank under subsection 30(3)
of the Islamic Financial Services Act 2013 to establish a
Shariah committee,

shall, without prejudice to section 56, have due regard to the advice
of its Shariah committee in respect of the Islamic financial business
carried on by the person.

  (8)   For the purposes of this section—

   “designated Islamic payment instrument”, “Islamic banking
business”, “Islamic financial advisory business”, “Shariah
committee” and “takaful broking business” have the same meaning
as defined in subsection 2(1) of the Islamic Financial Services Act
2013;

   “Islamic financial business” has the same meaning as defined in
subsection 2(1) of the Central Bank of Malaysia Act 2009.

  (9)   Any person who fails to obtain the approval of the Bank to
carry on any business referred to under subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

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Licensed insurer to carry
on life or general business

16.   (1)   A licensed insurer, other than a licensed professional
reinsurer, shall not carry on both life business and general business.

  (2)   Notwithstanding subsection (1), a licensed life insurer may
carry on the business of insuring solely against disease or sickness or
solely against medical expenses subject to such requirements and
conditions as may be specified by the Bank.

  (3)   Any licensed insurer who contravenes subsection (1) commits
an offence and shall, on conviction, be liable to imprisonment for a
term not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Division 3

Registered business

Registered business to be
carried on by registered

person

17.   (1)   No person shall carry on registered business unless it has—

(a) fulfilled such requirements and submitted such documents or
information as may be prescribed by the Bank; and

(b) notified the Bank in writing of the date of commencement of
its business.

  (2)   Subsection (1) shall not apply in respect of adjusting business
to—

(a) an advocate, solicitor or a member of any other profession
who acts or assists in adjusting insurance or takaful claims
incidental to his practice and who does not hold himself out
as an adjuster;

(b) an adjuster of aviation or maritime losses; or

(c) an employee of a licensed insurer or licensed takaful operator
under the Islamic Financial Services Act 2013, who in the
course of his employment, acts or assists in adjusting
insurance or takaful claims and who does not hold himself out
as an adjuster.

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Registered person to
comply with standards

18.   (1)   A person is a registered person if such person has complied
with subsection 17(1) and has commenced its registered business.

  (2)   The Bank may specify standards for registered persons and a
registered person shall at all times comply with such standards.

Division 4

Representative office

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Requirements for
representative office

19.   (1)   No foreign institution shall—

(a) establish a representative office in Malaysia unless it has
obtained the prior written approval of the Bank; or

(b) through its approved representative office, carry on any
authorized or registered business in Malaysia.

  (2)   Subject to the prohibition under paragraph (1)(b), a foreign
institution may carry on, through its approved representative office,
only such activities as may be specified by the Bank.

  (3)   An application to establish a representative office shall be
made in writing to the Bank together with such documents or
information as may be specified by the Bank.

  (4)   The Bank may on an application having been duly made in
accordance with subsection (3) approve the application, with or
without conditions, or reject the application.

  (5)   The Bank may at any time in writing amend or revoke any
existing conditions of an approval granted under subsection (4) or
impose any new condition thereto.

  (6)   The Bank may revoke an approval granted under subsection
(4) if—

(a) the approved representative office has—

(i) breached or contravened any provision of this Act or the
Central Bank of Malaysia Act 2009; or

(ii) failed to comply with any condition imposed pursuant to
the approval,

regardless that there has been no prosecution or other action
in respect of such breach, contravention or non-compliance;

(b) the approved representative office has contravened any law in
or outside Malaysia; or

(c) it is in the interest of consumers of financial services and
products in Malaysia to do so.

  (7)   The Bank may, with the approval of the Minister, revoke an
approval granted under subsection (4) if it is in the national interest
to do so.

  (8)   Any person who contravenes subsection (1) or (2) or fails to
comply with any condition imposed under subsection (4) or (5)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding fifty million ringgit or to both.

Division 5

Revocation, deregistration, surrender or cessation of business or
operations

Grounds for revocation of
authorization

20.   (1)   The Minister may, on the recommendation of the Bank,
revoke the licence of a licensed person, and the Bank may revoke the
approval of an approved person, on the grounds that—

(a) the Bank has, in connection with the application under section

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9, been provided with false, misleading, inaccurate or
incomplete information;

(b) the person has not commenced the business in respect of
which it is licensed or approved within the period specified
by the Minister under subsection 10(6) or by the Bank under
subsection 11(5);

(c) the person has ceased to carry on business for which it is
licensed or approved;

(d) the person has—

(i) breached or contravened any provision of this Act or the
Central Bank of Malaysia Act 2009;

(ii) failed to comply with any condition of its licence or
approval; or

(iii) failed to comply with any direction issued by the Bank
under section 156 or an order under the Central Bank of
Malaysia Act 2009,

regardless that there has been no prosecution or other action
in respect of such breach, contravention or non-compliance;

(e) the person has ceased to be viable in the opinion of the Bank;

(f) the Bank, pursuant to the exercise of its powers under Part
XIII relating to such person, has substantially completed all
the transfer of business, assets or liabilities of the person;

(g) the person has been wound-up or otherwise dissolved; or

(h) it is in the interest of consumers of financial services and
products to do so.

  (2)   The Minister may, on the recommendation of the Bank, revoke
the licence of a licensed person, and the Bank may with the
concurrence of the Minister revoke an approval of an approved
person, if it is in the interest of the public to do so.

  (3)   In addition to subsections (1) and (2), the Bank may revoke the
approval of an approved person on the grounds that—

(a) in the opinion of the Bank the person is committing or is
about to commit an act, or is pursuing or is about to pursue
any course of conduct, that is unsafe or unsound or has failed
to commit an act or pursue a course of conduct that is
necessary to maintain the safety and soundness of the person;

(b) in the opinion of the Bank, the person is carrying on business
in a manner detrimental to the interests of its customers,
creditors, participants, users or the public generally;

(c) a receiver or manager of the property of the person has been
appointed; or

(d) possession of the property of the person has been taken by or
on behalf of a debenture holder pursuant to a charge on the
property.

  (4)   The Bank—

(a) shall publish in the Gazette, as soon as practicable, a notice of
a revocation of a licence under subsection (1) or (2); or

(b) may publish a notice of a revocation of an approval under

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subsection (1), (2) or (3) in such form as the Bank deems
appropriate.

Grounds for
deregistration

21.   The Bank may deregister a registered person if—

(a) the person has provided the Bank with false, misleading,
inaccurate or incomplete information for the purposes of
subsection 17(1);

(b) the person has ceased to carry on business for which it is
registered;

(c) the person has—

(i) breached or contravened any provision of this Act or the
Central Bank of Malaysia Act 2009; or

(ii) failed to comply with any specification or standards under
this Act,

regardless that there has been no prosecution or other action
in respect of such breach, contravention or non-compliance;

(d) the shareholder, director or any person concerned with the
operation or management of the registered person has been
convicted of an offence under this Act or an offence
involving fraud or dishonesty under any other written law; or

(e) the person has been wound-up or otherwise dissolved or a
receiver or manager of the property of the person has been
appointed.

Surrender of licence or
notification on cessation
of business or operations

22.   (1)   A licensed person may surrender its licence to the Bank
and upon surrendering, the licensed person shall provide a written
notice of its surrender to the Bank.

  (2)   An approved person or a registered person, as the case may be,
shall submit a written notice to the Bank if it ceases to carry on its
business.

  (3)   An approved representative office shall submit a written notice
to the Bank if it ceases operations.

  (4)   The surrender under subsection (1) or the notification under
subsection (2) or (3) shall take effect on the date the Bank receives
such notice or where a later date is specified in the notice, on that
date.

  (5)   The Bank—

(a) shall publish in the Gazette, as soon as practicable, a notice of
a surrender of a licence under subsection (1); or

(b) may publish a notice of cessation of business under
subsection (2) or cessation of operations under subsection (3)
in such form as the Bank deems appropriate.

  (6)   Any person who contravenes subsection (1), (2) or (3)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding one year or to a fine not
exceeding five million ringgit or to both.

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Effect of revocation,
deregistration, surrender,
notification on cessation

of business or operations,
and expiry

23.   (1)   Where—

(a) the Minister revokes a licence of a licensed person under
section 20;

(b) the Bank—

(i) revokes an approval of an approved representative office
under subsection 19(6) or (7) or an approved person under
section 20; or

(ii) deregisters a registered person under section 21;

(c) a surrender of a licence by a licensed person or notification by
an approved person or registered person on the cessation of
its business or an approved representative office on the
cessation of its operations has taken effect under subsection
22(4); or

(d) an approval granted to an approved person under section 11
has expired,

such person or representative office shall immediately cease to carry
on its business or operations, as the case may be.

  (2)   Notwithstanding the revocation, deregistration, surrender,
notification on the cessation of business or operations, or expiry
referred to in subsection (1), the person or representative office
referred to in subsection (1) shall continue—

(a) to be subject to this Act to the same extent as an authorized
person, a registered person or an approved representative
office, as the case may be; and

(b) to discharge its obligations,

until the Bank is satisfied that the person or representative office has
discharged its obligations, or that adequate arrangements have been
made to discharge its obligations, which remain undischarged at the
time of revocation, deregistration, surrender, notification on the
cessation of business or operations or expiry, as the case may be.

  (3)   A revocation, deregistration, surrender, notification on the
cessation of business or operations or expiry referred to in subsection
(1) shall not operate so as to—

(a) avoid or affect any agreement, arrangement or transaction
entered into by the person or representative office referred to
in subsection (1) with any person; or

(b) affect any right, obligation or liability arising under any such
agreement, arrangement or transaction.

  (4)   Any person who contravenes subsection (1) or fails to
discharge its obligations under subsection (2) commits an offence
and shall, on conviction, be liable to imprisonment for a term not
exceeding five years or to a fine not exceeding ten million ringgit or
to both.

Division 6

General matters

Page 38 of 180

Form of establishment 24.   (1)   A person who is to be licensed under section 10 to carry on
banking business, insurance business (other than a person who is to
be a professional reinsurer) or investment banking business shall be
a public company.

  (2)   The Bank may specify the form of establishment of—

(a) a person who is to be licensed as a professional reinsurer; or

(b) a person who is to be approved under section 11 to carry on
an approved business.

Establishment or
relocation of office of

authorized persons

25.   (1)   Unless otherwise specified by the Bank, no licensed person
shall establish or relocate an office in or outside Malaysia without
the prior written approval of the Bank.

  (2)   Where an approved person establishes or relocates an office in
or outside Malaysia, such approved person shall notify the Bank in
writing within such period as may be specified by the Bank.

Fees 26.   (1)   Regulations may be made under section 260 to prescribe—

(a) any fee to be paid by an authorized person or a registered
person in respect of its authorization or registration,
establishment of any office or the annual fee; and

(b) a processing fee to be paid by an applicant for authorization
under section 9 or a person who has complied with paragraph
17(1)(a),

of such amount, or calculated at such rate or in such manner as set
out in the regulations.

  (2)   Any fee paid to the Bank under this section shall be paid into
and form part of the Federal Consolidated Fund.

  (3)   Any unpaid fees may be sued for and recovered as a civil debt
due to the Government and in addition, the court may order for a
payment of a penalty for late payment up to an amount equivalent to
twice the amount of the fees unpaid and costs of recovering the
amount including but not limited to costs of legal proceedings.

Publication of names of
authorized persons and

registered persons

27.   (1)   The Bank shall, from time to time, publish in the Gazette a
list of all licensed persons and any additions to or deletions from the
list.

  (2)   The Bank shall, from time to time, publish a list of approved
persons and registered persons in such form as the Bank deems
appropriate.

Holding out as authorized
person or registered

person

28.   (1)   No person shall hold himself out to be—

(a) an authorized person unless he is authorized; or

(b) a registered person unless he is registered,

under this Act.

Page 39 of 180

  (2)   Any person who contravenes paragraph (1)(a) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

  (3)   Any person who contravenes paragraph (1)(b) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Acting on behalf of
unlicensed person

29.   (1)   No person shall act on behalf of a foreign institution or any
person who is not licensed under this Act in relation to carrying on
banking business, investment banking business, insurance business
or accepting deposits in Malaysia unless approved in writing by the
Bank.

  (2)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

PART IV

PAYMENT SYSTEMS

Division 1

Designation of payment systems and payment instruments

Designation and
revocation of designation

of payment systems

30.   (1)   Where the Bank is of the opinion that a disruption in the
operations of the payment system could affect public confidence in
the overall payment systems of Malaysia or impact the monetary or
financial stability of Malaysia—

(a) in the case of an operator of a payment system who is subject
to the supervision or oversight of another supervisory
authority in Malaysia, the Minister on the recommendation of
the Bank and such supervisory authority; or

(b) in any other case, the Bank with the concurrence of the
Minister,

may, by an order published in the Gazette, designate such payment
system as a designated payment system.

  (2)   In the case of an operator of a payment system who is subject
to the supervision or oversight of another supervisory authority in
Malaysia, the Bank shall consult with such supervisory authority in
forming an opinion under subsection (1).

  (3)   If the circumstances in subsection (1) no longer apply, the
designation of a payment system may be revoked—

(a) in the case of an operator of a payment system who is subject
to the supervision or oversight of another supervisory
authority in Malaysia, by the Minister, on the joint
recommendation of the Bank and such supervisory authority;
or

Page 40 of 180

(b) in any other case, by the Bank,

by an order published in the Gazette.

  (4)   The Bank and the supervisory authority shall regularly review
the status of the payment system designated under paragraph (1)(a),
to determine whether the circumstances under subsection (1), no
longer applies for purposes of making the joint recommendation
under paragraph (3)(a).

Designation of payment
instruments

31.   Where the Bank is of the opinion that—

(a) a payment instrument may be of widespread use as a means
of making payment and may affect the payment systems in
Malaysia; and

(b) it is necessary to maintain the integrity, efficiency and
reliability of the payment instrument,

the Bank may, with the concurrence of the Minister, by an order
published in the Gazette, designate such payment instrument as a
designated payment instrument.

Division 2

Requirements for operation of payment systems and issuance of
designated payment instruments

Application of this act on
payment systems

32.   Unless otherwise prescribed by the Bank, this Act shall apply to
a person outside Malaysia who is an operator of a payment system
which accepts payment instructions or settlement instructions from
participants in Malaysia.

Power of bank to specify
standards for payment

systems

33.   (1)   The Bank may specify standards for payment systems—

(a) for promoting safety, integrity, efficiency or reliability of the
designated payment system, the payment system set out in
Division 1 of Part 1 of Schedule 1, the payment system set
out in paragraph 9 of Part 2 of Schedule 1 or the designated
payment instrument including facilitating interoperability,
technical specifications and security standards; or

(b) in the interest of current or prospective participants of the
designated payment system, the payment system set out in
Division 1 of Part 1 of Schedule 1 or the payment system set
out in paragraph 9 of Part 2 of Schedule 1 or users.

  (2)   An operator of a designated payment system, an approved
operator of a payment system, a registered operator of a payment
system or an approved issuer of a designated payment instrument
shall at all times comply with the standards specified by the Bank
under subsection (1) which are applicable to such operator or issuer.

Direction to participants
of designated payment

system

34.   The Bank may issue directions in writing to any participant of a
designated payment system if the Bank is of the opinion that it is

Page 41 of 180

necessary for ensuring the integrity and proper management of the
designated payment system or it is in the interest of the public to do
so.

Operational arrangements 35.   (1)   An operator of a designated payment system, approved
operator of a payment system or approved issuer of a designated
payment instrument shall establish the following operational
arrangements:

(a) rules, procedures and requirements setting out the rights,
liabilities or any other obligations of—

(i) the operator and participants of the designated payment
system;

(ii) the approved operator of a payment system and its
participants; and

(iii) the approved issuer of a designated payment instrument
and its users,

including the risks that such participants or users may incur;
and

(b) measures to ensure the safety, security and operational
reliability of the designated payment system, payment system
set out in Division 1 of Part 1 of Schedule 1 or the designated
payment instrument including contingency arrangements.

  (2)   In addition to the operational arrangements under subsection
(1), an operator of a designated payment system or approved
operator of a payment system shall establish the following
operational arrangements:

(a) procedures, controls and measures for the management of
credit, liquidity or settlement risk, including rules determining
the time when a transfer order is final in the case of payment
systems that have been issued a certificate of finality by the
Bank under section 38; and

(b) criteria for participation in the designated payment system or
payment system set out in Division 1 of Part 1 of Schedule 1.

  (3)   Without limiting the generality of subsection (1), the approved
issuer of a designated payment instrument shall establish measures to
ensure prudent management of funds collected from the users,
including measures to ensure that such funds are always available for
repayment to the users of the designated payment instrument.

Power of bank to inspect 36.   The Bank may, in considering whether—

(a) to designate or recommend to the Minister to designate a
payment system under section 30;

(b) to designate a payment instrument under section 31;

(c) to recommend to the Minister to include an operation of a
payment system into Division 1 of Part 1 of Schedule 1 under
section 264; or

(d) to recommend to the Minister to include an operation of a
payment system into Part 2 of Schedule 1 under section 264,

inspect the premises, apparatus, equipment, machinery, documents

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and transactions relating to the payment system or payment
instrument, upon giving a written notice to the operator or issuer.

Division 3

Finality of payment and netting arrangement

Interpretation 37.   For the purposes of this Division—

   “certificate of finality” means a certificate issued by the Bank to
any designated payment system under section 38;

   “certified designated payment system” means a designated
payment system that has been issued a certificate of finality by the
Bank which may include a payment system operated by the Bank, or
by any body corporate established or acquired by the Bank under the
Central Bank of Malaysia Act 2009 or by any person authorized by
the Bank;

   “insolvency administrator” includes a receiver, manager, receiver
and manager, liquidator, provisional liquidator, judicial manager,
curator, special administrator or any other person, however styled,
authorized under any law in or outside Malaysia to take control of a
person’s property for the benefit of that person’s creditors in the
event that the person is, or is likely to become, insolvent;

   “netting arrangement” means an arrangement in writing to convert
several claims or obligations into one net claim or one net obligation;

   “transfer order” means—

(a) an instruction by a participant of a designated payment
system to place at the disposal of a recipient an amount of
money by means of account book-entry;

(b) an instruction which, when settled, results in the assumption
or discharge of a payment obligation as defined by the rules
of a designated payment system; or

(c) an instruction by a participant of a designated payment
system either to settle an obligation for the transfer of book-
entry securities or for the transfer of such securities.

Power of bank to issue
certificate of finality

38.   The Bank may, with the concurrence of the Minister, by an
order published in the Gazette, issue a certificate of finality to a
designated payment system where the following criteria are met:

(a) the payment system poses or is likely to pose a systemic risk;

(b) the settlement of transfer order is effected within the
designated payment system itself; and

(c) the operator of the payment system has complied with the
requirements as may be specified by the Bank.

Revocation of certificate
of finality

39.   The Bank may, with the concurrence of the Minister, by an
order published in the Gazette, revoke a certificate of finality if the
Bank is of the opinion that—

(a) any of the criteria specified in section 38 is no longer met; or

Page 43 of 180

(b) the operator of the certified designated payment system has
breached or contravened any provision of this Act.

Application of this
division

40.   (1)   The provisions of this Division shall apply to—

(a) any transfer order sent through a certified designated payment
system; and

(b) any netting arrangement, in respect of claims or obligations
arising from a transfer order that is final under subsection 42
(1), entered into between an operator and a participant or
between participants only in respect of a certified designated
payment system.

  (2)   Any written law relating to bankruptcy and insolvency shall
continue to apply, but where there is any conflict or inconsistency
between the provisions of this Division and the written law relating
to bankruptcy and insolvency, the provisions of this Division shall
prevail.

Transfer order made after
appointment of

insolvency administrator

41.   This Division shall not apply in relation to any transfer order
which is sent through a certified designated payment system after the
expiry of the day on which an insolvency administrator is appointed
in respect of an operator or a participant of a certified designated
payment system.

Finality of payment and
netting arrangement

42.   (1)   A transfer order shall be valid and enforceable by and
against an operator or a participant of a certified designated payment
system and shall be final and shall not be revoked, reversed or set
aside by any person from the time the transfer order is determined to
be final under the rules of the certified designated payment system
required to be established under paragraph 35(2)(a) and no order
shall be made by any court for the rectification or stay of such
transfer order.

  (2)   A netting arrangement shall be valid and enforceable and an
operator or a participant of a certified designated payment system
shall do whatever is permitted or required under the netting
arrangement in order to give effect to the netting arrangement.

  (3)   Any payment or settlement obligations owed to an operator or
a participant of a certified designated payment system under the
netting arrangement that has not been discharged—

(a) is provable in insolvency proceedings; and

(b) may be recovered for the benefit of creditors.

  (4)   Without limiting the generality of subsection 40(2), any
transfer order that is final and irrevocable under subsection (1) and
any netting arrangement that is valid and enforceable under
subsections (2) and (3), shall be given effect notwithstanding
anything to the contrary contained in—

(a) sections 223 and 224 of the Companies Act 1965 in relation
to the avoidance of dispositions of property;

Act 360.Act 587. (b) section 296 of the Companies Act 1965, section 59 of the
Bankruptcy Act 1967 [Act 360] or subsection 40(1) of the
Pengurusan Danaharta Nasional Berhad Act 1998 [Act 587]

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in relation to the disclaiming of an onerous property;

(c) section 219 of the Companies Act 1965 and section 47 of the
Bankruptcy Act 1967 in relation to the time of
commencement of insolvency;

(d) section 293 of the Companies Act 1965 and section 53 of the
Bankruptcy Act 1967 in relation to undue preference; and

(e) section 222 of the Companies Act 1965 and section 10 of the
Bankruptcy Act 1967 in relation to the power to stay or
restrain proceedings.

Preservation of rights 43.   For the avoidance of doubt, the provisions of this Division shall
not restrict or preclude any person from enforcing his rights under
the law in so far as it does not affect the finality of the transfer order
or the validity and enforceability of a netting arrangement under this
Division.

Non-recognition of
insolvency order by

foreign court

44.   Notwithstanding any other written law, a court shall not
recognize or give effect to an order of a foreign court exercising
jurisdiction under any law of insolvency outside Malaysia in so far
as the making of the order would be inconsistent with or contrary to
the provisions of this Division.

Requirement to notify in
event of insolvency, etc.

45.   (1)   Where an operator of a certified designated payment
system—

(a) is insolvent or is likely to become insolvent;

(b) has become or is likely to become unable to meet any or all of
its obligations; or

(c) has suspended payments or compounded with its creditors,

such operator shall immediately notify the participants of the
certified designated payment system.

  (2)   Where a participant of a certified designated payment
system—

(a) is insolvent or is likely to become insolvent;

(b) has become or is likely to become unable to meet any or all of
its obligations; or

(c) has suspended payments or compounded with its creditors,

such participant shall immediately notify the operator who shall
notify the other participants of the certified designated payment
system.

  (3)   Any person who contravenes subsection (1) or (2) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

PART V

PRUDENTIAL REQUIREMENTS

Page 45 of 180

Interpretation 46.   For the purposes of Divisions 1, 2, 3 and 4, “institution” refers
to an authorized person or operator of a designated payment system.

Division 1

Standards on prudential matters

Power of bank to specify
standards on prudential

matters

47.   (1)   The Bank may specify standards on prudential matters to
promote—

(a) the sound financial position of an institution; or

(b) integrity, professionalism and expertise in the conduct of the
business, affairs and activities of an institution.

  (2)   Without limiting the generality of subsection (1), standards
specified under that subsection may include standards relating to—

(a) capital adequacy;

(b) liquidity;

(c) corporate governance;

(d) risk management;

(e) related party transactions;

(f) maintenance of reserve funds;

(g) insurance funds; and

(h) prevention of an institution from being used, intentionally or
unintentionally, for criminal activities.

  (3)   For purposes of paragraph (2)(e), “related party transactions”
means transactions with an institution involving—

(a) a director, officer or shareholder of the institution;

(b) any person in a position to influence or control the institution
or affect the decisions of the institution;

(c) a relative or dependent of any person referred to in paragraph
(a) or (b); or

(d) any other person as may be specified by the Bank, which in
the opinion of the Bank may cause the institution to be in a
conflict of interest situation.

Institution, director and
officer to comply with

standards

48.   (1)   Every institution shall at all times—

(a) comply with the standards as may be specified by the Bank
under subsection 47(1) which are applicable to such
institution;

(b) ensure that its internal policies and procedures are consistent
with the standards as may be specified by the Bank under
subsection 47(1); and

(c) whether or not standards have been specified by the Bank

Page 46 of 180

under subsection 47(1), manage its business, affairs and
activities in a manner consistent with sound risk management
and governance practices which are effective, accountable
and transparent.

  (2)   Every director and officer of an institution shall at all times
comply with the internal policies and procedures adopted by such
institution including internal policies and procedures to implement
the standards as may be specified by the Bank under subsection 47
(1).

Registered operator of
payment system to

comply with standards

49.   The Bank may require a registered operator of a payment
system to comply with all or any standards as may be specified by
the Bank under subsection 47(1), or any part of such standards, with
such amendments as the Bank deems necessary, if the Bank is of the
opinion that it is necessary to promote public confidence in, or for
the safety, reliability and efficiency of, the payment systems of
Malaysia.

Single counterparty
exposure limit for

licensed person

50.   (1)   No licensed person shall have an exposure to a single
counterparty which exceeds the limit as may be specified by the
Bank under subsection 47(1).

  (2)   An exposure to a single counterparty referred to in subsection
(1) shall include an exposure to any group of persons connected to
such single counterparty but shall not include any exposure to, and
any exposure explicitly guaranteed by, the Bank or the Government.

  (3)   For the purposes of this section, the Bank may specify what
constitutes “connected”, “counterparty” or “exposure”.

Restriction on payment of
dividend by licensed

person

51.   (1)   No licensed person shall declare or pay any dividend on its
shares except with the prior written approval of the Bank or where
the Bank has specified standards permitting the declaration of
payments of any dividend under subsection 47(1).

  (2)   Where there is an application made by a licensed person for
approval under subsection (1) in respect of the proposed amount of
dividend to be declared, the Bank shall, in considering whether or
not to grant an approval on the proposed amount or approve a
reduced amount of dividend payment, have regard to the prevailing
and prospective financial condition of the licensed person including
its ability to comply with any standards as may be specified by the
Bank under paragraph 47(2)(a).

Maintenance of assets in
Malaysia by licensed

person

52.   The Bank may require a licensed person to hold at all times all
or such part of its assets, as may be specified by the Bank, in
Malaysia.

Division 2

Corporate governance

Interpretation 53.   For the purposes of this Division, “chairman” means chairman
of the board of directors.

Page 47 of 180

Chairman, directors and
chief executive officer of

institution

54.   (1)   Every institution shall at all times have a chief executive
officer.

  (2)   Except with the prior written approval of the Bank—

(a) no licensed person shall appoint or elect, or reappoint or re-
elect any person as its chairman, director or chief executive
officer; and

(b) no person shall accept any appointment or election, or
reappointment or re-election as a chairman, director or chief
executive officer, of a licensed person.

  (3)   The licensed person shall submit an application in writing to
the Bank together with such documents or information as may be
specified by the Bank for the purposes of an approval under
subsection (2).

  (4)   An approved person or operator of a designated payment
system shall notify the Bank in writing of the appointment,
reappointment, election or re-election of its chairman, director or
chief executive officer and in the case of an approved financial
adviser, its representative, within seven days or such other period as
may be specified by the Bank together with such documents or
information as may be specified by the Bank.

Requirements to be
chairman, director, chief

executive officer or senior
officer

55.   (1)   An institution shall not appoint or elect, reappoint or re-
elect any person as a chairman, director, chief executive officer or
senior officer of the institution, unless such person—

(a) is an individual;

(b) is not disqualified under subsection 59(1); and

(c) has complied with the fit and proper requirements as may be
specified by the Bank under section 60.

  (2)   No person shall accept any appointment or election,
reappointment or re-election as a chairman, director, chief executive
officer or senior officer of an institution, unless such person—

(a) is not disqualified under subsection 59(1); and

(b) has complied with the fit and proper requirements as may be
specified by the Bank under section 60.

  (3)   Unless the Bank otherwise approves, a chief executive officer
of an institution shall have his principal or only place of residence
within Malaysia and devote the whole of his professional time to the
service of the institution.

Functions and duties of
board of directors

56.   (1)   The business and affairs of an institution shall be managed
under the direction and oversight of its board of directors, subject to
this Act and any other written law which may be applicable to the
institution.

  (2)   Without limiting the generality of subsection (1), the board of
directors shall—

(a) set and oversee the implementation of business and risk
objectives and strategies and in doing so shall have regard to

Page 48 of 180

the long term viability of the institution and reasonable
standards of fair dealing;

(b) ensure and oversee the effective design and implementation
of sound internal controls, compliance and risk management
systems commensurate with the nature, scale and complexity
of the business and structure of the institution;

(c) oversee the performance of the senior management in
managing the business and affairs of the institution;

(d) ensure that there is a reliable and transparent financial
reporting process within the institution; and

(e) promote timely and effective communications between the
institution and the Bank on matters affecting or that may
affect the safety and soundness of the institution.

  (3)   In carrying out its functions or duties under this Division, the
board of directors of an institution shall have regard to the interests
of depositors or policy owners of the institution and participants.

Duties of directors 57.   (1)   A director of an institution shall at all times—

(a) act in good faith in the best interests of the institution;

(b) exercise reasonable care, skill and diligence with—

(i) the knowledge, skill and experience which may
reasonably be expected of a director having the same
responsibilities; and

(ii) any additional knowledge, skill and experience which the
director has;

(c) only exercise powers conferred on him for the purposes for
which such powers are conferred; and

(d) exercise sound and independent judgment.

  (2)   Subsection (1) has effect in addition to, and not in derogation
of, any written law or rule of law relating to the duty or liability of a
director.

  (3)   Any director who contravenes paragraph (1)(c) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Duty to disclose interests
in material transaction or

material arrangement

58.   (1)   A director of an institution shall disclose to the board of
directors of the institution the nature and extent of his interest,
whether directly or indirectly, in a material transaction or material
arrangement with the institution.

  (2)   Whether or not a declaration under subsection (1) has been
made, a director who has, directly or indirectly, an interest in a
material transaction or material arrangement shall not be present at
the board meeting where the material transaction or material
arrangement is being deliberated by the board of directors.

  (3)   Where there is any change in the nature and extent of a
director’s interest in a material transaction or material arrangement
subsequent to the disclosure pursuant to subsection (1), the director
shall make a further disclosure of such changes in accordance with

Page 49 of 180

subsection (1).

  (4)   For the purposes of subsection (1), the Bank may specify—

(a) the time, form, manner, procedures or any other incidental or
ancillary matters in which the disclosure under subsection (1)
is to be made; and

(b) what constitutes a material transaction or material
arrangement.

Disqualifications 59.   (1)   A person is disqualified from being appointed or elected,
reappointed or re-elected, accepting any appointment or election, or
holding office, as a chairman, director, chief executive officer or
senior officer of an institution if—

(a) he is an undischarged bankrupt, has suspended payments or
has compounded with his creditors whether in or outside
Malaysia;

(b) a charge for a criminal offence relating to dishonesty or fraud
under any written law or the law of any country, territory or
place outside Malaysia, has been proven against him;

(c) he is prohibited from being a director of a company or in any
way, whether directly or indirectly, be concerned or take part
in the management of a company in Malaysia pursuant to a
court order made under section 130A of the Companies Act
1965 and has not obtained any leave of the court under the
same section; or

(d) under any law relating to prevention of crime, drug
trafficking or immigration—

(i) an order of detention, supervision, or deportation has been
made against that person; or

(ii) any form of restriction or supervision by bond or
otherwise, has been imposed on him.

  (2)   Where any criminal proceeding is pending in any court for any
offence referred to in paragraph (1)(b) against a chairman, director,
chief executive officer or senior officer of an institution, such person
shall not—

(a) act in such capacity, hold any other office or act in any other
capacity, in that institution; or

(b) be concerned with, take part or engage in any manner,
whether directly or indirectly, in any activity, affairs or
business of, or in relation to, that institution,

except as may be permitted by the board of directors of the
institution subject to such conditions as may be specified by the
Bank.

  (3)   For the purposes of subsection (2), “criminal proceedings”
shall be deemed to be pending from the date that the accused person
is first charged in court for the offence until the date of the final
conclusion of the proceedings, whether in the court of original
jurisdiction or, in the event of any appeal by any party, in the court
of final appellate jurisdiction.

Fit and proper 60.   (1)   Without limiting the generality of section 47 and for the

Page 50 of 180

requirements purposes of paragraphs 55(1)(c) and 55(2)(b), the Bank may specify
fit and proper requirements to be complied with by a chairman,
director, chief executive officer or senior officer of an institution or a
financial adviser’s representative, which may include minimum
criteria relating to—

(a) probity, personal integrity and reputation;

(b) competency and capability; and

(c) financial integrity.

  (2)   Where an issue arises as to whether a chairman, director, chief
executive officer, senior officer or financial adviser’s representative
has complied with the fit and proper requirements as specified under
subsection (1), the Bank shall have full discretion to determine the
issue.

Cessation from office 61.   (1)   Where a chairman, director, chief executive officer or
senior officer of an institution or a financial adviser’s representative,
as the case may be—

(a) becomes disqualified under subsection 59(1); or

(b) no longer complies with any of the fit and proper
requirements as may be specified by the Bank under section
60,

such chairman, director, chief executive officer, senior officer or
financial adviser’s representative shall immediately cease to hold
office and act in such capacity.

  (2)   The institution shall immediately—

(a) in the case of paragraph (1)(a), terminate the appointment of
such chairman, director, chief executive officer, senior officer
or financial adviser’s representative; or

(b) in the case of paragraph (1)(b), remove such chairman,
director, chief executive officer, senior officer or financial
adviser’s representative from such office.

  (3)   Notwithstanding anything contained in any contract of service
or any other agreement relating to his appointment, the chairman,
director, chief executive officer, senior officer or financial adviser’s
representative terminated under paragraph (2)(a) shall not be entitled
to claim any compensation for such termination.

Notice of cessation from
office

62.   An institution shall notify the Bank in writing of the fact that a
person has ceased to be its chairman, director, chief executive
officer, senior officer or financial adviser’s representative, as the
case may be, pursuant to this Division or under any other
circumstances and of the reasons for the cessation within seven days
from the date of such cessation.

Division 3

Transparency requirements

Interpretation 63.   For the purposes of this Division—

Page 51 of 180

   “accounting records” has the same meaning assigned to it in
subsection 4(1) of the Companies Act 1965;

Act 558.    “approved accounting standards” has the same meaning assigned
to it in section 2 of the Financial Reporting Act 1997 [Act 558];

   “financial statements” has the same meaning as set out in the
approved accounting standards issued or approved by the Malaysian
Accounting standards Board under the Financial Reporting Act
1997.

Maintenance of
accounting records and

information

64.   An institution shall maintain or cause to be maintained proper
accounting records and information in such manner as will
sufficiently enable the institution to prepare its financial statements
under section 65 and shall cause those records to be kept in such
manner as to enable them to be conveniently and properly audited.

Compliance with
approved accounting

standards

65.   An institution shall prepare its financial statements in
accordance with—

(a) the approved accounting standards subject to any standards as
may be specified by the Bank under subsection 47(1); or

(b) in the absence of any approved accounting standards, any
standards as may be specified by the Bank under subsection
47(1).

Publication of financial
statements

66.   (1)   An institution shall publish its financial statements
prepared under section 65 from time to time subject to any standards
as may be specified by the Bank under subsection 47(1).

  (2)   Notwithstanding subsection (1), the Bank may require that the
financial statements shall be audited before any publication under
subsection (1).

Division 4

Auditors

Appointment of auditor
by institution

67.   (1)   Every institution shall appoint an auditor for each financial
year who meets such requirements or has such qualifications set out
in any standards as may be specified by the Bank under subsection
47(1).

  (2)   Except with the prior written approval of the Bank, no licensed
person shall appoint any person as its auditor and no person shall
accept any appointment as an auditor of a licensed person.

  (3)   An approved person or operator of a designated payment
system shall notify the Bank of the appointment of its auditor within
such period as may be determined by the Bank.

  (4)   For the purposes of this Division—

(a) a person shall not be deemed to be an officer of an institution
by reason only of him having been appointed as an auditor of
the institution; and

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(b) the term “appointment” includes reappointment.

Appointment of auditor
by Bank

68.   Without prejudice to section 67, the Bank may appoint an
auditor for an institution—

(a) if the institution fails to appoint an auditor as required under
subsection 67(1); or

(b) to act with an existing auditor of the institution appointed
under subsection 67(1),

and the remuneration and expenses relating to such appointment
shall be borne by the institution.

Duties of auditor 69.   (1)   An auditor appointed under this Division shall—

(a) carry out an audit of the business, affairs and books of the
institution;

(b) submit a report of such audit to the members of the institution
and the Bank;

(c) submit any additional information as may be specified by the
Bank relating to the audit conducted under paragraph (a);

(d) expand or extend the scope of the audit conducted under
paragraph (a) within such time, in such manner or to such
extent as may be specified by the Bank; or

(e) carry out any specific assessment of the business, affairs and
books of the institution as may be specified by the Bank and
submit a report to the Bank on such assessment.

  (2)   The remuneration and expenses of the auditor relating to any
expanded or extended scope of audit under paragraph (1)(d) or any
specific assessment under paragraph (1)(e) shall be borne by the
institution.

  (3)   Any audit carried out under subsection (1) shall be in
accordance with generally accepted auditing standards applicable in
Malaysia.

Notice of cessation as
auditor

70.   Where during the course of an audit on an institution, an auditor
appointed under section 67 or 68 has ceased to be an auditor of an
institution, the auditor shall notify the Bank in writing of that fact
and the reasons of such cessation within seven days from the date of
such cessation.

Information to be
provided to auditor

71.   An institution and any director, officer or controller of that
institution shall—

(a) provide the auditor appointed under section 67 or 68 all
information within its or his knowledge or capable of being
obtained by it or him which the auditor may require; and

(b) ensure that all such information provided under paragraph (a)
is accurate, complete, not false or misleading in any material
particular,

to enable the auditor to carry out his duties under this Act.

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Reporting obligations of
auditor

72.   An auditor shall report such matter to the Bank immediately in
writing if, in the course of carrying out his duties as an auditor of an
institution under this Act, he is satisfied that—

(a) there has been a breach or contravention of any provision of
this Act or a non-compliance of any standards as may be
specified by the Bank under this Act which may have a
material effect on the financial position of the institution;

(b) an offence involving fraud or dishonesty under any written
law has been committed by the institution or by any director
or officer of the institution;

(c) any irregularity which may have a material effect on the
financial position of the institution, including any irregularity
which jeopardizes or may jeopardize the interests of the
depositors, policy owners, creditors of the institution,
participants or users, or any other serious irregularity, has
occurred;

(d) he is unable to confirm that claims of depositors, policy
owners, creditors of the institution, participants or users, as
the case may be, are covered by the assets of the institution or
insurance fund, as the case may be;

(e) there is any weakness in the internal controls which is
relevant to the financial reporting process undertaken by the
institution; or

(f) the financial position of the institution is likely to be or has
been materially affected by any event, conduct of activity by
the institution or any weakness in the internal controls of the
institution.

Qualified privilege and
duty of confidentiality

Act 498.

73.   (1)   Subsection 133(1) shall not apply to any documents or
information relating to the affairs or account of any customer of a
financial institution subject to such conditions as may be specified
by the Bank, disclosed by an auditor of a financial institution to the
Audit Oversight Board established under the securities commission
Act 1993 [Act 498] or an officer or other person authorized in
writing by the Audit Oversight Board to perform the responsibilities
of the Audit Oversight Board.

  (2)   An auditor of an institution shall not be liable—

(a) for a breach of a duty of confidentiality between the auditor
and the institution in respect of any reporting to the Bank
done in good faith under this Division; or

(b) to be sued in any court for defamation in respect of any
statement made by the auditor without malice in the discharge
of his duties under this Act.

Division 5

Appointed actuaries

Appointment of actuary
by licensed insurer

74.   (1)   Every licensed insurer shall appoint an actuary in respect
of a life or general business carried on by the licensed insurer.

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  (2)   Any actuary to be appointed under subsection (1) shall meet
such requirements or have such qualifications set out in any
standards as may be specified by the Bank under subsection 47(1).

  (3)   Except with the prior written approval of the Bank, no licensed
insurer shall appoint any person as its actuary under subsection (1)
and no person shall accept such appointment.

  (4)   An appointment under subsection (1) shall be for each
financial year or such longer period as approved by the Bank.

Appointment of actuary
by Bank

75.   Without prejudice to section 74, the Bank may appoint an
actuary for a licensed insurer if the licensed insurer fails to appoint
an actuary as required under subsection 74(1) and the remuneration
and expenses relating to such appointment shall be borne by the
licensed insurer.

Duties of appointed
actuary

76.   An appointed actuary shall have such duties and functions set
out in any standards as may be specified by the Bank under
subsection 47(1).

Cessation as appointed
actuary

77.   A person shall cease to be the appointed actuary of a licensed
insurer if—

(a) such person resigns from office;

(b) the licensed insurer terminates his appointment; or

(c) such person, in the opinion of the Bank, no longer meets the
requirements or cease to have the qualifications as may be
specified by the Bank under subsection 74(2).

Notice of cessation as
appointed actuary

78.   (1)   Where a person ceases to be an appointed actuary of a
licensed insurer under section 77, such person shall notify the Bank
in writing of that fact and the reasons of such cessation not later than
seven days from the date of such cessation.

  (2)   Where a person ceases to be the appointed actuary of a
licensed insurer under subsection (1), such insurer shall appoint
another person as its appointed actuary under subsection 74(1) not
later than such period as may be specified by the Bank from the date
of the cessation.

Information to be
provided to appointed

actuary

79.   A licensed insurer and any director, officer or controller of such
licensed insurer shall—

(a) provide the appointed actuary all information within its or his
knowledge or capable of being obtained by it or him which
the appointed actuary may require; and

(b) ensure that all such information provided under paragraph (a)
is accurate, complete, not false or misleading, in any material
particular,

to enable the appointed actuary to carry out his duties and functions
under this Act.

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Qualified privilege and
duty of confidentiality

80.   An appointed actuary shall not be liable—

(a) for a breach of a duty of confidentiality between the
appointed actuary and a licensed insurer in respect of—

(i) any reporting to the Bank; or

(ii) the discharge of his duties and performance of his
functions,

pursuant to any standards as may be specified under
subsection 47(1) which was done or made in good faith; or

(b) to be sued in any court for defamation in respect of any
statement made by the appointed actuary without malice in
the discharge of his duties under this Act.

Division 6

Insurance funds

Establishment and
maintenance of insurance

funds

81.   (1)   A licensed insurer shall establish and maintain one or more
insurance funds for any class or description of its insurance business
as may be specified by the Bank.

  (2)   Notwithstanding subsection (1), a licensed life insurer shall
establish and maintain a separate insurance fund for its life insurance
business relating to participating life policies.

  (3)   The Bank may specify that a licensed life insurer shall
establish and maintain more than one insurance fund for its
participating life policies under subsection (2).

Requirements relating to
insurance funds

82.   (1)   A licensed insurer shall—

(a) pay into an insurance fund all receipts in respect of policies to
which the insurance fund relates and which are issued by it or
under which it has undertaken liability, including all income
of that insurance fund;

(b) maintain at all times assets in an insurance fund of a value
equivalent to or higher than the liabilities of that insurance
fund;

(c) apply the assets of an insurance fund only to meet the
liabilities and expenses properly incurred by that insurance
fund; and

(d) comply with such other requirements as may be specified by
the Bank under paragraph 47(2)(g) including requirements on
the types of assets to be, or not to be, included as assets of the
insurance fund.

  (2)   For the purposes of subsection (1), the Bank may specify what
constitutes “receipts”, “income”, “liabilities” or “expenses” and the
manner to determine or value the receipts, income, assets, liabilities
or expenses.

  (3)   Unless the Bank otherwise approves, a licensed insurer shall
maintain an insurance fund established under section 81 so long as it
is under liability in respect of any policy or insurance claim relating

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to that insurance fund.

Withdrawal from
insurance funds

83.   A licensed insurer shall not make any withdrawal from an
insurance fund, whether from the surplus or otherwise of that
insurance fund, unless—

(a) it has complied with such requirements on withdrawals as
may be specified by the Bank;

(b) the withdrawal does not impair the sustainability of the
insurance fund to meet its liabilities; and

(c) in respect of an insurance fund for participating life policies,
the interests and fair treatment of policy owners, including
their reasonable expectations, have been given due regard.

Assumption of risk 84.   (1)   No licensed insurer shall assume any risk in respect of such
description of policy as may be prescribed by the Bank unless and
until the premium payable is received by the licensed insurer in such
manner and within such time as may be prescribed by the Bank.

  (2)   Where the premium payable under subsection (1) is received
by a person on behalf of a licensed insurer, the receipt shall be
deemed to be receipt by the licensed insurer for the purpose of that
subsection and the onus of proving that the premium was received by
a person who was not authorized to receive the premium shall lie on
the licensed insurer.

Division 7

Subsidiaries

Establishment or
acquisition of subsidiaries
and acquisition or holding

of material interest in
corporation

85.   (1)   No authorized person shall—

(a) establish or acquire a subsidiary in or outside Malaysia; or

(b) acquire or hold any material interest in any corporation,

without the prior written approval of the Bank.

  (2)   The Bank may specify what constitutes “material interest” for
the purposes of paragraph (1)(b).

PART VI

OWNERSHIP, CONTROL AND TRANSFER OF BUSINESS

Application and non-
application

86.   (1)   Divisions 1 and 2 shall apply to a licensed person
incorporated in Malaysia.

  (2)   Sections 87, 88, 89, 99 and 100 shall not apply to the Malaysia
Deposit insurance corporation, its subsidiary, bridge institution or
any person appointed under paragraph 99(1)(c) or section 106 of the
Malaysia Deposit Insurance Corporation Act 2011, where such

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person is exercising its powers under that Act.

Division 1

Interest in shares of licensed person

Acquisition of interest in
shares requiring approval

87.   (1)   Subject to section 92 and except with the prior written
approval of the Bank, no person—

(a) shall enter into an agreement or arrangement, to acquire any
interest in shares of a licensed person by which, if the
agreement or arrangement is carried out, he would hold
(together with any interest in shares of that licensed person
which are already held by such person) an aggregate interest
of five per cent or more in the shares of the licensed person;
or

(b) who has obtained an approval of the Bank under paragraph 90
(3)(a), or the Minister under subsection 90(6) in respect of the
prohibition under subsection (2), as the case may be, shall
enter into any subsequent agreement or arrangement, by
which, if the agreement or arrangement is carried out, he
would hold an aggregate interest in shares of a licensed
person of, or exceeding—

(i) any multiple of five per cent; or

(ii) the percentage holding for a mandatory offer under the
Malaysian Code on Take-Overs and Mergers prescribed
under section 217 of the Capital Markets and Services Act
2007.

  (2)   Notwithstanding subsection (1), no person shall enter into an
agreement or arrangement to acquire any interest in shares of a
licensed person by which, if the agreement or arrangement is carried
out, he would hold (together with any interest in shares of that
licensed person which are already held by such person) an aggregate
of more than fifty per cent of the interest in shares of the licensed
person, without obtaining the prior written approval of the Minister,
on the recommendation of the Bank.

  (3)   For the avoidance of doubt, a person shall not be required to
obtain—

(a) the approval of the Bank—

(i) under subsection (1), for any subsequent acquisition of
interests in the shares of a licensed person, if—

(A) such person has already obtained the approval of the
Bank under that subsection; and

(B) such acquisition will result in the person holding
interest in shares which is less than any multiple of
five per cent; or

(ii) under subparagraph (1)(b)(i), if the approval of the
Minister under subsection (2) is also required for such
acquisition; or

(b) the approval of the Minister under subsection (2) for any
subsequent acquisition of interests in the shares of a licensed
person if such person has already obtained the approval of the

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Minister under subsection 90(6) to hold an aggregate of more
than fifty per cent of interest in shares of the licensed person.

Control over licensed
person prohibited in some

cases

88.   (1)   Subject to subsection (2), no person shall have control over
a licensed person, unless such person obtains the prior written
approval of the Minister, on the recommendation of the Bank.

  (2)   Subsection (1) shall not apply to—

(a) any director or chief executive officer of a licensed person in
respect of the carrying out of his duties and functions in the
management of the licensed person; and

(b) a person who has obtained an approval of the Minister under
subsection 90(6) to hold more than fifty per cent of the
interest in shares of the licensed person.

Disposal of interest in
shares requiring approval

89.   Except with the prior written approval of the Minister, on the
recommendation of the Bank, no person who has an aggregate
interest in shares of a licensed person of—

(a) more than fifty per cent; or

(b) fifty per cent or less but has control over the licensed person,

shall enter into an agreement or arrangement to dispose any interest
in shares of a licensed person by which, if the agreement or
arrangement is carried out, such disposal would result in the person
holding an interest in shares of less than fifty per cent or in any way
ceasing to have control over the licensed person.

Application procedures
for section 87, 88 or 89

90.   (1)   An application for an approval of—

(a) the Bank under subsection 87(1); or

(b) the Minister under subsection 87(2) or 88(1), or section 89,

as the case may be, shall be made by submitting the application to
the Bank together with such documents or information as may be
specified by the Bank.

  (2)   In assessing the suitability of an applicant for the purposes
of—

(a) granting an approval of the Bank under subsection 87(1); or

(b) recommending to the Minister under subsection 87(2) or 88
(1),

the Bank shall take into consideration matters that the Bank
considers relevant including any of the factors set out in Schedule 6,
and any standards as may be specified by the Bank under subsection
91(1).

  (3)   Upon making an assessment under subsection (2) and where
the Bank is satisfied with the suitability of the applicant, the Bank—

(a) may approve an application in respect of subsection 87(1),
with or without conditions; or

(b) may make a recommendation to the Minister to approve the
application in respect of subsection 87(2) or 88(1), with or
without conditions.

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  (4)   Where an application is made under subsection (1) for an
approval of the Minister in respect of section 89, the Bank shall
consider the application and may make a recommendation to the
Minister to grant the approval if the Bank is of the opinion that it
would not be detrimental to the safety and soundness of the licensed
person.

  (5)   The Bank shall notify the applicant in writing if the Bank does
not make a recommendation to the Minister under paragraph (3)(b)
or subsection (4).

  (6)   Where the Bank makes a recommendation pursuant to
paragraph (3)(b) or subsection (4), the Minister may approve the
application, with or without conditions, or reject the application.

  (7)   The Minister, on the recommendation of the Bank, in the case
of an approval under subsection (6), or the Bank, in the case of an
approval under paragraph (3)(a), may, at any time amend or revoke
any condition imposed on such approval under subsection (6) or
paragraph (3)(a), as the case may be.

  (8)   The Bank shall notify the applicant of its decision under
paragraph (3)(a) or the decision of the Minister under subsection (6),
as the case may be.

  (9)   The Bank may, at any time by notice in writing, require a
person who has obtained the approval of the Bank under paragraph
(3)(a) or the Minister under subsection (6) in respect of subsection
87(2) or 88(1), to submit any information or particulars of any share
acquired or held directly or indirectly either for his own benefit or
any other person.

  (10)   Any person who has been served with a notice under
subsection (9) shall submit to the Bank such information and
particulars as may be specified by the Bank.

Power of bank to specify
standards on shareholder

suitability

91.   (1)   The Bank may specify standards on shareholder suitability
to give full effect to Schedule 6.

  (2)   Any person who has obtained the approval of the Bank under
paragraph 90(3)(a) or the Minister under subsection 90(6) in respect
of subsection 87(2) or 88(1), shall at all times comply with the
standards as may be specified under subsection (1) to the satisfaction
of the Bank.

Maximum permissible
holdings

92.   No individual shall hold more than ten per cent of interest in
shares of a licensed person.

Notification on
acquisition or disposal of

interest in shares of
licensed person

93.   (1)   Where it comes to the knowledge of a director or an officer
of a licensed person or a financial holding company that—

(a) any agreement or arrangement as referred to in section 87 or
89 has been or is about to be effected; or

(b) any person approved by the Bank under paragraph 90(3)(a) or
the Minister under subsection 90(6) in respect of subsection
87(2) or 88(1), has failed to comply or is likely to fail to
comply with standards as may be specified under subsection

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91(1),

the director or officer shall immediately notify the Bank of all such
information which is within his knowledge.

  (2)   No director or officer shall be liable to any action for
defamation at the suit of any person or be subject to any disciplinary
proceedings in respect of the notification under subsection (1) made
by the director or officer without malice.

Division 2

Action by Bank in event of breach

Order against defaulting
persons

94.   (1)   Where the Bank is satisfied that any person (in this section
referred to as “the defaulting person”)—

(a) has breached section 87, 88, 89 or 92;

(b) has failed to comply with any condition imposed pursuant to
the approval of the Bank or the Minister, as the case may be,
under section 87, 88 or 89; or

(c) has failed to comply with any standards as may be specified
by the Bank under subsection 91(1),

the Bank may exercise its powers under subsection (2) as may be
applicable or appropriate in the circumstances of the breach or non-
compliance.

  (2)   Subject to section 262, where any of the circumstances
described in subsection (1) exists, the Bank may make the following
order:

(a) in respect of any shares which are the subject of the breach or
non-compliance—

(i) prohibit the transfer of, or the carrying out of the
agreement to transfer, such shares, or, in the case of
unissued shares, prohibit the transfer of, or the carrying
out of the agreement to transfer, the right to be issued with
such unissued shares;

(ii) prohibit the exercise of any voting rights in respect of
such shares;

(iii) prohibit the issue of any further shares in right of such
shares or in pursuance of any offer made to their holder;

(iv) except in a liquidation, prohibit the payment of any sum
due from the licensed person on such shares, whether in
respect of capital or otherwise; or

(v) direct the defaulting person to surrender the shares to the
Bank within a certain period as may be specified by the
Bank; or

(b) in respect of a breach of section 88, direct the defaulting
person to take such necessary actions as may be specified by
the Bank in order to cease exercising or to relinquish its
control over a licensed person.

  (3)   An order made under subsection (2) shall be served on the
defaulting person as soon as is practicable, and may be published by

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the Bank in such manner as the Bank deems fit.

  (4)   Where a defaulting person has been served with an order under
subsection (2), he shall notify any person for the time being holding
any shares to which such order applies, any other person specified in
the order or any person to whom the order is directed.

  (5)   An order under subsection (2) shall be binding on the
defaulting person, any person for the time being holding any shares
to which such order applies and any other person specified in the
order or any person to whom the order is directed, notwithstanding—

(a) anything contained in any constituent documents of the
licensed person; or

(b) anything contained in any contract entered into by such
persons affecting the shares relating to the licensed person.

  (6)   The Bank may give such instructions or directions to the
directors or officers of the licensed person as may be necessary or
requisite to give effect to any order of the Bank under this section, or
as may be incidental, ancillary or consequential to such order.

  (7)   Any transaction entered into by the defaulting person,
including any agreement or arrangement in relation to any shares,
interest in shares, or security, which is in contravention of any order
under subsection (2) or of any instructions or directions given by the
Bank under subsection (6), shall be void and of no effect.

  (8)   The satisfaction of the Bank under subsection (1) that a person
has breached or failed to comply with section 87, 88 or 89 or
standards specified by the Bank under subsection 91(1), may be
arrived at regardless that there has been no exercise of any action in
respect of such breach or non-compliance.

  (9)   A person who fails to comply with an order issued under
subsection (2) or contravenes subsection (4) commits an offence and
shall, on conviction, be liable to imprisonment for a term not
exceeding eight years or to a fine not exceeding twenty-five million
ringgit or to both.

Additional provisions
relating to order under

subparagraph 94(2)(a)(v)

95.   (1)   After considering the representation made by the
defaulting person under section 262 and where the Bank confirms an
order made under subparagraph 94(2)(a)(v), the Bank may dispose
of the shares surrendered to it pursuant to the order made under that
subparagraph to such persons and to such extent as shall be
consistent with the same being held lawfully by the person who
acquires the shares under this Act.

  (2)   The proceeds of the disposal of the shares under subsection (1)
shall be paid into the High court, and any person claiming to be
beneficially entitled to the whole or any part of such proceeds may,
within thirty days of such payment into the High court, apply to a
judge of the High court in chambers for payment out of the same to
him.

Division 3

Interest in shares of approved person

Page 62 of 180

Interpretation 96.   For the purposes of this Division, “an approved person” does
not include an approved operator of a payment system and an
approved issuer of a designated payment instrument.

Acquisition of interest in
shares of approved person

97.   (1)   Where a person enters into an agreement or arrangement to
acquire any interest in shares of an approved person, by which, if the
agreement or arrangement is carried out, he would hold, together
with any interest in shares of the approved person which were then
already held by him, an aggregate interest in shares of not less than
five per cent of the shares of the approved person, such person shall
notify the Bank of such fact upon entering into such agreement or
arrangement within the period as may be specified by the Bank.

  (2)   In addition to subsection (1), no person shall enter into any
agreement or arrangement for the purpose of acquiring interest in
shares pursuant to subsection (1), if such acquisition will result in a
change in the control of an approved person, unless such person
obtains the prior written approval of the Bank upon entering into
such agreement or arrangement.

  (3)   The Bank may specify standards on shareholder suitability to
give full effect to subsections (1) and (2).

  (4)   Any person who has notified the Bank under subsection (1) or
obtained the approval of the Bank under subsection (2), shall at all
times comply with the standards specified by the Bank under
subsection (3) to the satisfaction of the Bank.

  (5)   For the purposes of this section, the Bank may, at any time by
notice in writing, require a person who has notified the Bank under
subsection (1) or obtained the approval of the Bank under subsection
(2) to submit any information or particulars of any share acquired or
held directly or indirectly either for his own benefit or any other
person.

  (6)   Any person who has been served with a notice under
subsection (5) shall submit to the Bank such information and
particulars as may be specified by the Bank.

Division 4

Transfer of business, reconstruction or amalgamation of licensed
person

Interpretation 98.   For the purposes of this Division—

   “security” includes a mortgage or charge, whether legal or
equitable, debenture, bill of exchange, promissory note, guarantee,
lien or pledge, whether actual or constructive, hypothecation,
indemnity, undertaking or other means of securing payment or
discharge of a debt or liability, whether present or future, or whether
vested or contingent;

   “transferee” means a person, including a licensed person, to which
the whole or any part of the licensed business of a transferor is
transferred under a business transfer scheme;

   “transferor” means a licensed person which transfers the whole or
any part of its licensed business under a business transfer scheme.

Page 63 of 180

Approval required for
reconstruction or

amalgamation of licensed
person

99.   No person shall enter into an agreement or arrangement for the
reconstruction or amalgamation under the Companies Act 1965 of a
licensed person except with the prior written approval of the
Minister, on the recommendation of the Bank.

Approval required for
business transfer scheme

100.   (1)   No person shall enter into an agreement or arrangement
for a scheme to transfer the whole or any part of the business of a
licensed person, except with the prior written approval of the Bank.

  (2)   For the purposes of subsection (1), in the case of a licensed
person which is a foreign insurer, a reference to “business” in
subsection (1) is a reference to its Malaysian business as may be
specified by the Bank.

  (3)   The transferor and transferee shall jointly submit an
application for the approval of the Bank together with such
documents or information as may be specified by the Bank.

  (4)   Where an agreement or arrangement for a business transfer
scheme proposes to transfer the whole business, or a material part of
the business of a licensed person, the Bank shall, prior to giving
approval—

(a) be satisfied that the proposed agreement or arrangement is not
prejudicial to—

(i) the interests of any person likely to be affected by the
scheme; and

(ii) the safety and soundness of such licensed person; and

(b) obtain the concurrence of the Minister in respect of the
proposed agreement or arrangement.

  (5)   For the purpose of subsection (4), the Bank may, after
consultation with the Minister, specify what constitutes a material
part of the business of a licensed person.

  (6)   The Bank may approve an application submitted under
subsection (3), with or without conditions, or reject the application.

  (7)   The Bank shall notify the transferor and transferee of its
decision under subsection (6) in writing.

Notification of business
transfer scheme

101.   (1)   Before an application is made to the High Court under
subsection 102(1), a transferor shall publish in the Gazette a notice
stating its intention to make the application to the High Court for
confirmation of the business transfer scheme.

  (2)   In addition to the notice under subsection (1), the Bank may
require the transferor to give such other notice in respect of the
business transfer scheme and for such purpose, the Bank may specify
the following requirements:

(a) persons to whom, and when such notices shall be given;

(b) the form or manner of the notices to be given; and

(c) the period within which a person specified under paragraph
(a) may object to the proposed scheme.

  (3)   Where any person files an objection to the proposed scheme,

Page 64 of 180

the transferor, with the approval of the Bank, may modify the
scheme.

Application to High Court
for confirmation of

business transfer scheme

102.   (1)   Upon obtaining the approval of the Bank under
subsection 100(6), the transferor and transferee may make an
application to the High Court for confirmation of the business
transfer scheme.

  (2)   An application to the High Court with respect to any matter
connected with a business transfer scheme may be made by a person,
who in the opinion of the High Court, is likely to be affected by the
scheme, at any time before the High Court grants an order under
subsection (3) confirming the scheme.

  (3)   The High Court may confirm the business transfer scheme by
granting an order in the terms applied for, or with modifications to
the terms applied, or refuse to confirm the scheme.

  (4)   When the High Court makes an order confirming the business
transfer scheme under subsection (3) after hearing all parties
concerned, the High Court shall fix a date, to be applied for by the
transferor and transferee and to be known as the transfer date, on
which the business transfer scheme shall take effect.

Bank to be party to
proceedings

103.   (1)   A person making an application to the High Court under
subsection 102(2) in relation to a business transfer scheme shall—

(a) deliver a copy of the application to the Bank;

(b) give notice to the Bank of all proceedings relating to the
application; and

(c) give to the Bank a copy of any document relating to the
proceedings,

at the same time as the proceedings are instituted or the document is
lodged, in the High Court or the document is served on a party to the
proceedings.

  (2)   The Bank shall be entitled to be heard in proceedings relating
to the application under subsection (1).

  (3)   Notwithstanding that the Bank has given its approval to a
business transfer scheme under subsection 100(6), the Bank may
propose any modification to the scheme.

Orders sought by
transferor and transferee

104.   (1)   In an application made under subsection 102(1), the
transferor and transferee may seek all or any of the following orders:

(a) for the transferor’s rights and title to the assets to be
transferred to the transferee under a business transfer scheme
without the need to effect the transfer of rights and titles to
each asset individually;

(b) in relation to a banking or an investment banking business
transfer scheme, for any account between the transferor and
its customer to become an account between the transferee and
the customer, subject to the same conditions and incidents
existed between the transferor and its customer, and such
account to be deemed for all purposes to be a single
continuing account;

Page 65 of 180

(c) in relation to an insurance business transfer scheme, for the
transferee to be fully responsible for liabilities transferred by
the business transfer scheme whether arising out of policies or
otherwise as though the liabilities were originally assumed by
the transferee without the need for the transferee to confirm
each liability individually;

(d) for any existing instrument, whether in the form of a deed,
will or otherwise, or order of any court, under or by virtue of
which any property became vested in the transferor, to be
construed and to have effect as if for any reference therein to
the transferor there were substituted a reference to the
transferee;

(e) for any existing agreement to which the transferor was a party
to have effect as if the transferee had been a party thereto
instead of the transferor;

(f) for any existing instruction, order, direction, mandate, power
of attorney, authority, undertaking or consent, whether or not
in relation to an account, given to the transferor, either alone
or jointly with another person, to have effect, in respect of
anything due to be done as if given to the transferee either
alone or, as the case may be, jointly with the other person;

(g) for any negotiable instrument or order for payment of money
drawn on, or given to, or accepted or endorsed by, the
transferor or payable at the office of the transferor, whether so
drawn, given, accepted or endorsed before, on, or after, the
transfer date, to have the same effect on and from the transfer
date, as if it had been drawn on, or given to, or accepted or
endorsed by, the transferee or were payable at the office of
the transferee;

(h) for the custody of any document, goods or thing held by the
transferor as bailee immediately before the transfer date to
pass to the transferee and the rights and obligations of the
transferor under any contract of bailment relating to any such
document, goods or thing to be transferred to the transferee;

(i) for any security held immediately before the transfer date by
the transferor, or by a nominee of, or trustee for, the
transferor, as security for the payment or discharge of any
liability of any person, to be held by the transferee or, as the
case may be, to be held by that nominee or trustee as the
nominee of, or trustee for, the transferee, and to the extent of
those liabilities, be available to the transferee as security for
the payment or discharge of those liabilities; and where any
such security extends to future advances or future liabilities,
to be held by, and to be available as aforesaid to, the
transferee as security for future advances by, and future
liabilities to, the transferee in the same manner in all respects
as future advances by, or future liabilities to, the transferor
were secured thereby immediately before the transfer date;

(j) where any right or liability of the transferor is transferred to
the transferee, for the transferee to have the same rights,
powers and remedies (and in particular the same rights and
powers as to taking or resisting legal proceedings or making
or resisting applications to any authority) for ascertaining,
protecting or enforcing that right or resisting that liability as if
it had at all times been a right or liability of the transferee,
including those rights or liabilities in respect of any legal

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proceedings or applications to any authority pending
immediately before the transfer date by or against the
transferor;

(k) any judgment or award obtained by or against the transferor
and not fully satisfied before the transfer date to be
enforceable by or, as the case may be, against the transferee;
and

(l) for all such incidental, consequential and supplemental orders
as are necessary to secure that the business transfer scheme
shall be fully and effectively carried out.

  (2)   Where the order for confirmation of the High Court under
subsection 102(3) provides for the transfer of any business, including
assets and liabilities, vested in or held by the transferor, either alone
or jointly with any other person, then, by virtue of the order, that
business, including assets and liabilities, shall, on and from the
transfer date, become vested in or held by the transferee either alone
or, as the case may be, jointly with such other person, and the order
shall have effect according to its terms notwithstanding anything in
any law and shall be binding on all persons affected by it, regardless
that the person is not a party to the proceedings under this Division
or any other related proceedings, or had no notice of the proceedings
under this Division or of other related proceedings.

  (3)   Where an order of the High Court under subsection 102(3)
vests any alienated land, or any share or interest in any alienated
land, in the transferee—

Act 56/1965. (a) the High Court shall, where such alienated land is in
Peninsular Malaysia, pursuant to subsection 420(2) of the
National Land Code [Act 56 of 1965], cause a copy of the
order to be served on the Registrar of Titles or the Land
Administrator, as the case may be, immediately after the
making of the order so that the Registrar of Titles or the Land
Administrator, as the case may be, gives effect to subsections
420(2), (3) and (4) of the National Land Code;

Sabah Cap.68. (b) where such alienated land is in Sabah, the transferee shall, as
soon as practicable after the order has been made, present an
authenticated copy of such order to the Registrar for
registration of the vesting of the alienated land or of the share
or interest in alienated land as provided under the Land
Ordinance of Sabah [Sabah Cap. 68]; or

Swk Cap.81. (c) where such alienated land is in Sarawak, the transferee shall,
as soon as practicable after the order has been made, produce
an authenticated copy of such order to the Registrar for the
registration of the vesting of the alienated land or of the share
or interest in alienated land, in the transferee, as provided
under section 171 of the Land Code of Sarawak [Sarawak
Cap. 81].

  (4)   An order of the High Court under subsection 102(3) may relate
to any assets or business of the transferor outside Malaysia and, if it
so relates, effect may be given to it either in accordance with any
reciprocal arrangements relating to enforcement of judgments that
may exist between Malaysia and the country, territory or place
outside Malaysia in which such assets or business is, or where there
are no such arrangements, in accordance with the law applicable in
such country, territory or place.

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Publication of court order
under section 102

105.   (1)   An order of the High Court made under subsection 102(3)
shall, subject to the directions of the High Court, be published by the
transferee in not less than two daily newspapers published in
Malaysia and approved by the Bank, one of which shall be in the
national language and the other in English.

  (2)   A transferor shall, within thirty days after the business transfer
scheme has taken effect, lodge—

(a) such documents or information relating to the business
transfer scheme as may be specified by the Bank, with the
Bank; and

(b) a certified copy of such order made by the High Court under
subsection 102(3) together with a certified copy of the Bank’s
approval, with—

(i) the Registrar of Companies; and

(ii) the appropriate authority, if any, concerned with the
registration or recording of dealings in any movable
property, or any interest in movable property transferred
pursuant to the order.

Reimbursement of Bank’s
expenses

106.   The transferor and transferee shall be jointly and severally
liable to reimburse the Bank for any expenses the Bank may incur
under this Division.

Prohibition of payment
out of insurance fund

107.   Unless the Bank otherwise approves, no licensed insurer shall
pay to any person any remuneration out of the assets of an insurance
fund in relation to a business transfer scheme.

PART VII

FINANCIAL GROUPS

Purpose of this Part 108.   The Bank is empowered under this Part to exercise oversight
over financial groups for the purposes of promoting the safety and
soundness of a licensed person.

Disapplication of sections
110 and 111 to licensed

persons

109.   Sections 110 and 111 shall not apply to licensed persons.

Application to be
financial holding

company

110.   (1)   Any company which has to obtain the prior written
approval of the Minister under section 87 to hold an aggregate
interest in shares of more than fifty per cent in a licensed person
shall submit an application to the Bank for it to be approved as a
financial holding company.

  (2)   A company referred to in subsection (1) may propose another
company within its corporate group to be approved as a financial
holding company if it can be shown that the proposed company is in
a position to have control over the licensed person and its proposed
financial group.

  (3)   A person, other than a foreign institution or a company

Page 68 of 180

referred to in subsections (1) and (2), which is required to obtain the
prior written approval of the Minister under section 87 to hold an
aggregate interest in shares of more than fifty per cent in a licensed
person shall propose a company within its corporate group which
will have control over a licensed person and such proposed company
shall submit to the Bank an application to be approved as a financial
holding company.

Power of Bank to require
submission of application

111.   Where the Bank considers it is necessary for the purpose of
maintaining effective regulation and supervision of a licensed
person, the Bank may require—

(a) any other company within the corporate group of the
applicant, if the Bank is of the opinion that neither the
applicant nor the other company proposed by the applicant
under section 110 should be approved as a financial holding
company; or

(b) a company which has an aggregate interest in shares of fifty
per cent or less in the licensed person but has control over the
licensed person,

to submit to the Bank an application to be approved as a financial
holding company.

Approval of application
as financial holding

company under section
110 or 111

112.   (1)   An application to be a financial holding company under
section 110 or 111, as the case may be, shall be submitted to the
Bank together with such documents or information as may be
specified by the Bank.

  (2)   In assessing an application under section 110 or 111 for an
applicant company to be approved as a financial holding company
submitted under subsection (1), the Bank shall have regard to all
matters that the Bank considers relevant including the factors set out
in Schedule 6 and any standards specified by the Bank under
subsection 91(1).

  (3)   Where the Bank is satisfied that such matters referred to in
subsection (2) have been fulfilled by the applicant, the Bank may
approve an application made pursuant to section 110 or 111, as the
case may be, with or without conditions, or reject such application.

  (4)   The Bank may, at any time, in writing amend or revoke any
existing condition of approval of a financial holding company under
subsection (3) or impose any new condition thereto and such
conditions shall not have retrospective effect.

  (5)   The Bank shall notify the applicant of its decision under
subsection (3) in writing.

Bank may approve more
than one financial holding

company

113.   The Bank may require more than one company within a
corporate group of the applicant to be approved as a financial
holding company.

Business of financial
holding company

114.   (1)   Unless the Bank otherwise approves, a financial holding
company of a licensed person shall not carry on any business, other
than the business of holding investments directly or indirectly in
corporations which are primarily engaged in financial services or in

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other services in connection with or for the purpose of such financial
services.

  (2)   The Bank may specify standards to give full effect to
subsection (1).

Prudential requirements
on financial holding

company and subsidiaries

115.   (1)   Subject to subsection (2), Part V shall apply to a financial
holding company as if references in that Part to an “institution” or a
“licensed person” are references to a “financial holding company”.

  (2)   The Minister may, on the recommendation of the Bank, by an
order published in the Gazette, provide that all or any provision of
Part V—

(a) shall not apply to a financial holding company; or

(b) shall apply with such modifications consistent with the
regulatory objectives of this Act.

  (3)   The Bank may specify standards on prudential matters under
section 47 to a subsidiary of a financial holding company, if the
Bank is of the opinion that the activities of such subsidiary may pose
risks to the licensed person or its financial group.

  (4)   A subsidiary of a financial holding company referred to in
subsection (3) shall at all times ensure that its internal policies and
procedures are consistent with the standards specified by the Bank
under that subsection.

  (5)   A financial holding company or any of its subsidiries which
contravenes any provision of this Act or any standards, notice,
direction, condition, specification or requirement specified or issued
by the Bank under any provision of this Act applied to it under this
section commits a breach and the Bank may take an action under
paragraph 234(3)(b) in addition to other enforcement actions that the
Bank is empowered to take under this Act.

[sic]

Power to issue directions
to financial holding

company and subsidiaries

116.   (1)   The Bank may issue one or more of the directions
specified in subsection (2) or (3), if the Bank is of the opinion that—

(a) the financial holding company, its subsidiary or director,
chief executive officer or senior officer of such financial
holding company or such subsidiary—

(i) is committing or is about to commit an act, or is pursuing
or is about to pursue any course of conduct or carrying on
its business, in a manner that is detrimental to the safety
and soundness of a licensed person;

(ii) has failed to comply with any standards, notice, condition,
specification, requirement, restriction, direction or code
specified, issued or made under this Act or a direction
under subsection 214(6) or section 216 regardless that
there has been no prosecution or other action in respect of
such non-compliance; or

(iii) has breached or contravened any provision of this Act
which is applicable to such financial holding company or
any of its subsidiaries, the Central Bank of Malaysia Act
2009 or any written law, other than securities laws as
defined in the Securities Commission Act 1993,
regardless that there has been no prosecution or other

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action in respect of such breach or contravention; or

(b) any state of affairs exist in respect of a financial group that
may directly or indirectly affect the safety and soundness of a
licensed person.

  (2)   Subject to section 262, the Bank may issue a direction in
writing to a financial holding company, any of its subsidiaries or a
director or chief executive officer of such financial holding company
or such subsidiary, to cease or refrain from committing an act or
pursuing a course of conduct or to do any act, in relation to its
business, affairs or property if the Bank is of the opinion that it is
necessary to remedy any of the circumstances in subsection (1).

  (3)   Without limiting the generality of subsection (2) and subject to
section 262, a direction under subsection (2) may include any one or
more of the following directions:

(a) to vary or terminate any agreement or arrangement other than
any qualified financial agreement entered into by the financial
holding company or any of its subsidiaries with any person in
relation to its business, affairs or property;

(b) to dispose of all or any of the investments or assets held by
the financial holding company or any of its subsidiaries in
any body corporate;

(c) to prohibit the financial holding company or any of its
subsidiaries from carrying on any part of its business;

(d) to prohibit the financial holding company or any of its
subsidiaries from entering into any other transaction or class
of transactions, or to enter into it subject to such restrictions
or conditions as may be specified by the Bank; or

(e) with respect to a financial holding company, to increase its
capital to such amount as may be specified by the Bank.

General provisions
dealing with directions

117.   (1)   The direction issued under subsection 116(2) or (3) shall
specify—

(a) the grounds on which the Bank proposes to issue the
direction; and

(b) the time by which, or period during which, the direction is to
be complied with.

  (2)   The Bank may at any time—

(a) amend or revoke a direction; or

(b) replace a direction with another direction.

  (3)   Any direction issued under subsection 116(2) or (3) shall not
affect the enforcement by the parties of their rights under a qualified
financial agreement.

Consequences of failing
to comply with directions

118.   A financial holding company, its subsidiary, director or chief
executive officer of such financial holding company or such
subsidiary who fails to comply with a direction issued under
subsection 116(2) or (3) commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding ten
years or to a fine not exceeding fifty million ringgit or to both.

Page 71 of 180

Additional provisions
relating to paragraph 116

(3)(e)

119.   (1)   A direction issued pursuant to paragraph 116(3)(e) may
direct the financial holding company to issue shares or other capital
instruments of a kind specified in the direction.

  (2)   Where the financial holding company issues shares or other
capital instruments in compliance with a direction pursuant to
subsection (1), the financial holding company shall give a notice in
writing to the members of the financial holding company, to
subscribe to the shares or other capital instruments within the period
specified in the notice.

  (3)   Where a member of the financial holding company does not
subscribe to the shares or other capital instruments within the period
specified in the notice given by the financial holding company
pursuant to subsection (2), the Bank may issue a further direction
pursuant to subsection 116(2) to the financial holding company
requiring the financial holding company to allot the shares or other
capital instruments to a person determined by the Bank.

Power to remove director
or chief executive officer

of financial holding
company

120.   (1)   Subject to section 262, the Bank may by a notice in
writing, remove a director or chief executive officer of a financial
holding company if the Bank is of the opinion that the director or
chief executive officer of the financial holding company—

(a) no longer fulfills the fit and proper requirements specified by
the Bank under section 60 which is applicable to a financial
holding company pursuant to section 115, and fails to cease
holding such office or acting in such capacity; or

(b) has failed to comply with or by action or negligence has
contributed to the breach or contravention of, any provision
of this Act, a direction of the Bank referred to in section 116
or an enforceable undertaking accepted by the Bank under
section 259.

  (2)   A director or chief executive officer removed from office or
employment in a financial holding company under subsection (1)
shall cease to hold the office from which he is removed with effect
from the date set out in the order and shall cease to be concerned
with the business or affairs of the financial holding company.

  (3)   Notwithstanding anything contained in any contract of service
or any other agreement relating to his appointment, the removal of
the director or chief executive officer under subsection (1) shall not
entitle him to claim any compensation for such removal.

PART VIII

BUSINESS CONDUCT AND CONSUMER PROTECTION

Division 1

Interpretation

Interpretation 121.   For the purposes of this Division, Division 2 and Schedule 7—

   “eligible complainant” means any person who is eligible to refer a

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dispute to a financial ombudsman scheme in accordance with the
terms of reference of the scheme;

   “financial consumer” means any person who uses, has used or may
be intending to use, any financial service or product—

(a) for personal, domestic or household purposes;

(b) in connection with a small business as may be specified by
the Bank under section 123; or

(c) whether or not for the purposes set out in paragraph (a) or (b),
if—

(i) the value of the financial services or products does not
exceed an amount as may be specified by the Bank under
section 123; or

(ii) such person is of a class, category or description of
persons as may be specified by the Bank under section
123;

   “financial ombudsman scheme” means a scheme for the resolution
of disputes between an eligible complainant and a financial service
provider in respect of financial services or products;

   “financial services or products” means financial services or
financial products developed, offered or marketed, by a financial
service provider or for and on behalf of another person by a financial
service provider;

   “financial service provider” means an authorized person or a
registered person but excludes an approved money-broker.

Division 2

Business conduct, complaints, disputes, etc.

Application 122.   (1)   Sections 123 and 124 shall apply without prejudice to the
provisions of the Capital Markets and Services Act 2007 in so far as
such provisions relate to capital market products or capital market
services as defined in subsection 2(1) of the Capital Markets and
Services Act 2007, developed, offered or marketed by a licensed
bank, licensed insurer or licensed investment bank.

  (2)   The Bank shall enter into an arrangement in writing with the
Securities Commission to coordinate on the regulation of business
conduct relating to capital market products or capital market services
as defined in subsection 2(1) of the Capital Markets and Services Act
2007, developed, offered or marketed by a licensed bank, licensed
insurer or licensed investment bank.

Standards on business
conduct

123.   (1)   The Bank may specify standards on business conduct to a
financial service provider for the purposes of ensuring that a
financial service provider is fair, responsible and professional when
dealing with financial consumers.

  (2)   Without limiting the generality of subsection (1), standards
specified under that subsection may include standards relating to—

(a) transparency and disclosure requirements including the
provision of information to financial consumers that is

Page 73 of 180

accurate, clear, timely and not misleading;

(b) fairness of terms in a financial consumer contract for financial
services or products;

(c) promotion of financial services or products;

(d) provision of recommendations or advice including
assessments of suitability and affordability of financial
services or products offered to financial consumers; and

(e) complaints and dispute resolution mechanisms.

  (3)   The Bank may specify any class, category or description of
persons for purposes of the definition of “financial consumer” in
section 121.

  (4)   Where the Bank specifies a standard on business conduct
under subsection (1) which relates specifically to capital market
products or capital market services as defined in subsection 2(1) of
the Capital Markets and Services Act 2007, such standard shall be
specified jointly with the Securities Commission.

Prohibited business
conduct

124.   (1)   A financial service provider shall not engage in any
prohibited business conduct set out in Schedule 7.

  (2)   Without limiting the generality of section 266, the Bank may
issue guidance in writing on—

(a) descriptions of conduct which amount to; or

(b) factors that are to be taken into account in determining
whether a financial service provider has engaged in,

any prohibited business conduct set out in Schedule 7.

  (3)   Where the Bank issues guidance relating to prohibited business
conduct set out in paragraphs 5 and 6 of Schedule 7, such guidance
shall be issued in consultation with the Competition Commission.

  (4)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding ten million ringgit
or to both.

  (5)   In relation to any complaint from an aggrieved person
involving the prohibited business conduct set out in paragraphs 5 and
6 of Schedule 7, the Bank shall refer such complaint to the
Competition Commission.

Approved insurance
broker, approved financial

adviser and approved
issuer of designated

payment instrument to
establish customer

account

125.   (1)   Where—

(a) an approved insurance broker or approved financial adviser
receives any money—

(i) from or on behalf of an insured or potential insured for or
on account of a licensed insurer in connection with a
contract of insurance or a proposed contract of insurance;
or

Page 74 of 180

(ii) from or on behalf of a licensed insurer for or on account
of an insured; or

(b) an approved issuer of a designated payment instrument as
may be determined by the Bank, receives any money from or
on behalf of its user in exchange of the payment instrument
issued,

such approved person shall, for the purposes of this section, establish
and maintain one or more accounts for its customers in a licensed
bank separate from its own account.

  (2)   For the purposes of subsection (1)—

(a) a lien or claim on, or a right to set-off, the moneys in any
account established for customers under subsection (1) shall
be void unless the moneys are for fees due and owing to such
approved persons; and

(b) a charge, mortgage or an attachment on the moneys in any
account established for customers under subsection (1) shall
be void.

  (3)   Moneys in the account established for customers under
subsection (1) is taken to be held in trust by the approved persons for
the benefit of the customers.

Financial ombudsman
scheme

126.   (1)   For the purposes of ensuring effective and fair handling
of complaints and for the resolution of disputes in connection with
financial services or products, regulations may be made under
section 260 to require any class, category or description of financial
service providers—

(a) to be a member of a financial ombudsman scheme approved
under subsection (2); and

(b) at all times, to comply with terms of membership of such
scheme.

  (2)   The Bank may approve any financial ombudsman scheme for
the purposes of paragraph (1)(a).

  (3)   Regulations may be made under section 260 for the purposes
of ensuring a financial ombudsman scheme is fair, accessible and
effective, including regulations on the following:

(a) the matters that the Bank may have regard to in determining
whether to approve a financial ombudsman scheme under
subsection (2);

(b) the functions and duties of, or other requirements to be
complied with by any person operating a financial
ombudsman scheme;

(c) the terms of a financial ombudsman scheme setting out the
scope including types of dispute that may be referred to it and
its eligible complainants, membership requirements,
application, operations, procedures, the fees that may be
charged and the types of award which may be granted under
the financial ombudsman scheme;

(d) appointment of directors of any person operating a financial
ombudsman scheme;

(e) the documents or information that shall be submitted by any

Page 75 of 180

person operating a financial ombudsman scheme to the Bank;
and

(f) withdrawal or suspension of an approval under subsection (2).

  (4)   A financial service provider, who is a member of a financial
ombudsman scheme approved under subsection (2), shall—

(a) provide documents or information as may be required for the
purposes of the resolution of disputes referred to the financial
ombudsman scheme; and

(b) comply with any award granted under the financial
ombudsman scheme, including a direction that requires the
financial service provider to take such steps in relation to a
dispute.

Act 599.   (5)   Where a dispute has been referred to a financial ombudsman
scheme by an eligible complainant, the eligible complainant is not
entitled to lodge a claim on such dispute with the Tribunal for
Consumer Claims established under the Consumer Protection Act
1999 [Act 599].

Division 3

Insurance issues

Obtaining insurance
outside Malaysia

127.   (1)   Except with the prior written approval of the Bank, no
person shall enter into or cause to be entered into, a contract of
general insurance of such description as may be prescribed by the
Bank with an insurer other than a licensed general insurer.

  (2)   The Bank may grant an approval under subsection (1) after
consultation with the Minister.

  (3)   A person shall provide to the Bank such information on any
contract of general insurance entered into, or caused to be entered
into with an insurer other than a licensed general insurer, as the Bank
may require by notice in writing within such period as may be
specified in the notice.

Provisions relating to
policies

128.   Schedule 8 sets out provisions relating to policies.

Pre-contractual disclosure
and representations, and

remedies for
misrepresentations

129.   (1)   Schedule 9 sets out the pre-contractual duty of disclosure
and representations for contracts of insurance in Part 2, and the
remedies for misrepresentations relating to contracts of insurance in
Part 3.

[Nyf]

  (2)   Any person who contravenes the duty of disclosure under
paragraph 11 of Schedule 9 commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding five
years or to a fine not exceeding ten million ringgit or to both.

Payment of policy
moneys under life policy

and personal accident
policy
Act 67.

130.   Schedule 10 sets out provisions for the payment of policy
moneys upon death of a policy owner under a life policy, including a
life policy under section 23 of the Civil Law Act 1956 [Act 67] and a
personal accident policy effected by him upon his own life.

Page 76 of 180

Division 4

Information and secrecy

Interpretation 131.   For the purposes of this Division—

   “customer” includes a participant or user;

   “financial institution” refers to—

(a) a licensed bank;

(b) a licensed investment bank;

(c) an approved operator of a payment system;

(d) a registered operator of a payment system;

(e) an operator of a designated payment system; or

(f) an approved issuer of a designated payment instrument.

Restriction on inquiring
specifically into affairs of

particular customer

132.   (1)   Nothing in this Act shall—

(a) authorize the Minister to direct the Bank; or

(b) authorize the Bank,

to inquire specifically into the affairs or account of any customer of
any authorized person.

  (2)   Notwithstanding paragraph (1)(b), the Bank may inquire into
the affairs or account of a customer of an authorized person for the
purposes of exercising its powers or functions under this Act, the
Islamic Financial Services Act 2013 or section 47 of the Central
Bank of Malaysia Act 2009.

Secrecy 133.   (1)   No person who has access to any document or
information relating to the affairs or account of any customer of a
financial institution, including—

(a) the financial institution; or

(b) any person who is or has been a director, officer or agent of
the financial institution,

shall disclose to another person any document or information
relating to the affairs or account of any customer of the financial
institution.

  (2)   Subsection (1) shall not apply to any document or information
relating to the affairs or account of any customer of a financial
institution—

(a) that is disclosed to the Bank, any officer of the Bank or any
person appointed under this Act or the Central Bank of
Malaysia Act 2009 for the purposes of exercising any powers
or functions of the Bank under this Act or the Central Bank of
Malaysia Act 2009;

(b) that is in the form of a summary or collection of information

Page 77 of 180

set out in such manner as does not enable information relating
to any particular customer of the financial institution to be
ascertained from it; or

(c) that is at the time of disclosure is, or has already been made
lawfully available to the public from any source other than
the financial institution.

  (3)   No person who has any document or information which to his
knowledge has been disclosed in contravention of subsection (1)
shall disclose the same to any other person.

  (4)   Any person who contravenes subsection (1) or (3) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding ten million ringgit
or to both.

Permitted disclosures 134.   (1)   A financial institution or any of its directors or officers
may—

(a) for such purpose or in such circumstances as set out in the
first column of Schedule 11, disclose any document or
information relating to the affairs or account of its customer
to such persons specified in the second column of that
Schedule; or

(b) disclose any document or information relating to the affairs or
account of its customer to any person where such disclosure
is approved in writing by the Bank.

  (2)   The financial institution or its directors or officers making a
disclosure for the purposes or in such circumstances set out in
Schedule 11 and paragraph (1)(b), shall be subject to such conditions
as may be specified by the Bank.

  (3)   For the purposes of subsection (2), the Bank may at any time
amend or revoke any existing conditions or impose any new
conditions in respect of permitted disclosures by the financial
institutions set out in Schedule 11 or paragraph (1)(b).

  (4)   Any person who receives any document or information
relating to the affairs or account of a customer as permitted under
subsection (1) shall not disclose such document or information to
any other person.

  (5)   In any proceedings under paragraph 3, 4, 5, 6 or 7 of the first
column of Schedule 11 or circumstances approved by the Bank
under paragraph (1)(b), where any document or information is likely
to be disclosed in relation to a customer’s account, the court may, on
its own motion, or on the application of a party to the proceedings or
the customer to which the document or information relates—

(a) order that the proceedings be held in camera and in such case,
the document or information shall be secret as between the
court and the parties thereto, and no such party shall disclose
such document or information to any other person; and

(b) make such further orders as it may consider necessary to
ensure the confidentiality of the customer information.

  (6)   Unless the court otherwise orders, no person shall publish the
name, address or photograph of any parties to such proceedings as
are referred in subsection (5), or any document or information likely
to lead to the identification of the parties thereto, either during the

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currency of the proceedings or at any time after they have been
concluded.

  (7)   Any person who fails to comply with conditions imposed by
the Bank pursuant to subsection (2) or (3) or contravenes subsection
(4) or (6) commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine not
exceeding ten million ringgit or to both.

Division 5

Restrictions relating to consumer protection

Application of this
Division

135.   This Division shall not apply to a licensed Islamic bank under
the Islamic Financial Services Act 2012.

Deposit 136.   For the purposes of sections 137 and 138, “deposit” means a
sum of money or any precious metal or precious stone, or any article
or thing as may be prescribed by the Minister, on the
recommendation of the Bank, accepted, paid or delivered on terms
under which it will be repaid or returned in full, regardless whether
the repayment or return is by way of instalments, with or without
interest or any other consideration in money or money’s worth,
either on demand or at a time or in circumstances agreed by or on
behalf of the person making the payment or delivery and the person
accepting it, but excludes money paid bona fide—

(a) by way of an advance or a part payment under a contract for
the sale, hire or other provision of property or services, and is
repayable only in the event that the property or services are
not in fact sold, hired or otherwise provided;

(b) by way of security for the performance of a contract or by
way of security in respect of any loss which may result from
the non-performance of a contract;

(c) without limiting paragraph (b), by way of security for the
delivery up or return of any property, whether in a particular
state of repair or otherwise; and

(d) in such other circumstances, or to or by such other person, as
set out in Schedule 2.

Restriction on accepting
deposits

137.   (1)   No person shall accept deposits except under a licence
granted under section 10 regardless of whether the transaction is
described as a loan, an advance, an investment, a savings, a sale or a
sale and repurchase or by whatever name called.

  (2)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

Advertisements for
deposits

138.   (1)   No person, other than a licensed bank or licensed
investment bank, shall issue, or otherwise facilitate any person to
issue, an advertisement which—

Page 79 of 180

(a) contains any offer or invitation—

(i) to make any deposit; or

(ii) to enter or offer to enter into any agreement to make any
deposit; or

(b) is intended, directly or indirectly, to lead to or induce the
making of any deposit.

  (2)   Subsection (1) shall not apply to the issuance by any person of
any advertisement for or on behalf of a licensed bank or licensed
investment bank.

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding ten million ringgit
or to both.

Restriction on use of
certain words

139.   (1)   Except with the prior written approval of the Bank, no
person shall—

(a) in its name, description or title under which such person
carries on business or in the conduct of its business, use—

(i) the word “bank” unless such person is licensed under this
Act to carry on banking business or investment banking
business;

(ii) the word “insurance” or “assurance” unless such person is
authorized or registered under this Act to carry on
insurance business, insurance broking business, financial
advisory business or adjusting business;

(iii) the words “financial adviser” unless such person is
approved under this Act to carry on financial advisory
business;

(iv) any derivative of the words in subparagraph (i), (ii) or (iii)
in any language; or

(v) any other words in any language,

capable of being construed as indicating the carrying on of
any of the authorized or registered businesses; or

(b) make any representation to the effect of paragraph (a) in any
document relating to its business or document used in the
course of carrying on its business or in any other manner
whatsoever.

  (2)   The restriction in subsection (1) shall not apply to—

(a) the persons specified in Part 1 of Schedule 12 for the word
“bank” in subparagraph (1)(a)(i);

(b) the persons specified in Part 2 of Schedule 12 for the word
“insurance” or “assurance” in subparagraph (1)(a)(ii); and

(c) the persons specified in Part 3 of Schedule 12 for the words
“financial adviser” in subparagraph (1)(a)(iii).

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Page 80 of 180

PART IX

MONEY MARKET AND FOREIGN EXCHANGE MARKET

Power of Bank to specify
standards or issue codes

140.   (1)   The Bank may specify standards or issue codes for the
purposes of developing, or maintaining orderly conditions or the
integrity of, the money market or foreign exchange market.

  (2)   Without limiting the generality of subsection (1), standards
specified or codes issued under that subsection may include
standards or codes relating to—

(a) obligations and duties of any market participant or any officer
of the market participant; and

(b) the issuance, sale, purchase, repurchase, borrowing or
lending, of or other dealings in, currencies or other financial
instruments traded in the money market or foreign exchange
market including over-the-counter derivatives whose price,
value or payment obligations are derived from, referenced to
or based on interest rates or exchange rates.

  (3)   Standards or codes may only be specified or issued under
paragraph (2)(b) in respect of over-the-counter derivatives derived
from, referenced to or based on interest rates for the purposes of
maintaining monetary stability.

  (4)   Any market participant or any officer of the market participant
in the money market or foreign exchange market shall at all times
comply with any standards specified or codes issued by the Bank
under this section.

  (5)   Without limiting the Bank’s powers to take action under any
provision of this Act, the Bank may impose any condition, restriction
or prohibition including, suspension from trading and restrictions on
dealings in these markets on any market participant or any officer of
the market participant for failure to comply with or give effect to
such standards specified or codes issued under this section.

Prohibited conduct in
money market and foreign

exchange market

141.   (1)   No person shall—

(a) take part in or carry out a transaction that has or is likely to
have the effect of creating a rate which is an off-market rate
which results in an artificial rate for dealing in financial
instruments in the money market or foreign exchange market;

(b) create, or cause to be created, or do anything that is calculated
to create, a false or misleading appearance of active dealing in
financial instruments in the money market or foreign
exchange market;

(c) make a statement, or disseminate information that is false or
misleading in a material particular and is likely to induce
another person to deal in financial instruments or is likely to
have the effect of raising, lowering, maintaining or stabilising
the market rate of such financial instruments in the money
market or foreign exchange market and when the person
makes the statement, or disseminates the information—

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(i) the person does not exercise due care whether the
statement or information is true or false; or

(ii) the person knows, or ought reasonably to have known, the
statement or information is false or is materially
misleading;

(d) take part in or carry out a transaction based on information
that is not generally available to persons who regularly deals
in the money market or foreign exchange market that would,
or would tend to, have a material effect on the price or value
of financial instruments; or

(e) engage in any other conduct relating to money market or
foreign exchange market as may be prescribed by the
Minister, on the recommendation of the Bank.

  (2)   Without limiting the generality of section 266, the Bank may
issue guidance in writing on—

(a) descriptions of conduct which amount to; or

(b) factors that are to be taken into account in determining
whether a person has engaged in,

any conduct set out in subsection (1).

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

Arrangement with
relevant supervisory

authority

142.   (1)   The Bank shall enter into arrangements with relevant
supervisory authorities to coordinate on the regulation of financial
instruments traded in the money market which are within the
purview and oversight of the relevant supervisory authorities.

  (2)   For the purposes of this section, “relevant supervisory
authorities” means any authority, body or agency in Malaysia other
than the Bank which is responsible for the supervision or oversight
of the capital market, or capital market intermediaries or capital
market participants.

PART X

SUBMISSION OF DOCUMENT OR INFORMATION

Submission of document
or information to Bank

143.   (1)   Where under this Act or any written law, any person
including—

(a) an authorized person;

(b) a registered person;

(c) an operator of a designated payment system;

(d) a financial holding company;

(e) a market participant;

(f) an approved representative office;

(g) a financial institution prescribed under section 212;

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(h) an associate corporation or related corporation of a person
referred to in paragraphs (a) to (g); or

(i) a participant, user or any other person having dealings with a
person referred to in paragraphs (a) to (g),

is required to submit any document or information to the Bank, such
person shall submit such document or information to the Bank.

  (2)   Where, for the purposes of the exercise of any of its powers or
the performance of any of its functions under this Act or any written
law, the Bank requires any document or information from any person
including a person referred to in subsection (1), such person shall
submit such document or information to the Bank.

  (3)   Any person who is required to submit any document or
information under subsection (1) or (2) shall not submit any
document or information—

(a) which he knows, or has reason to believe, to be false or
misleading in a material particular; or

(b) which is inaccurate or incomplete in respect of which there is
a material error or omission, or any recurring error or
omission.

  (4)   For the purposes of subsection (1) or (2), any document or
information required to be submitted shall be submitted within a
period, at such intervals, in the manner or form as may be specified
by the Bank.

  (5)   Any person complying with subsection (1) or (2) shall not be
treated as being in breach of any contract, agreement or arrangement.

  (6)   The Bank may require—

(a) any document or information submitted under subsection (1)
or (2) to be verified in such manner as may be specified by
the bank; or

(b) any document produced to be certified as a true copy,

by any person including an auditor of a person referred to in
subsection (1).

  (7)   Subject to section 145, where a document or information
obtained by the Bank under subsection (1) relates to the account or
affairs of any customer of any person referred to in subsection (1),
that document or information shall be secret as between the Bank
and such person submitting the document or information.

  (8)   Any person who contravenes paragraph (3)(a) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Submission of statistical
information, etc.

144.   (1)   For the purposes of collating statistical or other
information on financial intermediation or financial inclusion in
Malaysia or for other purposes related to the regulatory objectives of
this Act, the Bank may require any person to submit any document
or information to the Bank.

  (2)   Subject to section 145, the Bank shall not disclose to any
person any document or information submitted under subsection (1)
unless such disclosure is in summary or consolidated form and does

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not in any manner lead to the identification of any person to which
such document or information relates.

Secrecy requirements
under sections 143 and

144 not to apply

145.   The secrecy requirements in subsections 143(7) and 144(2)
shall not apply—

(a) for the purposes of the exercise of any of its powers or the
performance of any of its functions by the Bank under this
Act or the Central Bank of Malaysia Act 2009, including for
the purposes of—

(i) the credit bureau established under section 47 of the
Central Bank of Malaysia Act 2009; or

(ii) submitting any proposal to the Financial Stability
Executive Committee;

(b) in respect of information provided by the Bank under section
95 of the Malaysia Deposit Insurance Corporation Act 2011;

(c) where such disclosure is in summary or consolidated form
and does not in any manner lead to the identification of any
person to which such document or information relates
including the publication of consolidated statements or
reports in respect of each class, category or description of
persons as the Bank deems appropriate by aggregating the
figures in all or any document or information submitted to the
Bank under section 143 or 144; and

(d) for the purposes of prosecuting any person for any offence
under any written law.

PART XI

EXAMINATION

Examination of
authorized person, etc.

146.   (1)   The Bank may examine, without any prior notice, the
business and affairs of the following persons:

(a) an authorized person, registered person, operator of a
designated payment system or financial holding company,
and the offices, related corporations and any agent of any
such persons, in or outside Malaysia;

(b) a market participant; or

(c) an approved representative office.

  (2)   The Bank may, for the purposes of an examination under
subsection (1), examine any director, officer or controller of any
person referred to in subsection (1).

Duty to provide access to,
and produce documents,

information, etc.

147.   (1)   For the purposes of an examination under section 146, a
person under examination and its director, officer or controller—

(a) shall afford the Bank access to its documents, including
documents of title to its assets, all securities held by it in
respect of its customers’ transactions and investments held by
it, cash, premises, apparatus, equipment or machinery, and

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produce to the Bank all such documents or cash, as the Bank
may require within such time as it may specify;

(b) shall allow the Bank to copy or make extracts of any
document referred to in paragraph (a); and

(c) shall give to the Bank, orally or in writing, all such
information and explanation relating to its business and
affairs or of its agent as the Bank may require within such
time as it may specify.

  (2)   The Bank may take possession of any documents, titles,
securities, cash, apparatus, equipment or machinery to which it has
access under subsection (1), if the Bank is of the opinion that the
documents, titles, securities, cash, apparatus, equipment or
machinery may be—

(a) interfered with, destroyed, concealed or removed unless the
Bank takes possession of them; or

(b) needed as evidence in any legal proceedings, whether civil or
criminal, which may be instituted under this Act, the Central
Bank of Malaysia Act 2009 or any other written law.

  (3)   Any person who contravenes subsection (1) or refuses to allow
the Bank to take possession of the documents, titles, securities, cash,
apparatus, equipment or machinery under subsection (2), commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Examination of other
persons

148.   (1)   The Bank may, for the purposes of an examination under
section 146, examine—

(a) a person who was at any time, a director or officer of a person
referred to in subsection 146(1);

(b) a person who is, or was at any time having dealings with a
person referred to in subsection 146(1); or

(c) a person whom the Bank believes to be acquainted with the
facts and circumstances of the case, including the auditor of a
person referred to in subsection 146(1),

and that person shall give to the Bank such document, information or
explanation as the Bank may require within such time as it may
specify.

  (2)   Any person falling under paragraph (1)(b), or an auditor
referred to in paragraph (1)(c) shall not be liable for breach of a
contract relating to, or duty of, confidentiality for giving a document,
information or explanation under subsection (1).

  (3)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Appearance before Bank 149.   (1)   Any person examined under sections 146 and 148 shall
appear before the Bank at such place, and at such time, as may be
specified by the Bank.

  (2)   Any person who contravenes subsection (1) commits an

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offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Examination or
assessment by auditor or

actuary

150.   (1)   The Bank may require an authorized person, operator of a
designated payment system or financial holding company to appoint
an auditor, or actuary, as the case may be, to carry out any specific
examination or assessment in respect of its business or affairs as may
be specified by the Bank and submit a report of such examination or
assessment to the Bank.

  (2)   Where an examination or assessment is required under
subsection (1), the remuneration of the auditor or actuary and other
expenses related to such examination or assessment shall be borne
by the authorized person, operator of a designated payment system
or financial holding company.

Confidential information 151.   (1)   Any document or information produced by the Bank as
provided in subsection (2) as a result of the administration or
enforcement of this Act, the Central Bank of Malaysia Act 2009 or
any other written law administered by the Bank, or from an
examination by a relevant supervisory authority under section 152,
shall not be disclosed by any authorized person, operator of a
designated payment system or financial holding company, or any
director, officer, auditor or actuary of such persons, to any other
person except in such circumstances as may be specified by the
Bank.

  (2)   A document or information referred to in subsection (1) which
shall not be disclosed, whether wholly or in part, shall include—

(a) any rating assigned by the Bank or relevant supervisory
authority, as the case may be, to an authorized person,
operator of a designated payment system or financial holding
company;

(b) any stage of intervention assigned to an authorized person,
operator of a designated payment system or financial holding
company;

(c) any assessment of an authorized person, operator of a
designated payment system or financial holding company
made by the Bank or relevant supervisory authority, as the
case may be, as a result of an examination or other
supervisory review of such person including any report,
correspondence or recommendation made to such persons;

(d) any enforceable undertaking accepted by the Bank under
section 259;

(e) any order made, or direction issued by the Bank under this
Act or by the relevant supervisory authority, as the case may
be, to an authorized person, operator of a designated payment
system or financial holding company; or

(f) any other information as may be specified by the Bank.

  (3)   In any court proceedings, where any document or information
referred to in this section is likely to be disclosed, the court, of its
own motion, or at the application of a party to the proceedings or the
Bank, may order for such proceedings to be held in camera and in

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such case, the document or information shall be secret as between
the court and parties or the Bank thereto, and no such party shall
disclose such document or information to any other person.

  (4)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Examination by relevant
overseas supervisory

authority

152.   (1)   A relevant supervisory authority outside Malaysia which
exercises functions corresponding to those of the Bank under this
Act may, with the approval of the Bank, examine the books and
transactions of—

(a) an approved representative office in Malaysia of a foreign
institution;

(b) an authorized person which operates in Malaysia as a branch
of a foreign institution; or

(c) an authorized person, registered person, operator of a
designated payment system or financial holding company
which is a subsidiary of a foreign institution,

established or incorporated in that country, territory or place,
provided that such examination by the relevant supervisory authority
is for the sole purpose of its supervisory functions.

  (2)   The relevant supervisory authority shall give to the Bank a
written undertaking to protect the confidentiality of any information
it has obtained during, or arising out of its examination under
subsection (1) and the purposes for which such information may be
used.

  (3)   Where the Bank has granted its approval under subsection (1),
the provisions of section 133 shall not apply in relation to the
examination to be carried out under such approval, to the extent
specified in the approval.

  (4)   A copy of the report of an examination under subsection (1)
shall be lodged with the Bank upon the conclusion of such
examination.

Disclosure of information
by Bank to relevant

overseas supervisory
authority

153.   The Bank may, subject to such terms and conditions it deems
fit, provide to a relevant supervisory authority outside Malaysia
which exercises functions corresponding to those of the Bank under
this Act, such document or information relating to—

(a) the affairs of—

(i) any authorized person, registered person, operator of a
designated payment system or financial holding company
which is a subsidiary of a foreign institution; or

(ii) any authorized person, registered person, operator of a
designated payment system or financial holding company
which is an associate of a foreign institution;

(b) any office of an authorized person, registered person, operator
of a designated payment system or financial holding
company; or

(c) any authorized person, registered person, operator of a

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designated payment system or financial holding company for
the purposes of assessing a proposed establishment of any
office by the authorized person, registered person, operator of
a designated payment system or financial holding company,

if the Bank considers it necessary that the such document or
information be disclosed to the relevant supervisory authority
outside Malaysia for the sole purpose of carrying out its supervisory
functions.

PART XII

DIRECTIONS OF COMPLIANCE

Interpretation 154.   For the purposes of this Part, “institution” refers to an
authorized person or operator of a designated payment system.

Circumstances for
exercising power to issue

directions

155.   The Bank may issue one or more of the directions specified in
section 156 if the Bank is of the opinion that an institution, its
director, chief executive officer or senior officer—

(a) is committing or is about to commit an act, or is pursuing or
is about to pursue any course of conduct, that is unsafe or
unsound or has failed to commit an act or pursue a course of
conduct that is necessary to maintain the safety and soundness
of the institution;

(b) is carrying on business in a manner detrimental to the
interests of depositors, policy owners, participants, users,
creditors or the public generally;

(c) has failed to manage its business or affairs in a manner that is
consistent with sound risk management and good governance
practices;

(d) has failed to comply with any standards, notice, condition,
specification, requirement, restriction, direction or code
specified, issued or made under this Act or a direction under
subsection 214(6) or section 216 regardless that there has
been no prosecution or other action in respect of such non-
compliance;

(e) has breached or contravened any provision of this Act, the
Central Bank of Malaysia Act 2009 or any written law, other
than securities laws as defined in the Securities Commission
Act 1993, regardless that there has been no prosecution or
other action in respect of the breach or contravention; or

(f) has failed to ensure the safety, efficiency and reliability of the
payment system or payment instrument, having regard, inter
alia, to the reasonableness of admission criteria for
participating in the payment system and the overall cost to the
participants or users of, or any other persons involved with,
the payment system or payment instrument.

Power to issue directions
to institution

156.   (1)   Subject to section 262, the Bank may issue a direction in
writing to the institution, its director, chief executive officer or
senior officer, to cease or refrain from committing an act or pursuing

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a course of conduct or to do any act, in relation to its business,
affairs or property if the Bank is of the opinion that it is necessary to
remedy any of the circumstances in section 155.

  (2)   Without limiting the generality of subsection (1), the direction
under subsection (1) may include—

(a) with respect to any institution, any one or more of the
following directions:

(i) to vary or terminate any agreement or arrangement other
than any qualified financial agreement entered into by the
institution with any person in relation to its business,
affairs or property;

(ii) to dispose of all or any of the investments or assets held
by the institution in any body corporate;

(iii) to prohibit the institution from carrying on any part of its
business including, imposing any limitation on or
prohibiting the giving of credit facilities, the making of
investments, or in the case of a licensed bank or licensed
investment bank, the acceptance of deposits, or in the case
of a licensed insurer, the effecting of policies; or

(iv) to prohibit the institution from entering into any other
transaction or class of transactions, or to enter into it
subject to such restrictions or conditions as may be
specified by the Bank;

(b) with respect to an institution which is a licensed person, to
increase its capital to such amount as may be specified by the
Bank; and

(c) with respect to an institution which is an approved operator of
a payment system, approved issuer of a designated payment
instrument or operator of a designated payment system, any
one or more of the following directions:

(i) to make any modification to such payment system or
payment instrument, as the case may be, including any
operational arrangements;

(ii) cease to issue the designated payment instrument; or

(iii) cease to operate the designated payment system or a
payment system set out in Division 1 of Part 1 of
Schedule 1.

General provisions
dealing with directions

157.   (1)   The direction issued under section 156 shall specify—

(a) the grounds on which the Bank proposes to issue the
direction; and

(b) the time by which, or period during which, the direction is to
be complied with.

  (2)   The Bank may at any time—

(a) amend or revoke a direction; or

(b) replace a direction with another direction.

  (3)   Any direction issued under section 156 shall not affect the
enforcement by the parties of their rights under a qualified financial

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agreement.

Consequences of failing
to comply with directions

158.   An institution, its director, chief executive officer or senior
officer who fails to comply with a direction issued under section 156
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding fifty million ringgit or to both.

Additional provisions
relating to paragraph 156

(2)(b)

159.   (1)   A direction issued pursuant to paragraph 156(2)(b) may
direct the licensed person to issue shares or other capital instruments
of a kind specified in the direction.

  (2)   Where the licensed person issues shares or other capital
instruments in compliance with a direction pursuant to subsection
(1), the licensed person shall give a notice in writing to the members
of the licensed person to subscribe to the shares or other capital
instruments within the period specified in the notice.

  (3)   Where a member of the licensed person does not subscribe to
the shares or other capital instruments within the period specified in
the notice given by the licensed person pursuant to subsection (2),
the Bank may issue a further direction pursuant to subsection 156(1)
to the licensed person requiring the licensed person to allot the
shares or other capital instruments to a person determined by the
Bank.

PART XIII

INTERVENTION AND REMEDIAL ACTION

Application of this Part to
member institution

160.   (1)   Notwithstanding any other provision in this Part, in
respect of an institution that is a member institution as defined under
the Malaysia Deposit Insurance Corporation Act 2011—

(a) the Bank may exercise the following powers:

(i) the powers under sections 161 to 163 and paragraph 188
(a); and

(ii) for the sole purpose of averting or reducing any risk to
financial stability and where the institution has not ceased
to be viable or is not considered by the Bank to be likely
to become non-viable, the powers under the following
provisions:

(A) paragraph 188(b);

(B) sections 189 and 190; and

(C) section 208; and

(b) the following provisions shall continue to apply:

(i) subsections 173(1) and (2) except where the application
for the appointment of a receiver and manager to manage
the whole or part of the business, affairs or property of a
member institution is made by the Malaysia Deposit
Insurance Corporation;

(ii) subsection 173(3) and section 194; and

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(iii) section 195 except where the application for the winding
up of a member institution is presented by the Malaysia
Deposit Insurance Corporation.

  (2)   For the avoidance of doubt, in respect of an institution that is a
member institution as defined under the Malaysia Deposit Insurance
Corporation Act 2011, in relation to section 208, the provision shall
be read to apply only in relation to the powers that may be exercised
by the Bank under subsection (1).

Division 1

Removal of director, chief executive officer or senior officer

Interpretation 161.   For the purposes of this Division, “institution” refers to a
licensed person or an operator of a designated payment system.

Power to remove director,
chief executive officer or

senior officer

162.   Subject to section 262, the Bank may, by an order in writing,
remove a director, chief executive officer or senior officer from
office or employment in an institution if the Bank is of the opinion
that the director, chief executive officer or senior officer of the
institution—

(a) no longer fulfils the fit and proper requirements specified
under section 60 and fails to cease holding such office or
acting in such capacity; or

(b) has breached, contravened or failed to comply with or, by
action or negligence, has contributed to the breach or
contravention of, or non-compliance with any provision of
this Act, a direction under section 156 or an enforceable
undertaking accepted by the Bank under section 259.

Provisions relating to
removal

163.   (1)   A director, chief executive officer or senior officer
removed from office or employment in an institution under section
162 shall cease to hold the office from which he is removed with
effect from the date set out in the order and shall cease to be
concerned with the business or affairs of the institution.

  (2)   The removal of a director, chief executive officer or senior
officer under section 162 shall be lawful and valid notwithstanding
anything contained in a contract of service or any other agreement
relating to his appointment and whether or not made or provided for
under any written law, and a person so removed from office or
employment shall not be entitled to claim compensation for the loss
of office.

Division 2

Power to take intervention and remedial action

Subdivision 1 - Circumstances for exercising intervention and
remedial action

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Interpretation 164.   For the purposes of this Subdivision, “institution” refers to a
licensed person, an approved issuer of a designated payment
instrument or operator of a designated payment system.

Circumstances for
exercise of Bank’s power

165.   Where the Bank is of the opinion that any of the following
circumstances exist in respect of an institution:

(a) the institution has breached or contravened any provision of
this Act, the Islamic Financial Services Act 2012, the Central
Bank of Malaysia Act 2009 or any written law, regardless that
there has been no prosecution or other action in respect of the
breach or contravention;

(b) the institution has failed to comply with any direction under
section 156;

(c) the assets of the institution are not sufficient to give adequate
protection to its depositors, policy owners, participants, users
or creditors, as the case may be;

(d) the capital of the institution has reached a level or is eroding
in a manner that may detrimentally affect its depositors,
policy owners, participants, users, creditors or the public
generally;

(e) the institution has become or is likely to become insolvent or
is likely to become unable to meet all or any of its
obligations; or

(f) any other state of affairs exists in respect of the institution
that may be materially prejudicial to the interests of the
depositors, policy owners, participants, users or creditors of
the institution, including where proceedings under a law
relating to bankruptcy or insolvency have been commenced in
Malaysia or elsewhere in respect of the holding company of
the institution, including its financial holding company,

the Bank may exercise its powers under this Division or Division 3.

Subdivision 2 - Assumption of control

Interpretation 166.   For the purposes of this Subdivision—

   “appointed person” refers to a person appointed by the Bank under
subsection 167(1);

   “institution” refers to a licensed person or an operator of a
designated payment system.

Power to assume control 167.   (1)   Subject to section 262, where any of the circumstances set
out in section 165 exist in respect of an institution, the Bank may,
with the prior approval of the Minister, by an order in writing,
assume control of the whole or part of the business, affairs or
property of the institution and manage the whole or such part of its
business and affairs, or appoint any person to do so on behalf of the
Bank.

  (2)   The terms and conditions of the appointed person shall be
determined by the Bank.

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  (3)   Where an order has been made under subsection (1) or revoked
under subsection 168(1), the Bank shall—

(a) notify that fact in the Gazette; and

(b) give notice of the commencement of the assumption of
control under subsection (1), or revocation of the order in
writing under subsection 168(1), as soon as is practicable by
publication in at least two daily newspapers in Malaysia, one
of which shall be in the national language.

  (4)   All costs and expenses of the Bank, including the remuneration
of the appointed person, shall be payable out of the funds and
properties of the institution, as a first charge on the funds and
properties of the institution.

Effect of assumption of
control

168.   (1)   Upon assuming control of the whole or part of the
business, affairs or property of the institution, the Bank or the
appointed person shall take custody and control of the whole or part
of the business, affairs or property of the institution, and shall
manage the whole or such part of the business and affairs of the
institution in the name and on behalf of that institution until the order
is revoked by the Bank in writing.

  (2)   During the period an order under this Subdivision is in force,
the functions, rights and privileges of—

(a) the directors and chief executive officer of the institution shall
be suspended unless the Bank gives its approval in writing for
any director to remain as director or the chief executive
officer to continue in the employment of the institution on
such terms and conditions as the Bank may determine; and

(b) such senior officers of the institution as may be specified by
the Bank, shall be suspended.

  (3)   The Bank or the appointed person shall be vested with such
powers and functions of the institution and its board of directors,
under its constituent documents or exercisable by the institution or
its directors under any written law regardless whether the powers are
exercisable by resolution or in any other manner whatsoever.

  (4)   The Bank or the appointed person, in effecting any action
under this Subdivision, shall not be required to notify or obtain the
approval of the members or creditors of the institution in a general
meeting or otherwise notwithstanding any contract or law including
without limitation to sections 132C, 132D and 132E of the
Companies Act 1965 or anything in its constituent documents.

  (5)   The Bank or the appointed person may alter the constituent
documents of the institution or other arrangements for governance if
the alteration is necessary to facilitate the exercise of powers or
performance of functions of the Bank or the appointed person under
this Subdivision, in relation to the institution.

  (6)   The Bank or the appointed person may sell or otherwise
dispose of the whole or part of the business or property of the
institution, on any terms and conditions determined by the Bank.

  (7)   Sections 99, 100 and 101 shall not apply to any sale or
disposal of the whole or part of the business or property under
subsection (6).

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Information and facilities 169.   (1)   Where control of the whole or part of the business, affairs
or property of an institution has been assumed pursuant to an order
under this Subdivision—

(a) the institution, its directors, chief executive officer and
officers shall submit the whole or part of the business, affairs
or property to such control and provide the Bank or the
appointed person with such facilities, documents or
information as may be required to facilitate the exercise of
powers or performance of functions of the Bank or the
appointed person under this Subdivision; and

(b) the Bank or the appointed person may require a person who
has, at any time, been a director, chief executive officer or an
officer of the institution to give the Bank or the appointed
person any information relating to the business, affairs or
property of the institution that the Bank or the appointed
person requires.

  (2)   Any person who contravenes paragraph (1)(a) or fails to
comply with the requirement under paragraph (1)(b) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Additional provisions
relating to assumption of

control

170.   (1)   Upon assuming control of the whole or part of the
business, affairs or property of the institution, where the Bank gives
its approval in writing for the director or chief executive officer to
remain in his appointment pursuant to paragraph 168(2)(a), any
remuneration payable to the director or chief executive officer of the
institution shall be determined by the Bank, in relation to the activity
required or authorized by the Bank or the appointed person.

  (2)   Notwithstanding anything contained in any contract of service
or any other agreement relating to his appointment, the suspension of
the director or chief executive officer under paragraph 168(2)(a)
shall not entitle him to claim any compensation for such suspension.

  (3)   An order under this Subdivision shall not have the effect of—

(a) conferring on, or vesting in, the Bank or the appointed person,
any title to, or any beneficial interest in, any property of the
institution to which the order relates; or

(b) rendering the Bank or the appointed person liable for any
obligation or liability of the institution, whether incurred
before or after the order comes into force.

  (4)   Where the Bank or the appointed person sells or disposes of
the whole or part of the business or property of the institution
pursuant to subsection 168(6), any person aggrieved by the
transacted price may appeal on the transacted price to the Assessor
Committee and section 210 shall apply.

Subdivision 3 - Power to appoint receiver and manager

Interpretation 171.   For the purposes of this Subdivision, “institution” refers to a
licensed person, an approved issuer of a designated payment
instrument or operator of a designated payment system.

Page 94 of 180

Appointment of receiver
and manager by Bank

172.   (1)   Subject to section 262, where any of the circumstances
described in section 165 exist in respect of an institution, the Bank
may make an application to the High Court for an order—

(a) to appoint a receiver and manager to manage the whole or
part of the business, affairs or property of the institution; and

(b) for all such incidental, ancillary or consequential orders or
directions of the High Court in relation to such appointment
as may, in the opinion of the Bank, be necessary or expedient.

  (2)   On an application by the Bank, the High Court shall appoint as
receiver and manager, such person as may be specified by the Bank
in its application including such person as may be specified by the
Bank to fill a vacancy or to remove and replace a receiver and
manager appointed under this Subdivision.

  (3)   All costs and expenses of the Bank, including the remuneration
of such receiver and manager shall be payable out of the funds and
properties of the institution, as a first charge on the funds and
properties of the institution.

  (4)   A receiver and manager appointed under this Subdivision may
apply to the High Court for directions in relation to any particular
matter arising under the appointment.

PU(A) 205/2012.   (5)   Order 30 of the Rules of Court 2012 [P.U.(A) 205/2012] shall
not apply to an application for the appointment of a receiver and
manager under this Subdivision.

  (6)   An application for the appointment of a receiver and manager
under this Subdivision may be made by way of an ex parte
originating summons.

Appointment of receiver
and manager by persons

other than Bank

173.   (1)   Any person may make an application to the High Court
for the appointment of a receiver and manager to manage the whole
or part of the business, affairs or property of a licensed person, an
approved person, a registered person or an operator of a designated
payment system, as the case may be, by giving prior written notice
of thirty days to the Bank of its intention to do so.

  (2)   Where an application is made to the High Court for an order to
appoint a receiver and manager to manage the whole or part of the
business, affairs or property of a licensed person, an approved
person, a registered person or an operator of a designated payment
system, as the case may be, that person shall, as soon as practicable,
deliver a sealed copy of the application to the Bank.

  (3)   Where, pursuant to a debenture or any other instrument, a
receiver and manager is appointed over the whole or part of the
business, affairs or property of a licensed person, an approved
person, a registered person or an operator of a designated payment
system, as the case may be, by a person other than the Bank, that
person shall immediately notify the Bank of the appointment.

  (4)   Any person who contravenes subsection (1), (2) or (3)
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine not
exceeding ten million ringgit or to both.

Page 95 of 180

Provisions in relation to
appointment of receiver

and manager

174.   Where a receiver and manager has been appointed by the Bank
to manage the whole or part of the business, affairs or property of an
institution pursuant to section 172, the receiver and manager shall
have the power—

(a) to enter into any premises of the institution and take
possession and control of the whole or part of the business,
affairs or property of the institution and require any person in
the premises to account for and deliver up to the Bank or the
receiver and manager, possession and control of the whole or
such part of the business or property;

(b) subject to paragraph (c), to sell or otherwise dispose of the
whole or part of the business or property of the institution on
such terms and conditions as determined by the Bank;

(c) to sell or otherwise dispose of any property of the institution
that is subject to an agreement creating a security interest to
any person who agrees to assume the obligation secured by
the security interest;

(d) to arrange for the assumption of all or any part of the
liabilities of the institution by any person;

(e) to carry on the whole or such part of the business of the
institution to the extent that the receiver and manager deems
it necessary or beneficial;

(f) to sue for, defend, compromise and settle, in the name of the
institution, any claim made by or against it;

(g) in the name of the institution, to do all acts and execute all
receipts and other documents and for that purpose, when
necessary, use its common seal; and

(h) to do all such other things as may be necessary or incidental
to the exercise of the rights and powers of the receiver and
manager.

Subdivision 4 - Compulsory transfer of business, assets or liabilities

Interpretation 175.   For the purposes of this Subdivision—

   “residual institution” means a licensed person whose business,
assets or liabilities have been vested in the transferee in accordance
with section 176;

   “transacted price” means the price at which the whole or part of the
business, assets or liabilities of a licensed person referred to in
section 176 is vested in the transferee;

   “transferee” means a bridge institution or any other person, as the
case may be, in which is vested under this Subdivision the whole or
part of the business, assets or liabilities of the licensed person
referred to in section 176;

   “transferor” means the licensed person under this Subdivision
referred to in section 176;

   “transferred business” means the whole or part of the business,
assets or liabilities of the licensed person that has been vested in the
transferee.

Page 96 of 180

Order for compulsory
transfer of business,

assets or liabilities

176.   (1)   The Minister shall, on the recommendation of the Bank,
designate in writing a body corporate established or acquired by the
Bank under paragraph 48(1)(da) of the Central Bank of Malaysia
Act 2009 as a bridge institution for the purposes of vesting in such
body corporate the business, assets or liabilities of a licensed person
referred to in subsection (2).

  (2)   Where any of the circumstances set out in section 165 exist in
respect of a licensed person, the Bank may, with the prior approval
of the Minister, by an order in writing, vest in a bridge institution or
any other person, the whole or part of the business, assets or
liabilities of such licensed person.

  (3)   For purposes of subsection (2), the Third Schedule of the
Central Bank of Malaysia Act 2009 shall apply in relation to an
order of the Bank under this Subdivision and such order shall be
binding on all persons to whom the order is made or who are
affected by the order.

Additional provisions
relating to compulsory

transfer

177.   (1)   The Third Schedule of the Central Bank of Malaysia Act
2009 shall apply in relation to an order of the Bank under this
Subdivision, with modifications, as provided in Schedule 13 and the
Minister may prescribe any other modification as may be necessary
to give effect to such order.

  (2)   Where the Bank makes an order under this Subdivision to a
licensed person, the Bank shall—

(a) notify that fact in the Gazette; and

(b) give notice of such order as soon as is practicable by
publication in at least two daily newspapers published in
Malaysia, one of which shall be in the national language.

  (3)   The notice under paragraph (2)(b) shall include the transacted
price of the transfer and the right of any aggrieved person to appeal
on the transacted price to the Assessor Committee.

  (4)   The transacted price referred to in subsection (3) shall be
determined by an independent valuer.

  (5)   Subject to subsection (9), the transferee and the transferor shall
mutually agree on the person to be appointed by the Bank as the
independent valuer referred to in subsection (4).

  (6)   Where an agreement under subsection (5) cannot be reached
between the transferee and the transferor within a period the Bank
determines to be reasonable, the Bank shall refer the matter to the
Minister and the appointment of an independent valuer shall be made
by the Minister.

  (7)   The remuneration of the independent valuer appointed under
subsection (5) or (6) shall be payable out of the transacted price
unless otherwise determined by the Bank.

  (8)   In determining the transacted price under subsection (4) for the
business, assets or liabilities of the transferor, the independent valuer
shall—

(a) have regard to matters which the independent valuer
considers relevant including the prevailing market conditions
for sale or disposal of similar business, assets or liabilities of
the transferor; and

Page 97 of 180

(b) disregard any benefit derived from any special financial
assistance provided directly or indirectly by the Bank or the
Government to the transferor.

  (9)   Where the vesting under this Subdivision is to be in a bridge
institution, the independent valuer referred to in subsection (4) shall
be appointed by the Minister.

  (10)   Where any person aggrieved by the transacted price appeals
on the transacted price to the Assessor Committee, section 210 shall
apply.

Continuity obligations 178.   (1)   The Bank may direct the residual institution and any
person who has been providing services and facilities to the
transferor for the operation of its business, to continue to provide to
the transferee, such services and facilities as may be required to
enable a transferee to operate the transferred business effectively.

  (2)   The duty to provide services and facilities in pursuance of the
direction of the Bank in subsection (1) is subject to a right to receive
reasonable consideration from the transferee.

  (3)   Any residual institution or person who fails to comply with a
direction under subsection (1) commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding eight
years or to a fine not exceeding twenty-five million ringgit or to
both.

Subdivision 5 - Provisions relating to bridge institution

Designation of bridge
institution

179.   (1)   Where the Minister designates a bridge institution under
section 176—

(a) the designation shall expire two years after it is made, unless
the designation is—

(i) extended under paragraph (b); or

(ii) terminated under paragraph (c);

(b) the Minister may, on the recommendation of the Bank, extend
the designation for one or more periods, each of which may
not exceed one year; and

(c) the designation shall terminate on the earlier of the date of
occurrence of any one of the following events:

(i) the Bank ceases to hold shares in the bridge institution;

(ii) all or a substantial amount of the assets of the bridge
institution are acquired, or all or a substantial amount of
the liabilities of the bridge institution are assumed, or
both, by a person that is not a bridge institution; or

(iii) the Minister, on the recommendation of the Bank, decides
that the designation shall be terminated.

  (2)   Where a bridge institution changes its company name within
twelve months before or after such designation, the bridge institution
shall be exempt from stating or otherwise showing the former name
on any seal, document or instrument whatsoever.

Page 98 of 180

Publication of notice 180.   Upon the designation of a bridge institution or where such
designation is extended under paragraph 179(1)(b) or terminated
under paragraph 179(1)(c), the Bank shall as soon as practicable
publish a notice, specifying the date on which that event occurred in
at least two daily newspapers in Malaysia, one of which shall be in
the national language.

Bridge institution
authorized to carry on

business

181.   (1)   Upon its designation as such, and for so long as the
designation continues, a bridge institution shall be deemed to be
licensed to carry on the business of the licensed person whose
business, assets or liabilities have been vested in the bridge
institution.

  (2)   The Bank may exempt the bridge institution from such
requirements, or grant such approvals, under this Act as may be
necessary to facilitate the carrying on of its licensed business.

Bridge institution not
liable for past obligations

in respect of officers

182.   Where a bridge institution becomes the employer of any
individual who is an officer or a former officer of a licensed person,
the bridge institution shall not—

(a) be liable for any obligation of the licensed person or its
predecessor in respect of such individual existing prior to the
bridge institution becoming the employer of the individual or
in respect of any pension plan or other post-employment
benefit plan for such individual or his survivors, or in respect
of any collective agreement with a trade union or a council of
trade unions; or

(b) be liable for any wages or salary calculated by reference to a
period of time prior to the bridge institution becoming the
employer of the individual in question.

Stay in respect of bridge
institution

183.   During the period of ninety days following the designation of
a bridge institution—

(a) no action, suit or proceeding in any court or tribunal, may be
commenced or continued against the bridge institution or in
respect of its assets;

(b) no attachment, garnishment, execution or other method of
enforcement of a judgement, award or order against the
bridge institution or its assets may take place or continue; and

(c) no creditor of the bridge institution has any remedy against
the bridge institution or its assets.

Financial assistance to
bridge institution

184.   Notwithstanding section 76 of the Central Bank of Malaysia
Act 2009, the Bank may provide a bridge institution with such
financial assistance as the Bank thinks appropriate and the bridge
institution shall, on demand or at such other time as the Bank
specifies, repay or reimburse to the Bank, the financial assistance on
such terms and conditions as determined by the Bank.

Subdivision 6 - Restructuring of share capital

Page 99 of 180

Interpretation 185.   For the purposes of this Subdivision, “institution” refers to a
licensed person or an operator of a designated payment system.

Power to reduce share
capital of institution

186.   (1)   Notwithstanding any constituent documents of an
institution, the Bank may apply to the High Court for an order—

(a) where the paid-up capital of the institution is lost or
unrepresented by available assets, to cancel such paid-up
capital of the institution which is lost or unrepresented by
available assets; or

(b) where a call has been made by the institution on its members
to pay on the unpaid portion of their respective shares, if any,
and payment has not been made within the time specified in
the call, to consolidate the paid up portion of the shares as
fully paid up and to cancel any shares which remain unpaid.

  (2)   Where the Bank applies for the cancellation of share capital
under subsection (1), the institution shall not be required to notify or
obtain the approval of its members or creditors in a general meeting
or otherwise.

  (3)   Subject to subsections (1) and (2), the provisions of section 64
of the Companies Act 1965 shall apply.

Subdivision 7 - Financial assistance

Interpretation 187.   For the purposes of this Subdivision, “institution” refers to a
licensed person or an operator of a designated payment system.

Liquidity or financial
assistance to institution

188.   Notwithstanding section 76 of the Central Bank of Malaysia
Act 2009 and subject to subsection 160(1)—

(a) the Bank may provide liquidity assistance upon such terms
and conditions as the Bank deems fit, to an institution which
in the opinion of the Bank is about to or is likely to suspend
payment to any extent; or

(b) where any of the circumstances set out in section 165 exist in
respect of an institution, the Bank may, with the prior
approval of the Minister, provide financial assistance to
another institution or any other person to purchase any shares,
or the whole or any part of the business, assets or liabilities,
of the first-mentioned institution.

Subdivision 8 - Moratorium

Interpretation 189.   For the purposes of this Subdivision, “institution” refers to a
licensed person or an operator of a designated payment system.

Application for
moratorium

190.   (1)   Where the Bank, in the interests of the depositors, policy
owners or participants of an institution, has issued a direction
prohibiting an institution from carrying on all or part of its business

Page 100 of 180

under this Act, the Bank may apply to the High Court and the High
Court may, on the application of the Bank, make an order staying for
a period not exceeding six months, the commencement or
continuance of any proceedings of a civil nature by or against the
institution with respect to any of its business and the High Court
may, upon hearing an ex-parte originating summons filed by the
Bank, make the order.

  (2)   Where an order has been made under subsection (1), the Bank
shall notify that fact in the Gazette.

Division 3

Winding up

Subdivision 1 - General provisions on winding up

Interpretation 191.   For the purposes of this Division—

   “institution” refers to a licensed person or an operator of a
designated payment system;

   “liquidator” includes a provisional liquidator, wherever applicable.

Application of Companies
Act 1965 in relation to

winding up of institution

192.   The provisions of the Companies Act 1965 in relation to the
winding up of companies shall apply to the winding up of an
institution, unless specifically provided otherwise in this Division.

Bank to apply for winding
up

193.   Subject to section 262, where any of the circumstances
specified in section 165 exist in respect of an institution, the Bank
may recommend to the Minister and the Minister may on such
recommendation, authorize the Bank to file an application to the
High Court for the winding up of an institution and the High Court
may order the winding up of an institution pursuant to the
application filed by the Bank under this Division.

Restriction on voluntary
winding up

194.   (1)   An institution, whether or not its licence or designation
has been revoked, or an approved person, shall not be wound up
voluntarily without the prior written approval of the Bank.

  (2)   A registered person shall not be wound up voluntarily without
giving prior written notice to the Bank.

  (3)   Any person who contravenes subsection (1) or (2) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Winding up by High
Court on application by
persons other than Bank

195.   (1)   No application for the winding up of an institution or
approved person may be presented to the High Court by any person
without the prior written approval of the Bank.

  (2)   Subject to subsection (1), where an application for the winding
up of an institution or approved person is presented to the High

Page 101 of 180

Court by a person other than the Bank—

(a) that person shall deliver a copy of the application to the Bank
at the same time as it is presented; and

(b) the Bank shall be party to the winding up proceedings and
shall be entitled to appear and be heard in all proceedings
relating to the application and to call, examine and cross-
examine any witness.

  (3)   Any person who contravenes subsection (1) or paragraph (2)
(a) commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine not
exceeding ten million ringgit or to both.

Appointment and
remuneration of liquidator

196.   (1)   The High Court, where a winding up order is made in
respect of an institution pursuant to section 193, shall appoint as
liquidator such person as the Bank may specify in its application and
shall specify that the remuneration of the liquidator shall be
determined by the Bank.

  (2)   On an application by the Bank, the High Court shall appoint as
liquidator such person as the Bank may specify in its application—

(a) to fill a vacancy; or

(b) to remove and replace a liquidator appointed under subsection
(1).

Control of liquidator 197.   Subject to an order of the High Court, a liquidator, other than
the Official Receiver, appointed under section 196 shall carry out his
functions under the direction and supervision of the Bank.

Statement of affairs 198.   The statement of affairs of an institution as at the date of the
winding up order made pursuant to section 234 of the Companies
Act 1965 shall be submitted to the Bank at the same time as it is
submitted to the Official Receiver.

Offences by officers of
institution

199.   Section 300 of the Companies Act 1965 shall apply to an
institution as if references in that section to an “officer or a
contributory” are references to a director, officer, agent or
contributory of an institution.

Subdivision 2 - Provisions specific to licensed insurers

Valuation of assets and
liabilities

200.   In the winding up of a licensed insurer, whether or not its
licence is revoked and whether it is insolvent or not, the value of its
assets and liabilities, including liabilities in respect of policies, shall
be ascertained on such basis as the Bank may determine and the law
relating to bankruptcy or insolvency shall not apply to the valuation
of its liabilities.

Termination of insurance
policy

201.   (1)   A policy of a licensed insurer shall cease to remain in
force with effect from the date a winding up order has been made in

Page 102 of 180

respect of the licensed insurer.

  (2)   Where a policy ceases to be in force under subsection (1), the
policy owner shall only be eligible to claim as a debt due to him—

(a) in the case of a general policy, a refund of a portion of the
premium that is commensurate with the remaining period of
the policy;

(b) in the case of a life policy, the value of that life policy;

(c) the value of the investments or savings held separately in
respect of the policy; or

(d) any other refund or amount,

which shall be ascertained on such basis as may be prescribed by the
Bank.

  (3)   The liquidator shall notify each policy owner and, in the case
of a group policy, the group policy owner, about the cessation of an
insurance policy by registered post to his last known address of
residence or office and by publication in such newspapers as may be
specified by the Bank.

Waiver of strict proof of
debt

202.   Where it appears to the liquidator that by reason of the
inadequacy of its documents, or any other circumstances, hardship
would be caused if he requires strict proof of debt, he may act on
such evidence as he thinks fit and payment of a debt made by the
liquidator in good faith to any person as being the person entitled to
it shall discharge the liquidator from all liabilities in respect of that
debt.

Prohibition against
issuance of policy

203.   No director, officer, agent or contributory, past or present, of a
licensed insurer which is being wound up after its cessation of
insurance business, shall continue to issue a policy.

Continuation of life
business

204.   (1)   Notwithstanding paragraph 236(1)(a) of the Companies
Act 1965, the liquidator of a licensed life insurer—

(a) may carry on its life business with a view to it being
transferred as a going concern to another licensed insurer but
shall not effect a new policy; and

(b) subject to subsection (2), may transfer its assets and liabilities
to another licensed insurer, including liabilities under life
policies and Division 4 of Part VI shall apply to the transfer.

  (2)   The liquidator may, for the purpose of a transfer under
paragraph (1)(b), apply to the High Court for an order to reduce—

(a) the amount of liabilities under life policies of the licensed
insurer; or

(b) the amount of its other liabilities,

and the High Court may reduce the liabilities to the extent necessary
taking into consideration the value of its available assets subject to
such condition as it considers fit.

Subdivision 3 - Priority of payments in winding up

Page 103 of 180

Priority of payments in
winding up of licensed

investment bank
Act 359.

205.   In the winding up of a licensed investment bank, the assets of
the licensed investment bank shall be available to meet all liabilities
of that licensed investment bank in respect of all deposits in
Malaysia in priority over all other unsecured liabilities of that
licensed investment bank in Malaysia other than the preferential
debts set out in subsection 292(1) of the Companies Act 1965 in the
order set out in that subsection and debts due and claims owing to
the Government under section 10 of the Government Proceedings
Act 1956 [Act 359].

Priority of payments in
winding up of licensed

investment bank carrying
on Islamic banking

business

206.   (1)   For the purposes of this section, “Islamic deposit” has the
same meaning assigned to it in subsection 2(1) of the Islamic
Financial Services Act 2012.

  (2)   Without prejudice to section 205, in the winding up of a
licensed investment bank which has been approved under paragraph
15(1)(a) to carry on Islamic banking business—

(a) the assets of the licensed investment bank acquired in the
course of its business other than its Islamic banking business,
shall be applied to meet the liabilities incurred in the course
of its business other than the Islamic banking business, in the
order set out in section 205; and

(b) where the assets of the licensed investment bank referred to in
paragraph (a) is in surplus after payment has been made to
meet its liabilities under paragraph (a), such surplus assets of
the licensed investment bank shall be applied to meet the
liabilities of the licensed investment bank under subsection
(3).

  (3)   Without prejudice to section 205, in the winding up of a
licensed investment bank—

(a) the assets acquired by the licensed investment bank in the
course of its Islamic banking business including the Islamic
banking funds or any accounts established under subsection
15(3), subject to paragraph (b)—

(i) shall not be subject to the debts of the licensed investment
bank except in respect of its Islamic banking business or
as provided in paragraph (c); and

(ii) shall be available to meet all liabilities of that licensed
investment bank in respect of its Islamic deposits in
Malaysia in priority to all other unsecured liabilities
incurred in the course of its Islamic banking business,
other than the preferential debts set out in subsection 292
(1) of the Companies Act 1965 in the order set out in that
subsection and the debts due and claims owing to the
Government under section 10 of the Government
Proceedings Act 1956, which is attributable to its Islamic
banking business as may be specified by the Bank;

(b) notwithstanding subsection 292(1) of the Companies Act
1965, but subject to any costs and expenses of the winding up
set out in paragraph 292(1)(a) of the Companies Act 1965
directly incurred in realising the assets of the investment
accounts and any tax set out in paragraph 292(1)(f) of the

Page 104 of 180

Companies Act 1965 which is attributable to the investment
accounts, the assets of the investment accounts managed by
the licensed investment bank in Malaysia, shall be available,
in the order set out as follows:

(i) to pay outstanding costs or expenses of the investment
accounts;

(ii) to pay any profit, fees, gains or other remuneration due to
the licensed investment bank; and

(iii) to meet the liabilities to the investment account holders;
and

(c) where the assets of the licensed investment bank referred to in
paragraph (a) is in surplus after payment has been made to
meet its liabilities under subparagraph (a)(ii), such surplus
assets of the licensed investment bank shall be applied to
meet the liabilities of the licensed investment bank including
the liabilities of the licensed investment bank under section
205 in the order of priority stated therein.

  (4)   For purposes of subparagraph (3)(a)(ii), regulations may be
made under section 260 to prescribe the order of priority for
payments of different categories of Islamic deposits.

Application of insurance
fund in winding up

207.   (1)   In the winding up of a licensed insurer, the assets of an
insurance fund shall be applied to meet its liabilities to policy owners
and claimants under policies of that fund and these liabilities shall
have priority over unsecured liabilities of that fund, other than
preferential debts set out in subsection 292(1) of the Companies Act
1965 and debts due and claims owing to the Government under
section 10 of the Government Proceedings Act 1956, to the extent
that they are apportioned to the insurance fund.

  (2)   Subject to subsection (1)—

(a) the assets of an insurance fund as established under section 81
shall first be applied to meet the liabilities of that fund;

(b) where the assets of an insurance fund, other than a life fund
relating to participating life policies, exceed its liabilities, the
surplus assets may be applied to meet the liabilities of its
other insurance funds which are in deficit and if the surplus
assets of two or more insurance funds are applied, they shall
be applied proportionately to the amounts of the surpluses and
if the surplus assets are applied to meet the liabilities of two
or more insurance funds which are in deficit, they shall be
applied proportionately to the amounts of the deficits;

(c) any deficit subsisting after application of the assets of the
insurance funds under paragraphs (a) and (b) shall be met out
of the assets of the shareholders’ funds, and unsatisfied
liabilities to a policy owner and claimant under a policy shall
have priority over other unsecured liabilities other than
preferential debts specified under subsection 292(1) of the
Companies Act 1965 and debts due and claims owing to to
the Government under section 10 of the Government
Proceedings Act 1956; and

[sic]

(d) any other assets held by the licensed insurer, including
surplus assets in a life fund relating to participating life
policies, shall be used in a manner as may be prescribed by

Page 105 of 180

the Bank.

  (3)   Without limiting the generality of subsection (2), where the
Bank under subsection 81(1) has specified that a licensed foreign
insurer shall establish and maintain separate insurance funds for its
Malaysian policies, in the winding up of the licensed foreign insurer,
the assets of these funds—

(a) shall only be applied to meet the liabilities of those funds; and

(b) with effect from the date of the winding up of the licensed
foreign insurer, shall not be sold, removed, dissipated,
alienated, transferred, assigned, encumbered, distributed or
otherwise dealt with in any manner whatsoever without the
prior written approval of the Bank.

  (4)   Notwithstanding anything to the contrary in section 340 of the
Companies Act 1965 or the winding up order for a licensed foreign
insurer, the provisions of this section shall prevail and have full force
and effect.

  (5)   Any person who contravenes paragraph (3)(b) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding ten years or to a fine not exceeding fifty million
ringgit or to both.

Division 4

General provisions in relation to actions taken by Bank

Power of Bank to take
action under this Part

208.   Nothing in this Part shall preclude the Bank from taking any
one or more actions that it is empowered to take under this Part.

Qualified financial
agreement

209.   (1)   For the purposes of this section, “institution” refers to a
licensed person, an approved issuer of a designated payment
instrument or operator of a designated payment system.

  (2)   The parties under a qualified financial agreement may continue
to enforce their rights under the qualified financial agreement and
shall not be affected by—

(a) the assumption of control of a licensed person or an operator
of a designated payment system pursuant to section 167;

(b) the appointment of a receiver and manager of the business,
affairs or property of any institution pursuant to section 172;
or

(c) the making of an order for the compulsory transfer of the
business, assets or liabilities of a licensed person pursuant to
section 176,

except during such period as may be prescribed in regulations made
under section 260 upon the commencement of the assumption of
control or the appointment of a receiver and manager.

  (3)   Where a qualified financial agreement is transferred to any
person pursuant to the exercise of the powers under subsection 168
(6) or section 174 or to a bridge institution or any other person under
section 176—

(a) the acquiring person or bridge institution shall assume all the

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rights and obligations under such qualified financial
agreement of the institution from which such agreement was
transferred; and

(b) the enforcement by the parties of their rights under such
qualified financial agreement shall be in accordance with the
terms of such agreement as if the acquiring person or bridge
institution had always been a party to such agreement.

  (4)   If the qualified financial agreement is not transferred to a
bridge institution or another person, the parties to such qualified
financial agreement shall be entitled to enforce their rights under
such agreement at the expiry of the period referred to in subsection
(2).

  (5)   Where the qualified financial agreement of an institution is
transferred to an acquiring person or a bridge institution during the
period prescribed by the Bank under subsection (2), and where a
person is a counterparty to two or more qualified financial
transactions under that agreement with the same institution, all or
none of such qualified financial transactions shall be transferred to
the acquiring person or bridge institution.

  (6)   If a qualified financial agreement relating to financial
collateral that applies to any property of the institution is transferred,
that property shall also be transferred to the acquiring person or
bridge institution.

Assessor Committee 210.   (1)   Any person aggrieved by the transacted price as a result
of—

(a) a sale or disposal of the whole or part of the business or
property of a licensed person or an operator of a designated
payment system by the Bank or the appointed person under
subsection 168(6); or

(b) a compulsory transfer of the whole or part of the business,
assets or liabilities of a licensed person pursuant to section
176,

may, within twenty-one days from the date of such sale, disposal or
transfer, appeal on the transacted price to the Assessor Committee by
submitting an appeal in writing to the Bank.

  (2)   Where any person appeals under subsection (1), the Bank shall
constitute an Assessor Committee consisting of three independent
persons as members of the Assessor Committee, drawn from a panel
of ten persons appointed by the Minister on the recommendation of
the Bank and refer the appeal to the Assessor Committee to assess
the reasonableness of the transacted price.

  (3)   The Assessor Committee constituted under subsection (2) may
determine its own procedures.

  (4)   In assessing the reasonableness of the transacted price, the
Assessor Committee shall have regard to such matters it considers
relevant including the prevailing market conditions for the sale or
transfer of similar property, business, assets or liabilities of the
licensed person or operator of a designated payment system.

  (5)   Where the Assessor Committee decides that—

(a) the transacted price is less than the price that in its opinion is
the reasonable price for the property, business, assets or

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liabilities, it shall advise the Bank to pay the difference
between the transacted price and the reasonable price; or

(b) the transacted price is in its opinion the reasonable price, it
shall advise the Bank accordingly.

  (6)   The Bank shall notify the aggrieved person in writing of the
Assessor Committee’s decision under subsection (5).

  (7)   Notwithstanding subsection (5), where the institution is
insolvent and the whole of the property, business, assets or liabilities
of the licensed person or operator of a designated payment system is
sold or disposed of by the Bank or the appointed person under
subsection 168(6), or transferred by the Bank under section 176, a
consideration of one ringgit shall be deemed to be reasonable as the
transacted price.

  (8)   The sale or disposal of the whole or part of the business or
property under subsection 168(6) or the transfer of the whole or part
of the business, assets or liabilities under section 176 shall take
effect despite any appeal to or any decision made by, the Assessor
Committee.

  (9)   A decision of the Assessor Committee is final and binding on
the parties to the appeal.

PART XIV

OTHER POWERS OF BANK

Division 1

Regulation of prescribed financial institutions

Interpretation 211.   For the purposes of this Division, “financial intermediation
activities” includes—

(a) the accepting of deposits;

(b) the giving of any advance, loan or other facility in whatever
form or by whatever name called;

(c) leasing business;

(d) factoring business;

(e) the purchase of bills of exchange, promissory notes,
certificates of deposit, debentures or other negotiable
instruments;

(f) the acceptance of, or the giving of any guarantee in relation
to, liability, obligation or duty of any person;

(g) hire-purchase, including hire-purchase transactions pursuant
to the Hire-Purchase Act 1967;

(h) acquiring rights or interests in a hire-purchase, leasing or
other similar transaction;

(i) any activity that is incidental, ancillary or otherwise facilitates
or is closely related to the activities referred to in paragraphs
(a) to (h) above; and

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(j) such other business or activity as prescribed under section 3.

Power of Minister to
prescribe financial

institutions

212.   (1)   The Minister may prescribe any person which is not
under the supervision or oversight of the Bank and engaging in
financial intermediation activities as a prescribed financial
institution—

(a) on the joint recommendation by the Bank and the relevant
authority which is responsible for the regulation and
supervision of such person; or

(b) on the recommendation by the Bank, in any other case,

if such person, in the opinion of the Bank, poses or is likely to pose a
risk to financial stability arising from—

(i) its financial intermediation activities which may include
the generation of maturity or liquidity transformation,
involve imperfect credit risk transfers, create or facilitate
excessive leverage or raise concerns of regulatory
arbitrage;

(ii) the nature, scope, size, scale or concentration of its
financial intermediation activities; or

(iii) its interconnectedness with an authorized person or any
other person regulated by the Bank under any written law
enforced by the Bank.

  (2)   For the purpose of making a recommendation under subsection
(1), the Bank may, with the approval of the Minister, exercise its
examination powers under Part XI on a person referred to in
subsection (1) as if the references in such provisions to an
“authorized person” is a reference to the person referred to in
subsection (1).

  (3)   The Minister may, on the recommendation of the Bank, apply
all or any provisions of this Act to a prescribed financial institution
from a date specified in the order under subsection (1) and with such
amendments as the Minister, on the recommendation of the Bank,
deems necessary, as if the references in such provisions to an
“authorized person”, a “licensed person”, “licensed bank”, “licensed
insurer”, “licensed investment bank”, an “institution” and a
“financial service provider”, as the case may be, is a reference to
such prescribed financial institution.

  (4)   With effect from the date specified in the order made under
subsection (1), the prescribed financial institution concerned shall
comply with, and be subject to, the provisions of this Act as
specified in the order notwithstanding anything to the contrary in any
written law.

  (5)   The Minister may, at any time, amend or revoke an order made
under subsection (1)—

(a) on the joint recommendation by the Bank and the relevant
authority, in the case of an order made under paragraph (1)
(a); or

(b) on the recommendation by the Bank, in any other case.

  (6)   A prescribed financial institution which contravenes any
provision of this Act or any standards, notice, direction, condition,
specification or requirement specified or issued by the Bank under

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any provision of this Act applied to it under subsection (1) commits
an offence under such provision and shall be liable to the same
penalty applicable to a licensed person convicted of an offence under
such provision and if no offence is provided for such contravention,
the prescribed financial institution commits a breach and the Bank
may take an action under paragraph 234(3)(b) in addition to other
enforcement actions that the Bank is empowered to take under this
Act.

  (7)   This section shall not apply to—

(a) a person licensed, approved or recognized by the Securities
Commission under securities laws; or

Act 704. (b) a licensed entity under the Labuan Financial Services and
Securities Act 2010 [Act 704].

  (8)   For the purposes of this section, in the case of a registered
person under the Capital Markets and Services Act 2007, the Bank
shall—

(a) consult with the Securities Commission in forming an opinion
under subsection (1);

(b) notify the Securities Commission before conducting an
examination under subsection (2); and

(c) regularly review the status of such prescribed financial
institution, together with the Securities Commission, to
determine whether the circumstances under subsection (1) no
longer applies.

Division 2

International and domestic transactions

Interpretation 213.   (1)   For the purposes of section 214, unless the context
otherwise requires—

   “designated account” means an account opened in favour of any
person by a financial institution as determined by the Bank;

   “financial instrument” includes derivatives;

   “foreign currency” includes—

(a) currency notes or coins which are legal tender in any country,
territory or place outside Malaysia;

(b) any right to receive foreign currency—

(i) in respect of any credit or balance at a licensed bank or
any other similar institution in or outside Malaysia; or

(ii) from any person in or outside Malaysia; or

(c) any document or device of a kind intended to enable the
person to whom the document or device is issued to obtain
foreign currency from another person on the credit of the
person issuing it, and in particular, any traveller’s cheque or
other draft or letter of credit so intended;

   “giving or obtaining of guarantee” includes a renewal or extension
of such guarantee;

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   “gold” means—

(a) gold in whatever state or form other than gold which has been
materially increased in value by skilled craftsmanship; or

(b) any right to receive gold—

(i) in respect of any credit or balance at a licensed bank or
any other similar institution in or outside Malaysia; or

(ii) from any person in or outside Malaysia;

   “guarantee” includes the pledging of any security issued or
registered in Malaysia or any other property in Malaysia to secure
the repayment of a debt, obligation or liability;

   “issue” in relation to securities or financial instrument means to
bring or cause to be brought into existence those securities or
financial instrument, and the word “issued” or “issuance” shall be
construed accordingly;

   “non-resident” means—

(a) any person other than a resident;

(b) an overseas branch, a subsidiary, regional office, sales office
or representative office of a resident company;

(c) Embassies, Consulates, High Commissions, supranational or
international organizations; or

(d) a Malaysian citizen who has obtained permanent resident
status of a country or territory outside Malaysia and is
residing outside Malaysia;

   “payment” includes the act of transferring to, or placing to the
credit of, a person, ringgit, foreign currency, financial instrument,
gold, other precious metals or other valuable consideration, as the
case may be, whether under an obligation or otherwise;

   “person” means a natural person, any corporation, statutory body,
local authority, society, trade union, co-operative society, partnership
or any other body, organization, association or group of persons,
whether corporate or unincorporate and in addition includes the
Government, any State Government or any other government;

   “resident” means—

(a) a citizen of Malaysia, excluding a citizen who has obtained
permanent resident status in a country or a territory outside
Malaysia and is residing outside Malaysia;

(b) a non-citizen of Malaysia who has obtained permanent
resident status in Malaysia and is ordinarily residing in
Malaysia;

(c) a body corporate incorporated or established, or registered
with or approved by any authority, in Malaysia;

(d) an unincorporated body registered with or approved by any
authority in Malaysia; or

(e) the Government or any State Government;

   “ringgit” means currency notes or coins which are legal tender in
Malaysia and includes any right to receive ringgit in such form as
may be specified by the Bank;

   “securities” means shares, stock, bonds, notes (other than

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promissory notes), debentures, debentures stock, units under a unit
trust scheme, shares in an oil royalty, a secondary security and
coupons, whether in scripless form or in bearer certificates, including
certificates of title to securities or any letter of allotment which may
be renounced, any letter of rights, any warrants conferring an option
to acquire a security, any deposit certificate in respect of securities
and such other documents conferring, or containing evidence of,
rights to securities as may be specified by the Bank;

   “settlement of a property” includes the making of any disposition,
covenant, agreement or arrangement whereby the property becomes
subject to a trust;

   “transfer of securities” includes the buying, selling, borrowing or
lending of securities.

  (2)   Where under this Division, power is given to the Bank to
require any person, or where any person is required under this
Division, to submit to the Bank any document or information—

(a) the Bank may specify that the document or information shall
be submitted, within a period, at such intervals, in the manner
or form as may be specified by the Bank; and

(b) such person shall not submit any document or information—

(i) which he knows, or has reason to believe to be false or
misleading in a material particular; or

(ii) which is inaccurate or incomplete in respect of which
there is a material error or omission, or any recurring error
or omission.

Measures relating to
international and

domestic transactions

214.   (1)   The Bank is empowered under this section to safeguard
the balance of payments position and the value of the currency of
Malaysia.

  (2)   No person shall undertake or engage in any transaction set out
in Schedule 14 except with the written approval of the Bank.

  (3)   Subject to any direction issued by the Bank under paragraph
(6)(e), the prohibition in subsection (2) in respect of the transactions
in paragraph 1 of Schedule 14 shall not apply to any licensed bank.

  (4)   Unless otherwise expressly provided in this section and
Schedule 14, subsection (2) shall apply to—

(a) all persons, classes, categories or descriptions of persons
including their nominees or any person acting on their behalf
notwithstanding that they are not in Malaysia; and

(b) all acts that are committed in or outside Malaysia including
any act which involves, is in association with, or is
preparatory to, the transactions set out in Schedule 14.

  (5)   The Bank in granting any written approval under subsection
(2) may impose any requirement, restriction or condition in respect
of the transactions in Schedule 14.

  (6)   The Bank may issue direction to—

(a) declare that a person is to be treated as a resident or a non-
resident notwithstanding the definition of “resident” or “non-
resident” in section 213;

(b) require any person to submit any document or information to

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the Bank or any person as may be specified by the Bank;

(c) require any payment to be made into a designated account
and direct the use of such fund in the designated account as
may be specified by the Bank;

(d) require any person who is entitled to sell, or to procure the
sale of, any foreign currency, gold or other precious metals, to
offer it, or cause it to be offered, for sale to a licensed bank or
any person as may be specified by the Bank;

(e) require a licensed bank to undertake or engage in the
transactions in paragraph 1 of Schedule 14 on such terms as
may be specified by the Bank;

(f) require a licensed bank, or any other person to administer or
ensure compliance with this section on such terms as may be
specified by the Bank; or

(g) require any person to do or refrain from doing any act for the
purpose of securing compliance with this section.

  (7)   Any written approval granted under subsection (2) and any
direction issued under subsection (6) shall apply to such persons,
classes, categories or descriptions of persons as may be specified by
the Bank in that written approval and direction, as the case may be.

  (8)   Subsection (2) shall not affect the enforcement by the parties
of their rights under a qualified financial agreement.

  (9)   Except for paragraph 7 in Schedule 14, any person who
contravenes subsection (2) or fails to comply with any requirement,
restriction or condition imposed under a written approval granted
under subsection (2) or any direction issued under subsection (6)
commits an offence under this Act and shall, on conviction, be liable
to imprisonment for a term not exceeding ten years or to a fine not
exceeding fifty million ringgit or to both.

Act 235.   (10)   Any ringgit, foreign currency, gold, other precious metals,
security or financial instrument or any other article which is subject
to a prohibition under subsection (2) in respect of the transactions in
paragraph 7 of Schedule 14 shall be deemed to be prohibited goods
under the Customs Act 1967 [Act 235] and any person who fails to
comply with such prohibition or any requirement, restriction or
condition imposed under a written approval granted under subsection
(2) commits an offence under that Act and shall, on conviction, be
liable to the penalty provided in that Act.

Power of Bank to impose
levies or charges

215.   (1)   For the purposes of safeguarding the balance of payments
position or the value of the currency of Malaysia, regulations may be
made under section 260 to impose levies or charges in respect of any
transaction specified in Schedule 14, either generally or with
conditions or in circumstances set out in the regulations.

  (2)   Levies or charges imposed pursuant to the regulations referred
to in subsection (1) may be—

(a) specific;

(b) a minimum or maximum amount; or

(c) a percentage or proportion of the amount which is the subject
matter of the transaction in Schedule 14.

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Power of Bank, with
approval of Minister, to

issue directions

216.   (1)   The Bank may, with the approval of the Minister, in the
national interest, issue directions to any person in Malaysia, to
prohibit, restrict or require the doing of any act as may be specified
by the Bank, with or without conditions, in relation to dealings or
transactions, with any person resident in a country or territory, or in
any currency, as may be specified by the Bank.

  (2)   Any person for whom the directions are issued under
subsection (1) shall comply with the directions notwithstanding any
other duty imposed on that person by any contract or international
agreement.

  (3)   No person shall, in carrying out any act in compliance with the
directions made under subsection (1), be treated as being in breach
of any such contract or international agreement.

  (4)   Any person who fails to comply with any direction or
condition referred to in subsection (1) commits an offence and shall,
on conviction, be liable to imprisonment for a term not exceeding ten
years or to a fine not exceeding fifty million ringgit or to both.

Division 3

Holiday for licensed person

Power of Minister to
declare holiday for

licensed person

217.   (1)   The Minister may, on the recommendation of the Bank,
by notice in the Gazette, declare any day to be a holiday for all
licensed persons, or for any class, category or description of licensed
persons, or for such offices of such licensed persons, throughout, or
in any part of, Malaysia, as may be specified in the notice.

  (2)   No licensed person, or the office of the licensed person
specified in the notice, shall carry on any business on any day
declared as a holiday for such licensed person under subsection (1)
unless the Minister, on the recommendation of the Bank, otherwise
approves.

  (3)   Where a day is declared to be a holiday under subsection (1)—

(a) the licensed person or its office specified in the notice is not
compellable on such holiday to make a payment or to do any
other act that it would not be compellable to do on any day
which is public holiday within the meaning of any law
relating to public holidays; and

(b) no person shall be compellable to make any payment on such
holiday in or at a licensed person or its office specified in the
notice, or to do in or at a licensed person or its office
specified in the notice any act requiring the services of such
licensed person,

and the obligation to make the payment or to do the act shall be
deemed to be an obligation to make the payment or to do the act on
the next day which is not a public holiday within the meaning of any
law relating to public holidays.

  (4)   A day declared as a holiday for a licensed person or its office
under subsection (1) shall not necessarily be a public holiday and
nothing in this section shall affect the operation of any law relating
to public holidays.

  (5)   Any declaration of a holiday made under subsection (1) shall

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not—

(a) invalidate any contract, agreement, transaction or
arrangement entered into by the licensed person with any
person; and

(b) affect any right, obligation or liability arising under such
agreement, transaction or arrangement.

PART XV

ENFORCEMENT AND PENALTIES

Division 1

Investigation powers

Investigation by Bank 218.   Where the Bank is satisfied or has any reason to believe that
any person has committed an offence under this Act, the Bank may
cause an investigation to be made and for such purpose may exercise
all the powers of investigation provided under this Act.

Appointment of
investigating officer

219.   The Bank may appoint an officer of the Bank or any other
person appointed under subsection 7(6) to be an investigating officer
to conduct an investigation under this Division.

Powers of investigating
officer

220.   (1)   An investigating officer appointed under section 219 shall
have all the powers and functions conferred on the Bank under this
Part, and where such investigating officer is not an officer of the
Bank, he shall, in relation to such powers and functions—

(a) be subject to; and

(b) enjoy such rights, privileges, protection, immunities and
indemnities as may be specified in,

the provisions of this Act, the Central Bank of Malaysia Act 2009 or
any other written law applicable to an officer of the Bank as if he
was an officer of the Bank.

  (2)   An investigating officer, in exercising his powers and
performing his functions, shall be subject to and comply with the
directions, controls, instructions, conditions, restrictions or
limitations as may be specified by the Bank, orally or in writing,
either generally, or in any particular case or circumstance.

  (3)   The Governor shall have all the powers and functions of an
investigating officer.

  (4)   An investigating officer conducting any examination of any
person under this Division shall have the power to administer an oath
or affirmation to the person who is being examined.

Powers of entry, search
and seizure with warrant

221.   (1)   Where it appears to a magistrate, upon written
information, on oath and after such inquiry as he considers necessary
that there is reasonable cause to believe that—

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(a) any premises have been used or are about to be used for; or

(b) there is in any premises evidence necessary to the conduct of
an investigation into,

the commission of an offence under this Act, the magistrate may
issue a warrant authorizing an investigating officer named in the
warrant, at any reasonable time, by day or by night and with or
without assistance to enter the premises and if need be by force.

  (2)   A warrant under subsection (1) may authorize the investigating
officer to—

(a) enter any premises and search for, seize and detain any
property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document or
information;

(b) have access to, inspect, make copies of, or take extracts from,
any computer, computer output, system, data, books,
document or information so seized and detained, including
access to any program or data held in any computer or have
access to, inspect or check the operation of any computer and
any associated apparatus or material;

(c) take possession of, and remove from the premises, any
property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document or
information so seized and detained;

(d) search any person who is in, or on, such premises, and for the
purpose of such search, detain such person, subject to section
225, and remove him to such place as may be necessary to
facilitate the search, and seize and detain any property,
apparatus, equipment, machinery, computer, computer output,
system, data, books, document or information found on such
person;

(e) break open, examine, and search, any article, container or
receptacle, including assessing into a computer; or

(f) stop, detain or search any conveyance.

  (3)   An investigating officer may if it is necessary so to do—

(a) break open any outer or inner door of such premises or other
obstruction to the premises, in order to effect entry into the
premises;

(b) forcibly enter the premises and every part of the premises;

(c) remove by force any obstruction to entry, search, seizure,
detention or removal as he is empowered to effect under this
section; or

(d) detain, subject to section 225, any person found in any
premises, or in any conveyance, searched under subsection
(1) until such premises or conveyance have been searched.

  (4)   An investigating officer shall for the purposes of this section
be provided with the necessary password, encryption code,
decryption code, software or hardware and any other means required
to enable comprehension of any program or data held in any
computer including in a form in which the information contained in a
computer can be taken away and in which it is visible and legible.

  (5)   Any computer output, data, books, document, information or

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statement obtained by or provided to an investigating officer in the
course of a search under this section shall, notwithstanding any law
to the contrary, be admissible in evidence in any proceedings under
this Act.

Powers of entry, search
and seizure without

warrant

222.   If an investigating officer is satisfied upon information
received that he has reasonable cause to believe that by reason of
delay in obtaining a search warrant under section 221 the
investigation would be adversely affected or evidence of the
commission of an offence is likely to be tampered with, removed,
damaged or destroyed, the investigating officer may enter the
premises and exercise in, upon and in respect of the premises all the
powers referred to in section 221 in as full and ample a manner as if
he was authorized to do so by a warrant issued under that section.

List of seized property,
etc.

223.   (1)   An investigating officer, in the course of his investigation
or search, shall—

(a) prepare and sign a list of all property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document or information seized; and

(b) state in the list the location in which, or the person on whom,
the property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document or
information is found or obtained.

  (2)   The occupant of the premises entered under subsection 221(1)
or section 222 in the course of investigation, or any person on his
behalf, shall in every instance be permitted to attend during the
search, sign the search list or affix his thumb print thereon, and be
given a copy of the search list prepared and signed or affixed thumb
print under this section.

  (3)   Where such occupant or person acting on behalf of the
occupant under subsection (2) refuses to sign the search list or affix
his thumb print on the search list, the investigating officer shall
endorse on the search list, under his name, the fact of and reasons for
such refusal, if any, stated by such occupant or person acting on
behalf of the occupant.

Release of seized
property, etc.

224.   (1)   An investigating officer shall, unless otherwise ordered
by any court—

(a) on the close of investigations or any proceedings arising from
such investigations; or

(b) with the prior written consent of the Bank at any time before
the close of investigations,

release any property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document or information
seized, detained or removed by him or any other investigating officer
under this Part, to such person as he determines to be lawfully
entitled to the property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document or information if he
is satisfied that it is not required for the purpose of any prosecution
or proceedings under this Act, or for the purpose of any prosecution
under any other written law.

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  (2)   A record in writing shall be made by the investigating officer
effecting any release of any property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document or information under subsection (1) in respect of such
release specifying therein in detail the circumstances of, and the
reason for, such release.

  (3)   Where an investigating officer is unable to locate the person
who is lawfully entitled to the property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document or information the investigating officer shall cause to be
published a notice in the Bank’s website calling upon any person
who is lawfully entitled to the property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document or information to claim such property, apparatus,
equipment, machinery, computer, computer output, system, data,
books, document or information within the period stipulated in the
notice.

  (4)   Where no claim is made upon the expiry of the period
specified in the notice published under subsection (3), the
investigating officer shall make an application in writing to the court
as to the disposal of such property, apparatus, equipment, machinery,
computer, computer output, system, data, books, document or
information.

  (5)   The court upon receiving the application under subsection (4)
and being satisfied that the person under subsection (1) who is
lawfully entitled to the property, apparatus, equipment, machinery,
computer, computer output, system, data, books, document or
information cannot be located shall order the same to be forfeited or
disposed of by the Bank in accordance with the order made by the
court.

Search of person 225.   (1)   An investigating officer may search any person whom he
has reason to believe has on his person any property, apparatus,
equipment, machinery, computer, computer output, system, data,
books, document or information, or other article necessary, in his
opinion, for the purpose of investigation into any offence under this
Act.

Act 593.   (2)   For the purpose of a search of a person under subsection (1),
section 221 or 222, an investigating officer may, subject to the
provisions of the Criminal Procedure Code [Act 593], detain such
person as may be necessary to have the search carried out, and may
remove him in custody to such place as may be necessary to
facilitate such search.

  (3)   An investigating officer making a search of a person under
subsection (1) may seize, detain or take possession of any property,
apparatus, equipment, machinery, computer, computer output,
system, data, books, document, information or article, found upon
such person for the purpose of the investigation being carried out by
him.

  (4)   Any search of a person conducted under this Part shall be in
accordance with the provisions in the Criminal Procedure Code.

  (5)   No person shall be searched except by a person who is of the
same gender, and such search shall be conducted with strict regard to
decency.

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Obstruction to exercise of
powers by investigating

officer

226.   (1)   No person shall—

(a) refuse any investigating officer exercising his powers under
section 221, 222 or 225, access to any premises or any part of
such premises, or fail to submit to the search of his person;

(b) assault, obstruct, hinder or delay any investigating officer in
the exercise of his powers under this Part;

(c) fail to comply with any lawful demand of any investigating
officer in the execution of his duties under section 221, 222 or
225;

(d) refuse to give to an investigating officer any information
which may reasonably be required of him and which he has it
in his power to give;

(e) fail to produce to, or conceal or attempt to conceal from, an
investigating officer any property, books, other document or
article in relation to which the investigating officer has
reasonable grounds for suspecting that an offence or breach
has been or is being committed under this Act;

(f) retrieve or endeavour to retrieve any thing which has been
duly seized;

(g) furnish to an investigating officer as true, information which
he knows or has reason to believe to be false, misleading,
inaccurate or incomplete; or

(h) before or after any seizure, break or otherwise destroy any
thing to prevent the seizure thereof, or the securing of such
thing.

  (2)   Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Requirement to provide
translation

227.   (1)   Where an investigating officer finds, seizes, detains or
takes possession of any computer, computer output, system, data,
books, document or information, in the exercise of any power under
this Part, and such books, other document or information or any part
thereof is in a language other than the national language or the
English language, or in any sign or code, the investigating officer
may, orally or in writing, require the person who had the possession,
custody or control of such computer, computer output, system, data,
books, document or information, to furnish to the investigating
officer a translation in the national language or the English language
of such computer output, system, data, books, document or
information within such reasonable period as the investigating
officer may specify, having regard to the length of the computer
output, system, data, books, document or information, or other
circumstances relating to it.

  (2)   No person shall knowingly furnish a translation under
subsection (1) which is not an accurate, faithful and true translation,
or knowingly make a translation under that subsection which is not
accurate, faithful and true.

Page 119 of 180

  (3)   Where the person required to furnish a translation under
subsection (1) is not the person who is suspected to have committed
the offence or breach under investigation, the Bank shall pay him
reasonable fees for the translation.

  (4)   Any person who contravenes subsection (1) or (2) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding one year or to a fine not exceeding five million ringgit
or to both.

Power to examine persons 228.   (1)   Where an investigating officer suspects any person to
have committed an offence or a breach under this Act, he may, if in
his opinion it is reasonably necessary to do so for the purposes of an
investigation into such offence—

(a) order any person in writing to attend before him for the
purpose of being examined orally in relation to any matter
which may assist in the investigation into the offence or
breach;

(b) order any person in writing to produce before him, within the
time specified by such officer, any property, apparatus,
equipment, machinery, computer, computer output, system,
data, books, document, information, article or thing which
may assist in the investigation into the offence or breach; or

(c) by notice in writing require any person to furnish a statement
in writing made on oath or affirmation setting out therein all
such information which may be required under the notice,
being information which would be of assistance in the
investigation into the offence or breach.

  (2)   A person to whom an order under paragraph (1)(a) or (b), or a
notice under paragraph (1)(c), has been given shall comply with the
terms of such order or notice, as the case may be, and, in
particular—

(a) a person to whom an order under paragraph (1)(a) has been
given shall—

(i) attend in accordance with the terms of the order to be
examined, and shall continue to so attend from day to day
as directed by the investigating officer until the
examination is completed; and

(ii) during such examination disclose all information which is
within his knowledge, or which is available to him, or
which is capable of being obtained by him, in respect of
the matter in relation to which he is being examined,
whether or not any question is put to him with regard
thereto, and where any question is put to him he shall
answer the question truthfully and to the best of his
knowledge and belief, and shall not refuse to answer any
question on the ground that it tends to incriminate him or
his spouse;

(b) a person to whom an order has been given under paragraph
(1)(b) shall not conceal, hide, destroy, alter, remove from or
send out of Malaysia, or deal with, expend, or dispose of, any
property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document, information,
article or thing specified in the order, or alter or deface any
entry in any such computer output, system, data, books,

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document or information, or cause such acts to be done, or
assist or conspire to do such acts; and

(c) a person to whom a notice has been given under paragraph (1)
(c) shall, in his statement made on oath or affirmation, furnish
and disclose truthfully all information required under the
notice which is within his knowledge, or which is available to
him, or which is capable of being obtained by him, and shall
not fail to furnish or disclose the same on the ground that it
tends to incriminate him or his spouse.

  (3)   A person to whom an order or a notice is given under
subsection (1) shall comply with such order or notice and with the
provisions of subsection (2) in relation thereto, notwithstanding any
law, whether enacted before or after the commencement of this Act,
or of any oath, undertaking or requirement of secrecy, or of any
obligation under any contract, agreement or arrangement, whether
express or implied, to the contrary.

  (4)   Where any person discloses any information or produces any
property, equipment, apparatus, machinery, computer, computer
output, system, data, books, document, information, article or thing,
pursuant to subsections (1) and (2), neither the first-mentioned
person, nor any other person on whose behalf or direction or as
whose agent or officer the first-mentioned person may be acting,
shall, on account of such disclosure or production, be liable to any
prosecution for any offence under or by virtue of any law, or to any
proceeding or claim in any form or of any description by any person
under or by virtue of any agreement or arrangement, or otherwise.

  (5)   An investigating officer may seize, take possession of and
retain for such duration as he deems necessary, any property,
apparatus, equipment, machinery, computer, computer output,
system, data, books, document, information, article or thing
produced before him in the course of an investigation under
subsection (1), or search the person who is being examined by him
under paragraph (1)(a), or who is producing anything to him under
paragraph (1)(b), for ascertaining whether anything relevant to the
investigation is concealed, or is otherwise upon such person.

  (6)   An examination under paragraph (1)(a) shall be reduced into
writing by the investigating officer and shall be read to and signed
by the person being examined or affixed with his thumb print, and
where such person refuses to sign the record or affix his thumb print,
the investigating officer shall endorse thereon under his hand the fact
of such refusal and the reasons thereof, if any, stated by the person
examined.

  (7)   The record of an examination under paragraph (1)(a), or a
written statement on oath or affirmation made pursuant to paragraph
(1)(c), or any property, apparatus, equipment, machinery, computer,
computer output, system, data, books, document, information, article
or thing produced under paragraph (1)(b) or otherwise in the course
of an examination under paragraph (1)(a) or under a written
statement on oath or affirmation made pursuant to paragraph (1)(c)
shall be admissible in evidence in any proceedings in any court for,
or in relation to—

(a) an offence or breach under this Act;

(b) any other matter under this Act; or

(c) any offence under any other written law,

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regardless whether such proceedings are against the person who was
examined, or who produced the property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document, information, article or thing, or who made the written
statement on oath or affirmation, or against any other person.

  (8)   Any person who contravenes subsection (1) or (2) or furnishes
to an investigating officer any information or statement that is false
or misleading in any material particular, commits an offence and
shall, on conviction, be liable to imprisonment for a term not
exceeding eight years or to a fine not exceeding twenty-five million
ringgit or to both.

Service of orders or
notices generally, etc.

229.   (1)   Any order or notice that is given under this Part, shall,
where it is required to be served on an individual, be served by—

(a) delivering it personally to the person for whom it is intended;

(b) delivering it to an adult person at the last-known place of
residence, occupation or business of the person for whom it is
intended; or

(c) sending it by registered post to the person for whom it is
intended.

  (2)   Any order or notice that is given under this Part shall, where it
is required to be served on a body corporate or unincorporate, be
served by delivering the order or notice to an officer or agent of the
body corporate or unincorporate at its registered address or business
address.

  (3)   If the officer effecting any order or notice under subsection (1)
or (2) is satisfied, for reasons to be recorded by him in writing, that
the order or notice cannot be served in the manner provided in
subsection (1) or (2), the order or notice may be served by affixing
the order or notice on a conspicuous part of the premises—

(a) in which the individual for whom the order or notice is
intended is known to have last resided, to have been last
employed or to have last carried on business; or

(b) at the last known registered address or business address of the
body corporate or unincorporate for whom the order or notice
is intended,

and in such case the order or notice shall be deemed to have been
duly served.

  (4)   If upon an investigation made under this Act, it appears to the
investigating officer that there is sufficient evidence or reasonable
grounds for suspicion to justify the commencement or continuance
of any proceedings against any person, the investigating officer shall
require a complainant, if any, and so many of the persons who
appear to such investigating officer to be acquainted with the
circumstances of the case as he thinks necessary, to execute a bond
to appear before any court therein named or to give evidence in any
court proceedings.

  (5)   If any complainant or person referred to in subsection (4)
refuses to execute a bond under that subsection, the investigating
officer shall report such refusal to the court which may thereupon in
its discretion issue a warrant or summons to secure the attendance of
such complainant or person.

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Surrender of travel
documents

230.   (1)   Notwithstanding any written law to the contrary, an
investigating officer may, by notice in writing, require any person
who is the subject of an investigation for an offence under this Part,
to surrender his travel documents including passport or exit permit in
his possession, within such period as specified in the notice.

  (2)   A notice under subsection (1) shall be served personally to the
person to whom it is addressed in accordance with section 229.

  (3)   A person to whom a notice under subsection (1) is served shall
comply with such notice, failing which he may be arrested and taken
before a magistrate.

  (4)   Where a person is taken before a magistrate, unless such
person complies with the notice under subsection (1) or satisfies the
magistrate that he does not possess a travel document, the magistrate
shall by warrant commit such person to prison—

(a) until the expiry of a period of fourteen days from the date of
his committal; or

(b) until he complies with the notice under subsection (1),

whichever occurs earlier.

  (5)   For the purpose of subsection (4), a certificate signed by the
Public Prosecutor to the effect that the person has complied with the
written notice under subsection (1) shall be sufficient warrant for the
Superintendent of Prison to discharge such person.

  (6)   An investigating officer may, with the written approval of the
Bank, by notice in writing issued to any immigration officer, request
that any person who is the subject of an investigation in respect of an
offence under this Act be prevented from leaving Malaysia.

  (7)   The immigration officer may, upon being notified of a written
notice made under subsection (6), require the person who is the
subject of an investigation in respect of an offence under this Act, to
surrender his passport, exit permit or any other travel document in
his possession to an immigration officer.

Act 155.   (8)   Subject to any order issued or made under any written law
relating to immigration, “immigration officer” means any person
appointed under section 3 of the Immigration Act 1959/63 [Act 155].

Agent provocateur 231.   Notwithstanding any law or rule of law to the contrary, in any
proceedings against any person for an offence under this Act—

(a) no agent provocateur, whether he is an officer of the Bank or
not, shall be presumed to be an accomplice or be unworthy of
credit by reason only of his having attempted to commit or to
abet, or having abetted or having been engaged in a criminal
conspiracy to commit, such offence if the main purpose of
such attempt, abetment or engagement was to secure evidence
against such person;

(b) any statement whether oral or in writing made to an agent
provocateur by any person, including any person who is
subsequently charged with an offence under this Act, shall be
admissible in evidence and given due weight and
consideration at any trial for an offence under this Act; and

(c) a conviction for any offence under this Act solely on the

Page 123 of 180

uncorroborated evidence of any agent provocateur shall not
be illegal and no such conviction shall be set aside merely
because the court which tried the case has failed to refer in
the grounds of its judgment to the need to warn itself against
the danger of convicting on such evidence.

Assistance to police or
other public officer

232.   The Bank may at its own initiative, or on the request of a
public officer—

(a) supply to a police officer or any other public officer a copy of
any books, computer output, data, document or information
seized, detained or taken possession of under section 221, 222
or 225, or of any record of examination under paragraph 228
(1)(a), or of any written statement on oath or affirmation
made under paragraph 228(1)(c) or of any books, computer
output, data, document or information produced under
paragraph 228(1)(b), or otherwise in the course of any
examination under paragraph 228(1)(a), or under any written
statement on oath or affirmation made pursuant to paragraph
228(1)(c), and such police officer or other public officer may
make such use of such copy of such record, statement, books,
computer output, data, document or information as may be
necessary or expedient in relation to the exercise of his
powers, the performance of his functions, or the discharge of
his duties, in respect of any person; or

(b) allow a police officer or any other public officer to have
access to and inspect any property, apparatus, equipment,
machinery, computer, computer output, system, data, books,
document, information, article or thing which had been
produced before, or seized, detained or taken possession of,
by an investigating officer under this Part, and such police or
other public officer may make such use of any knowledge
gained by such access or inspection as may be necessary or
expedient in relation to the exercise of his powers, the
performance of his functions, or the discharge of his duties, in
respect of any person.

Investigating officer
deemed to be public

servant and public officer
Act 574.

233.   An investigating officer shall be deemed to be a public servant
for the purposes of the Penal Code [Act 574], and to be a public
officer for the purposes of the Criminal Procedure Code and the
Evidence Act 1950 or any other written law which the Minister may,
on the recommendation of the Bank, prescribe.

Division 2

Administrative actions

Power of Bank to take
action

234.   (1)   A person has committed a breach under this Act if the
person fails to comply with or give effect to—

(a) any provision of this Act;

(b) any regulations made under this Act;

(c) any order made or any direction issued under this Act by the
Bank including an order made under section 94 or a direction

Page 124 of 180

issued under section 116 or 156, subsection 214(6) or section
216; or

(d) any standards, condition, restriction, specification,
requirement or code under this Act.

  (2)   The Bank shall have regard to the following matters in
determining the appropriate action to be taken in each case:

(a) the effectiveness of the enforcement action to be taken under
this Act;

(b) the proportionality of the action to be taken with the breach
committed;

(c) deterrence of future breaches of similar nature by other
persons; and

(d) any other matter that is considered as relevant in the opinion
of the Bank.

  (3)   If the Bank is of the opinion that a person has committed a
breach and it is appropriate to take action against that person, the
Bank may, subject to section 262, take any one or more of the
following actions:

(a) make an order in writing requiring the person in breach—

(i) to comply with or give effect to; or

(ii) to do or not to do any act in order to ensure compliance
with,

such provisions, regulations, order, direction, standards,
condition, restriction, specification, requirement or code
referred to in subsection (1);

(b) subject to subsection (4), impose a monetary penalty—

(i) in accordance with the order published in the Gazette
made under section 236 or if no such order has been
made, such amount as the Bank considers appropriate, but
in any event not exceeding five million ringgit in the case
of a breach that is committed by a body corporate or
unincorporate or one million ringgit in the case of a
breach that is committed by any individual, as the case
may be;

(ii) which shall not exceed three times the gross amount of
pecuniary gain made or loss avoided by such person as a
result of the breach; or

(iii) which shall not exceed three times the amount of money
which is the subject matter of the breach,

whichever is greater for each breach or failure to comply;

(c) reprimand in writing the person in breach or require the
person in breach to issue a public statement in relation to such
breach, if it is in the opinion of the Bank that such breach is
relevant for the information of the general public;

(d) make an order in writing requiring the person in breach to
take such steps as the Bank may direct to mitigate the effect
of such breach; or

(e) make an order in writing requiring an authorized person, an
operator of a designated payment system, a registered person

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or a market participant to remedy the breach including
making restitution to any other person aggrieved by such
breach.

  (4)   The Bank may impose a monetary penalty under paragraph (3)
(b) only in respect of the following:

(a) breach of any provision set out in Schedule 15;

(b) breach of any requirement under any other provision of this
Act where no offence is provided for non-compliance of that
requirement;

(c) failure to comply with any requirement imposed under
regulations made under this Act where no provision for
imposition of penalty is provided for in accordance with
paragraph 260(2)(d); or

(d) failure to comply with any standards, code, order, direction,
requirement, condition, specification, restriction or otherwise
made or imposed pursuant to any provision set out in
Schedule 15.

  (5)   If a breach is committed by a body corporate or unincorporate,
any action under subsection (3) can be taken against a person—

(a) who is its director, controller, officer or partner, or was
purporting to act in any such capacity; or

(b) who is concerned in the management of its affairs,

at the time of the breach unless that person demonstrates that the
breach was committed without his consent or connivance and that he
exercised such diligence to prevent the breach as he ought to have
exercised, having regard to the nature of his function in that capacity
and to the circumstances.

  (6)   If a breach is committed by a person—

(a) who is a director, controller, officer or partner of a body
corporate or unincorporate, or was purporting to act in any
such capacity; or

(b) who is concerned in the management of the affairs of a body
corporate or unincorporate,

an action under subsection (3) can be taken against the body
corporate or unincorporate.

  (7)   For the purposes of paragraph (3)(e), in determining whether
or not any amount is to be paid by a person in breach, the Bank shall
have regard to—

(a) whether or not one or more persons have suffered loss or been
otherwise adversely affected as a result of the breach; or

(b) the profits that have accrued to such person in breach.

  (8)   Any monetary penalty paid by a person in accordance with
paragraph (3)(b) shall be paid into and form part of the Federal
Consolidated Fund.

  (9)   Where a person fails to pay a monetary penalty imposed by the
Bank under paragraph (3)(b) within the period specified by the Bank,
the penalty imposed by the Bank may be sued for and recovered as a
civil debt due to the Government.

  (10)   Where a person fails to remedy the breach including making

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restitution to any other person aggrieved by the breach under
paragraph (3)(e), notwithstanding any other written law, the Bank
may sue for and recover such sum as a civil debt due to the person
aggrieved by the breach.

  (11)   Nothing in this section shall preclude the Bank from taking
any of the actions that it is empowered to take under this Act, in
particular, section 94, 116 or 156, or any written law.

Lodgment of amount not
distributed with Registrar

of Unclaimed Moneys
Act 370.

235.   To the extent that any of the amount paid under paragraph 234
(3)(e) or subsection 234(10) has not been distributed by the person in
breach after reasonable efforts to notify the aggrieved persons have
failed due to the difficulty of notifying the aggrieved persons, such
amount shall be lodged with the Registrar of Unclaimed Moneys in
accordance with the provisions of the Unclaimed Moneys Act 1965
[Act 370].

Power of Bank to
prescribe monetary

penalty

236.   The Bank may, for giving full effect to or for convenient
implementation of subparagraph 234(3)(b)(i), or for the purposes of
regulatory objectives of this Act, prescribe the following matters as it
deems necessary:

(a) classify or designate the breaches under this Act into different
categories of breaches; and

(b) fix, in accordance with paragraph (a), a monetary penalty, or
a range of monetary penalties, in respect of each category.

Application for appeal of
decisions

237.   (1)   Any person who is aggrieved by a decision of the Bank
under paragraph 234(3)(b) or (e) may within twenty-one days after
the person has been notified of the decision, appeal by filing a notice
in writing to the Monetary Penalty Review Committee.

  (2)   The decision of the Bank under paragraph 234(3)(b) or (e), as
the case may be, shall not take effect until the appeal is disposed of.

  (3)   The Monetary Penalty Review Committee may decide to
confirm the decision of the Bank or require the Bank to reconsider
and reach a decision in accordance with the findings of the
Committee.

Monetary Penalty Review
Committee

238.   (1)   There shall be established a committee to be known as the
Monetary Penalty Review Committee for the purposes of section
237.

  (2)   The Monetary Penalty Review Committee shall consist of not
less than three but not more than five members appointed by the
Minister from amongst non-executive directors of the Bank or other
persons.

  (3)   The Monetary Penalty Review Committee may determine its
own procedures.

Division 3

Civil actions

Page 127 of 180

Civil action by Bank 239.   Where it appears to the Bank that there is a reasonable
likelihood that any person will contravene or has contravened or will
breach or has breached or is likely to fail to comply with or has
failed to comply with any—

(a) provisions of this Act;

(b) provisions of any regulations made pursuant to this Act;

(c) order made or direction issued by the Bank under this Act
including an order made under section 94 or a direction
issued under section 116 or 156, subsection 214(6) or section
216;

(d) standards, condition, restriction, specification, requirement or
code made or issued pursuant to any provision of this Act; or

(e) action taken by the Bank under subsection 234(3),

the Bank may institute civil proceedings in the court seeking any
order specified under subsection 240(1) against that person whether
or not that person has been charged with an offence in respect of the
contravention or breach or whether or not a contravention or breach
has been proved in a prosecution.

Orders by court 240.   (1)   The court may, on an application by the Bank under
section 239, make one or more of the following orders:

(a) an order requiring the person to pay an amount which shall
not exceed three times—

(i) the gross amount of pecuniary gain made or loss avoided
by such person as a result of the contravention, breach or
non-compliance; or

(ii) the amount of money which is the subject matter of the
contravention, breach or non-compliance,

as the case may be;

(b) an order requiring the person to pay a civil penalty in such
amount as the court considers appropriate having regard to
the severity or gravity of the contravention, breach or non-
compliance, but in any event not exceeding twenty-five
million ringgit;

(c) an order—

(i) restraining the person from engaging in any specific
conduct; or

(ii) requiring the cessation of the contravention, breach or
non-compliance;

(d) an order directing a person to do a certain act;

(e) an order directing the person, or any other person who
appears to have been involved in the contravention, breach or
non-compliance to take such steps as the court may direct to
mitigate the effect of such contravention breach or non-
compliance;

(f) an order directing the authorized person, operator of a
designated payment system, registered person or market
participant to remedy the contravention, breach or non-
compliance including making restitution to any other person

Page 128 of 180

aggrieved by such contravention, breach or non-compliance;

(g) where a person has refused or failed to comply with any
action taken by the Bank under subsection 234(3), an order
directing the person to comply with such action that is taken
by the Bank; and

(h) any other order deemed appropriate by the court including
any ancillary order deemed desirable in consequence of the
making of an order under any provision in this subsection.

  (2)   The court may make an order under subsection (1) against a
person—

(a) who is the director, controller, officer or partner, or was
purporting to act in any such capacity; or

(b) who is concerned in the management of the affairs,

of a body corporate or unincorporate in the event where the
contravention, breach or non-compliance has been committed by the
body corporate or unincorporate unless that person proves that the
contravention, breach or non-compliance was committed without his
consent or connivance and that he exercised such diligence to
prevent the commission of the contravention, breach or non-
compliance as he ought to have exercised, having regard to the
nature of his function in that capacity and to the circumstances.

  (3)   If a contravention, breach or non-compliance is committed by
a person—

(a) who is a director, controller, officer or partner of a body
corporate or unincorporate, or was purporting to act in any
such capacity; or

(b) who is concerned in the management of the affairs of a body
corporate or unincorporate,

an order under subsection (1) can be made against the body
corporate or unincorporate.

  (4)   Any sum ordered by the court under subsection (1), shall be
applied—

(a) firstly, to reimburse the Bank for all costs of the proceedings
in respect of the contravention, breach or non-compliance;
and

(b) secondly, to pay persons aggrieved by the contravention,
breach or non-compliance in the case of an order under
paragraph (1)(f); or

(c) thirdly, to pay into and form part of the Federal Consolidated
Fund unless the court orders for such sums or part thereof to
be used to compensate persons who have suffered loss as a
result of the contravention, breach or non-compliance.

  (5)   If the authorized person, operator of a designated payment
system, registered person or market participant considers that it is
not practicable to provide a remedy to the persons referred to in
paragraph (1)(f), in view of the amount of any potential distribution
to each person or the difficulty of ascertaining or notifying the
person whom it is appropriate to provide a remedy, the authorized
person, operator of a designated payment system, registered person
or market participant shall lodge such amount with the Registrar of
Unclaimed Moneys in accordance with the provisions of the

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Unclaimed Moneys Act 1965.

  (6)   The court may revoke or vary an order made by it under this
section or suspend the operation of such an order.

  (7)   The powers conferred on the court under this section are in
addition to any of its other powers, and do not derogate from its
other powers provided under any other written law.

  (8)   Applications under this section may be commenced at any
time within six years from the date on which the Bank discovered
the contravention, breach or non-compliance.

Civil action to seek
compensation

241.   (1)   Where any person—

(a) has been convicted of an offence under this Act or under any
other written law; or

(b) has had any offence committed by him compounded under
section 253,

and such offence has resulted in, or caused, or subsequent to its
commission, results in, or causes, any loss or damage of any nature
or in any form to a licensed person, the Bank may institute civil
proceedings in court for the purposes of seeking indemnity from the
persons referred to in subsection (2).

  (2)   The following persons shall be jointly and severally liable to
indemnify the licensed person in full for any loss or damage to the
licensed person:

(a) the person convicted of the offence, or the person whose
offence has been compounded under section 253; and

(b) any director, officer or controller of the licensed person, any
other person purporting to act in any such capacity, or any
person who is in any manner or to any extent responsible for
the management of the affairs of the licensed person, or any
person who is assisting in such management.

  (3)   The court may, upon reviewing an application by the Bank,
make an order specifying the amount of moneys the persons referred
to in subsection (2) are liable to indemnify the licensed person.

  (4)   The persons referred to in subsection (2) shall not be liable to
so indemnify the licensed person if—

(a) the offence was committed without his knowledge, consent or
connivance; and

(b) he took all reasonable precautions and had exercised due
diligence to prevent the commission of the offence as he
ought to have taken precautions or to have exercised, having
regard to the nature of his functions and to all the
circumstances in which the offence was committed.

  (5)   An amount ordered by the court under subsection (3) shall be
applied—

(a) firstly, to reimburse the Bank for all costs of the proceedings
to seek the indemnity; and

(b) secondly, to compensate the licensed person.

  (6)   Civil proceedings under subsection (1) may be commenced at

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any time within six years from the date on which the person has been
convicted of the offence under this Act or other written law or
compounded under section 253.

Interim orders 242.   If an application is made to a court for an order under
subsection 240(1) or 241(1), the court may, if it deems appropriate,
before considering the application, make an interim order of the kind
applied for and such order shall be expressed to have effect pending
the determination of the application.

Contravention of court
order

243.   (1)   Any person who contravenes an order of the court under
subsection 240(1) or 241(3) or section 242 commits an offence and
shall, on conviction be liable to imprisonment for a term not
exceeding eight years or to a fine not exceeding twenty-five million
ringgit or to both.

  (2)   Subsection (1) does not affect the powers of the court in
relation to the punishment of contempt of court.

No undertaking as to
damages

244.   Where the Bank makes an application for an order under
subsection 240(1) or 241(1), the court shall not, as a condition of the
grant of the order, require any undertaking as to damages to be given
by or on behalf of the Bank.

Other actions 245.   An application made pursuant to subsection 240(1) or 241(1)
shall not prejudice any other action that may be taken by the Bank,
aggrieved person or licensed person, as the case may be, under this
Act or any other law.

Evidence obtained in
investigations may be

used in civil proceedings

246.   (1)   Notwithstanding any law, any document or information
obtained by the Bank in the exercise of its investigation powers
against—

(a) an authorized person, operator of a designated payment
system, a registered person or market participant;

(b) any director or officer of the persons referred to in paragraph
(a);

(c) any agent of the persons referred to in paragraph (a); or

(d) any other person,

may be used by the Bank in a civil action instituted by the Bank.

  (2)   For the avoidance of doubt, any document or information
referred to in subsection (1) shall not be inadmissible in any civil
proceedings under this Part to which the Bank is a party by reason
only that it was obtained by the Bank in the exercise of its
investigation powers and the admissibility thereof shall be
determined in accordance with the rules of evidence under any law.

Division 4

Criminal offences

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Imprisonment 247.   Where the penalty of imprisonment has been provided for an
offence under this Act, such penalty shall not apply to a body
corporate convicted of the offence.

Offences in relation to
entries in documents

248.   (1)   No person shall—

(a) make or cause to be made a false entry;

(b) omit to make, or cause to be omitted, any entry; or

(c) alter, extract, conceal or destroy, or cause to be altered,
extracted, concealed or destroyed, any entry,

in any book or record, or in any report, slip, statement or other
document whatsoever, relating to the business, affairs, transactions,
condition, property, assets, liabilities or accounts, of an authorized
person, a registered person or an operator of a designated payment
system.

  (2)   No person shall evade the provisions of this Act by altering,
forging, destroying, mutilating, defacing, concealing or removing
any document.

  (3)   Any person who contravenes subsection (1) or (2) commits an
offence and shall, on conviction, be liable to imprisonment for a term
not exceeding eight years or to a fine not exceeding twenty-five
million ringgit or to both.

Offence committed by
any person acting in

official capacity

249.   (1)   Where an offence is committed by a body corporate or
unincorporate, a person—

(a) who is its director, controller, officer or partner, or was
purporting to act in any such capacity; or

(b) who is concerned in the management of its affairs,

at the time of the commission of the offence is deemed to have
committed that offence unless that person proves that the offence
was committed without his consent or connivance and that he
exercised such diligence to prevent the commission of the offence as
he ought to have exercised, having regard to the nature of his
function in that capacity and to the circumstances.

  (2)   An individual may be prosecuted for an offence under
subsection (1) notwithstanding that the body corporate or
unincorporate has not been convicted of the offence whether or not a
prosecution has been initiated or a conviction has been obtained
against the body corporate or unincorporate.

  (3)   Subsection (1) shall not affect the criminal liability of the body
corporate or unincorporate for the offence referred to in that
subsection.

  (4)   The penalty of imprisonment for an offence applies to an
individual convicted of an offence by virtue of subsection (1),
notwithstanding that the imprisonment does not apply to the body
corporate or unincorporate by virtue of section 247.

Offence by employees, 250.   Where a person is liable under this Act to a penalty for any

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etc. act, omission, neglect or default, such person shall be liable to the
same penalty for the act, omission, neglect or default of his
employee, director, controller or agent if the act, omission, neglect or
default was committed by—

(a) his employee in the course of the employee’s employment;

(b) his director in carrying out the function of a director;

(c) his controller in carrying out the function of a controller; or

(d) his agent when acting on his behalf.

Seizable offence 251.   Every offence punishable under this Act shall be a seizable
offence, and a police officer not below the rank of Inspector, or an
investigating officer appointed under section 219 may arrest without
warrant a person whom he reasonably suspects to have committed or
is committing the offence.

Duty of investigating
officer to make over

arrested person to police

252.   An investigating officer who makes an arrest under section
251 shall make over the arrested person to a police officer without
unnecessary delay and the arrested person shall be dealt with
according to the law relating to criminal procedure as if he had been
arrested by a police officer.

Power to compound 253.   (1)   The Governor may, with the consent in writing of the
Public Prosecutor, offer in writing to compound any offence
punishable under this Act or any regulations made under this Act, by
accepting from the person reasonably suspected of having committed
the offence, such sum of money not exceeding the amount of the
maximum fine to which that person would have been liable if he had
been convicted of the offence, within such time as may be specified
in the offer.

  (2)   An offer under subsection (1) may be made at any time after
the offence has been committed, but before any prosecution for it has
been instituted, and if the amount specified in the offer is not paid
within the time specified in the offer or within such extended period
as the Governor may grant, prosecution for the offence may be
instituted at any time after that against the person to whom the offer
was made.

  (3)   Where an offence has been compounded under subsection (1),
no prosecution shall be instituted in respect of the offence against the
person to whom the offer to compound was made, and any document
or thing seized in connection with the offence may be released by the
Bank, subject to such terms and conditions as the Bank thinks fit.

  (4)   All sums of money accepted under subsection (1) shall be paid
into the Federal Consolidated Fund.

Attempts, abetments and
conspiracies

254.   (1)   Any person who—

(a) attempts to commit an offence under this Act;

(b) does an act preparatory to, or in furtherance of, the
commission of an offence under this Act; or

(c) abets or is engaged in a criminal conspiracy to commit (as

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those terms are defined in the Penal Code) an offence under
this Act, whether or not the offence is committed in
consequence of it,

commits an offence and is liable to the penalty for that offence.

  (2)   A provision of this Act which refers to an offence under a
specific provision of this Act shall be read as including a reference to
an offence under subsection (1) in relation to the offence under that
specific provision.

Prosecution 255.   No prosecution for an offence under this Act shall be instituted
except with the written consent of the Public Prosecutor.

Division 5

General matters

Protection in relation to
disclosure of information

to Bank

256.   (1)   Where a person discloses in good faith to the Bank, his
knowledge or belief or any document or information that a breach or
contravention has been committed or is about to be committed under
this Act—

(a) such person shall not be liable for a breach of a duty of
confidentiality imposed by any law, contract or rules of
professional conduct;

(b) it shall be a defence in an action, a suit, prosecution or
proceeding that is brought, instituted or maintained in any
court or before any other authority against the person who
made the disclosure to the Bank that in his belief the
disclosure was necessary for the carrying into effect the
provisions of this Act; or

(c) no contractual or other rights or remedy may be enforced
against the person on the basis of disclosure.

  (2)   Any document or information disclosed to the Bank under
subsection (1) and the information and identity of the person making
the disclosure shall be secret between the Bank and the person who
made the disclosure.

Evidential provision 257.   In any criminal or civil proceedings under this Act—

(a) any statement purporting to be signed by the Governor or any
other person authorized to perform the functions of the Bank
on its behalf, which forms part of or is annexed to any letter,
register, record or document, however expressed, described or
represented; or

(b) the production of a printed copy of a standard, specification,
order in writing, direction, instruction, notice, requirement,
condition or restriction, letter, register, record, document or
any other instrument specified or issued pursuant to this Act,

shall, until the contrary is proved, be evidence of any fact stated
therein.

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Power of Bank to publish
information

258.   The Bank may, where it thinks necessary, publish in such form
and manner as it thinks fit, any information in relation to—

(a) any enforcement action taken under this Act including
criminal proceedings, compounding, civil actions and
administrative actions; and

(b) the outcome of actions referred to in paragraph (a) including
the outcome of any proceedings, settlement in or out of court
in relation to any breach or contravention of provisions of this
Act.

PART XVI

GENERAL PROVISIONS

Enforceable undertakings 259.   (1)   The Minister or the Bank may accept a written
undertaking given by a person in connection with a matter in relation
to which the Minister or the Bank, as the case may be, has a power
or function under this Act.

  (2)   The written undertaking accepted under subsection (1) may be
varied or withdrawn by the person giving the undertaking with the
consent of the Minister or the Bank, as the case may be.

  (3)   If the Bank considers that a person who has given a written
undertaking has breached any of the terms of the undertaking—

(a) given to the Bank, the Bank may apply; or

(b) given to the Minister, the Bank may recommend to the
Minister to apply,

to the High Court for an order under subsection (4) by way of
originating summons.

  (4)   If the High Court is satisfied that a person has breached a term
of the undertaking, the High Court may make any or all of the
following orders:

(a) an order directing the person to comply with the undertaking;

(b) an order directing the person to pay to the Federal
Consolidated Fund an amount up to the amount of any
financial benefit that the person obtained (whether directly or
indirectly) and that is reasonably attributable to the breach;

(c) any order that the High Court considers appropriate directing
the person to compensate any other person who has suffered
loss or damage as a result of the breach; or

(d) any other order that the High Court considers appropriate.

  (5)   The Bank shall be entitled to be heard in proceedings relating
to an application made to the High Court in respect of a breach of
undertaking given to the Minister.

Regulations 260.   (1)   The Minister may, on the recommendation of the Bank,
make such regulations as may be necessary or expedient for—

(a) giving full effect to the provisions of this Act;

(b) carrying out or achieving the regulatory objectives and

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purposes of this Act;

(c) the further, better or more convenient implementation of the
provisions of this Act; or

(d) providing for any supplemental, incidental or consequential
matters in relation to this Act.

  (2)   Without limiting the generality of subsection (1), regulations
may be made—

(a) to provide for control by the Bank by supervision, regulation,
restriction, prohibition, or otherwise howsoever, with respect
to the provision of finance, financial intermediation activities
as defined in section 211, banking services or insurance
services supplied or carried on by persons other than an
authorized person or registered person;

(b) to provide for forms in respect of any matter under this Act,
or under any regulations made under this section;

(c) to provide for fees to be paid to the Bank in respect of any
matter under this Act or under any regulations made under
this section; and

(d) to provide for the imposition of penalties for any offence
under the regulations which shall not exceed imprisonment
for a term not exceeding five years or a fine not exceeding ten
million ringgit or to both.

  (3)   Regulations made under this section may relate to all or any
class, category or description of persons, and may make different
provisions for different classes, categories or descriptions of persons.

Provisions relating to
approvals, consents,

standards, codes,
specifications, notices,

requirements, directions
or measures

261.   (1)   Unless otherwise expressly provided, any approval or
consent granted, or any standards, code, specification, notice,
requirement, direction or measures specified or issued, under this
Act—

(a) may be either general or specific;

(b) may be amended or revoked by the Bank or the Minister, as
the case may be; or

(c) shall be issued or communicated in such manner as the Bank
thinks appropriate and shall be valid for all purposes.

  (2)   Any approval or consent under subsection (1) may be—

(a) absolute or conditional; or

(b) limited so as to expire on a specified date, unless renewed.

Opportunity to make
representations

262.   (1)   Where—

(a) the Minister, on the recommendation of the Bank, proposes to
take any action against any person under subsection 13(1), 20
(1) or (2), 30(3) or section 193; or

(b) the Bank proposes to take any action against any person
under subsection 13(1), 20(1), (2) or (3), section 21,
subsection 30(3), section 34 or 39, subsection 94(2), 116(2)
or (3), 120(1), 140(5) or 156(1), section 162, subsection 167

Page 136 of 180

(1) or 172(1) or against any person in breach referred to in
subsection 234(1),

the Bank shall serve on such person a written notice of the proposed
action.

  (2)   The written notice under subsection (1) shall set out—

(a) the action that the Minister or the Bank, as the case may be,
proposes to take and the grounds for such action;

(b) the period within which the person referred to in subsection
(1) may make a written representation to the Minister or the
Bank, as the case may be;

(c) in the case of any proposed action under subsection 94(2),
140(5) or 234(3), the non-compliance or breach committed by
the person; and

(d) where the Bank proposes to impose a monetary penalty under
paragraph 234(3)(b), the right of the person in breach to pay,
within a period specified in the notice, the monetary penalty
stated in such notice.

  (3)   The person referred to in subsection (1) shall be given a
reasonable opportunity to make a written representation to the
Minister or the Bank, as the case may be, by submitting such
representation to the Bank within fourteen days from the date of the
notice by the Bank.

  (4)   After the expiry of the period of fourteen days from the date of
the notice by the Bank and considering any written representation
under subsection (3), the Minister, on the recommendation of the
Bank, or the Bank, as the case may be, shall decide whether to—

(a) proceed with the proposed action or a variation of such
action; or

(b) take no further action.

  (5)   The Minister or the Bank, as the case may be, shall give the
person referred to in subsection (1) a written notice of the decision
under subsection (4) and the decision shall take effect from the date
specified in the notice.

  (6)   Notwithstanding subsection (1), the Minister or the Bank may,
as the case may be, first take the proposed action and the opportunity
to make representations shall be given immediately after the action
has been taken if any delay in taking the proposed action would be
detrimental to the interests of any authorized person, registered
person, operator of a designated payment system, depositors, policy
owners, participants, creditors, the financial system or the public
generally.

  (7)   The Minister or the Bank may, as the case may be, confirm,
amend or revoke the exercise of action taken under subsection (6) in
consequence of representations made under that subsection.

  (8)   Subsection (6) shall not apply to any action taken under
section 234.

  (9)   This section shall not apply to—

(a) a proposed action under subsection 13(1) unless the proposed
action is likely to prejudice the interest of the person referred
to in subsection (1); and

Page 137 of 180

(b) a revocation of a licence under paragraph 20(1)(e), (f) or (g).

Exemptions 263.   The Minister may, on the recommendation of the Bank and
provided that it is consistent with the objects and functions of the
Bank under the Central Bank of Malaysia Act 2009 or the regulatory
objectives of this Act, by an order published in the Gazette, exempt
any particular person or any class, category or description of
persons, from all or any of the provisions of this Act, for such
duration, and subject to such conditions, as may be specified by the
Minister in the order.

Power of Minister to
amend Schedule

264.   The Minister may, on the recommendation of the Bank, from
time to time, by an order published in the Gazette, amend any
provision in Schedules 1, 2, 4, 5, 6, 7, 9, 11, 12 and 13 of this Act
and upon such publication, such provision as amended shall come
into full force and effect and shall be deemed to be an integral part of
this Act as from the date of such publication or from such later date
as may be specified in the order.

Decision of Minister to be
final

265.   Any decision made by the Minister under this Act shall be
final.

Power of Bank to issue
guidance

266.   The Bank may issue guidance in writing to any person or to
any class, category or description of persons consisting of such
information, advice or recommendation as it considers appropriate—

(a) with respect to the provisions of this Act;

(b) for the purpose of carrying out or achieving the regulatory
objectives of this Act; or

(c) with respect to any other matter which, in the opinion of the
Bank, is desirable to give information, advice or
recommendation.

Protection against suits
and legal proceedings

267.   No action, suit, prosecution or other proceeding shall lie or be
brought, instituted, or maintained in any court or before any other
authority against—

(a) the Minister;

(b) the Bank;

(c) the Governor;

(d) the Deputy Governor; or

(e) any of its director, officers or employees or any person acting
on behalf of the Bank,

for or on account of, or in respect of, any act done or statement made
or omitted to be done or made, or purporting to be done or made or
omitted to be done or made, in pursuance or in execution of, or
intended pursuance or execution of, this Act, or any order in writing,
direction, instruction, notice or other thing issued under this Act if
such act or such statement was done or made, or was omitted to be
done or made, in good faith.

Page 138 of 180

Application of Companies
Act 1965

268.   Where an authorized person, a registered person, an operator
of a designated payment system or a person prescribed as a
prescribed financial institution under section 212 is a corporation to
which all or any of the provisions of the Companies Act 1965 apply,
such provisions shall be in addition to the provisions of this Act and
not in derogation thereof, but where there is any conflict or
inconsistency between the provisions of the Companies Act 1965
and this Act in their respective application to the person or operator,
the provisions of this Act shall prevail.

  (2)   Where any difficulty or doubt arises in the application of
subsection (1) in relation to any particular authorized person,
registered person or operator of a designated payment system, or any
particular matter or circumstance, or generally, the Minister may on
the reference of the difficulty or doubt to him by the Bank, resolve
the same by a direction in writing.

Application of certain
provisions of Act to

Labuan entities
Act 545.

269.   (1)   For the purpose of this section, “Labuan Financial
Services Authority” means Labuan Financial Services Authority
established under section 3 of the Labuan Financial Services
Authority Act 1996 [Act 545].

  (2)   Without prejudice to the generality of Division 2 of Part XIV,
the provisions in such Division shall apply to any person who is
under the supervision or oversight of the Labuan Financial Services
Authority and the Bank may exercise such powers and perform such
functions under this Act to ensure compliance with Division 2 of
Part XIV by such person.

  (3)   For the purposes of the Bank exercising oversight over a
financial group, a reference to—

(a) “subsidiary” in sections 115 and 116; and

(b) “related corporation” in Parts X and XI,

shall be deemed to include a person who is under the supervision or
oversight of the Labuan Financial Services Authority where such
person is within the financial group.

  (4)   Sections 178 and 185 of the Labuan Financial Services and
Securities Act 2010 and sections 139 and 146 of the Labuan Islamic
Financial Services and Securities Act 2010 shall not restrict the Bank
in the exercise of powers or performance of functions under section
115 or 116, or Part X or XI, and the Bank may exercise such powers
and perform such functions under this Act to ensure compliance with
section 115 or 116, or Part X or XI.

  (5)   Section 185 of the Labuan Financial Services and Securities
Act 2010 shall not restrict the application of this Act to any person
under the supervision or oversight of the Labuan Financial Services
Authority who, under this Act—

(a) operates a payment system, is a participant, or issues a
payment instrument; or

(b) is a market participant.

Breach or contravention
not to affect contract,

agreement or arrangement

270.   Except as otherwise provided in this Act, or in pursuance of
any provision of this Act, no contract, agreement or arrangement,

Page 139 of 180

entered into in breach or contravention of any provision of this Act
shall be void solely by reason of such breach or contravention:

   Provided that nothing contained in this section shall affect any
liability of any person for any administrative, civil or criminal
actions under this Act in respect of such breach or contravention.

PART XVII

REPEAL, SAVINGS AND TRANSITIONAL

Repeal 271.   The Banking and Financial Institutions Act 1989, the
Exchange Control Act 1953, the Insurance Act 1996 and the
Payment Systems Act 2003 are repealed.

Savings and transitional 272.   Notwithstanding section 271—

(a) any rule, regulation, order, notification or other subsidiary
legislation made and any approval, authority, consent,
decision, direction, exemption, notice, order, permission,
recommendation, requirement, specification or other
executive act granted or done under the repealed Acts and in
force or having effect before the appointed date, shall be
deemed to have been made, granted or done under a
corresponding provision in this Act or a corresponding
provision in any direction issued pursuant to section 156,
subsection 214(6) or section 216, and shall continue to remain
in full force and effect in relation to the person to whom it
applied until amended or revoked, except those subsidiary
legislation set out in Schedule 16 which are deemed to have
been revoked;

(b) every guideline, direction, circular or notice under the
repealed Acts in relation to any matter which corresponds
with any provision of this Act, issued before the appointed
date and in force immediately before the appointed date, shall
be deemed to be standards which have been lawfully
specified under such provisions of this Act and shall remain
in full force and effect in relation to the person to whom it
applied until amended or revoked;

(c) any application for a licence, approval, authorization,
notification, acknowledgment, consent, permission or for any
other purpose whatsoever made by any person under the
repealed Acts before the appointed date and pending before
the appointed date, shall—

(i) if there is a corresponding provision in this Act or in any
direction issued under subsection 214(6) or section 216,
be dealt with as if it was made under that provision;

(ii) if a different provision has been made for the application
under this Act or in any direction issued under subsection
214(6) or section 216, be dealt with in accordance with
such provision; and

(iii) if there is no corresponding provision in this Act or a
different provision has not been made for the application
under this Act or in any direction issued under subsection

Page 140 of 180

214(6) or section 216, lapse on the appointed date and any
fees or other payment received with the application shall
be refunded to such person;

(d) all transactions, credit facilities, dealings, contracts, powers of
attorney or arrangements lawfully executed or entered into
and all business lawfully done under the repealed Acts with
any person shall be deemed to have been lawfully and validly
executed, entered into or done under this Act, and
accordingly, any right or liability under such transaction,
dealing, business existing before the appointed date shall be
deemed to continue to be lawful and valid under this Act;

(e) without limiting the generality of paragraph (d), all insurance
policies issued, all transactions or dealings lawfully executed
or entered into, and all business lawfully done under the
repealed Insurance Act 1996 by a person who was licensed
under that repealed Act and who is authorized or registered or
deemed to be authorized or registered under this Act with any
policy owner, customer, creditor, debtor or other person shall
be deemed to have been lawfully and validly executed,
entered into, or done, under and in accordance with this Act,
and any right or liability under the transaction, dealing or
business existing before the appointed date shall be deemed to
continue to be lawful and valid under this Act;

(f) nothing shall affect any person’s liability to be investigated,
prosecuted or punished for offences committed under the
repealed Acts before the appointed date;

(g) any pending legal proceedings, criminal prosecution or
investigation under the repealed Acts shall be continued
under the repealed Acts as if the repealed Acts are in force;

(h) subject to paragraph (i), any reference to the repealed Acts in
any written law shall be construed as a reference to this Act
and any reference to any specific provision of the repealed
Acts in any written law shall be construed as a reference to a
provision of this Act which corresponds closely to such
specific provision;

(i) any reference to the Exchange Control Act 1953 or exchange
control or any specific provision, or generally to the
provisions, of the repealed Exchange Control Act 1953 in any
written law shall be construed as a reference to section 214 or
216 of this Act or a corresponding provision in any direction
issued under subsection 214(6) or section 216;

(j) any reference to the Controller of Foreign Exchange in any
written law shall accordingly be construed as a reference to
the Bank;

Act 731. (k) any reference to an “authorized dealer” in subsection 1(3) of
the Money Services Business Act 2011 [Act 731] shall be
construed as a reference to a licensed bank under this Act and
the interpretation of an “authorized dealer” in section 2 of that
Act shall be construed accordingly;

(l) any right, benefit, privilege, obligation or liability acquired,
accrued or incurred under the repealed Acts, shall continue to
remain in force under this Act; and

(m) all other acts or things done under the repealed Acts shall be
deemed to have been done under this Act and accordingly,

Page 141 of 180

shall continue to be valid and lawful under this Act.

Savings in respect of
licences granted under

repealed Acts

273.   (1)   Subject to the provisions of subsection (2)—

(a) a licence granted to a person by the Minister—

(i) under subsection 6(4) of the repealed Banking and
Financial Institutions Act 1989 to carry on banking
business or merchant banking business, as the case may
be, under that Act; and

(ii) under section 16 of the repealed Insurance Act 1996 to
carry on insurance business under that Act,

shall be deemed to be a licence granted under section 10
authorizing such person to carry on banking business,
investment banking business or insurance business, as the
case may be;

(b) a licence granted to a person—

(i) by the Minister under subsection 6(4) of the repealed
Banking and Financial Institutions Act 1989 to carry on
money-broking business; and

(ii) by the Bank under section 17 of the repealed Insurance
Act 1996 to carry on insurance broking business or
financial advisory business,

shall be deemed to be an approval granted under section 11
authorizing such person to carry on money-broking business,
insurance broking business and financial advisory business,
as the case may be; and

(c) an adjuster licensed by the Bank under section 17 of the
repealed Insurance Act 1996 to carry on adjusting business
shall be deemed to be a registered person under subsection 18
(1).

  (2)   The persons referred to in subsection (1) shall continue to be
subject to the conditions applicable to it before the appointed date as
if such conditions were imposed under this Act.

  (3)   Where in any written law, any reference is made to a merchant
bank licensed under subsection 6(4) of the repealed Banking and
Financial Institutions Act 1989, it shall be construed as a reference to
a licensed investment bank.

Savings in respect of
Islamic financial business

274.   The following persons shall be deemed to be approved under
subsection 15(1):

(a) a licensed bank or licensed investment bank which has
consulted the Bank under section 124 of the repealed Banking
and Financial Institutions Act 1989, and has obtained the
approval of the Bank to carry on Islamic banking business;

(b) an approved issuer of a designated payment instrument which
has obtained a written approval under subsection 25(1) of the
repealed Payment Systems Act 2003 for the issuance of
Islamic designated payment instruments; and

(c) an operator of—

Page 142 of 180

(i) a payment system which has been notified under
subsection 5(1) of the repealed Payment Systems Act
2003 provided that the business of the operator of that
payment system corresponds to a payment system set out
in Part 1 of Schedule 1 of the Islamic Financial Services
Act 2012; or

(ii) a designated payment system that facilitates participants
engaged in Islamic financial business to transfer, clear or
settle funds or securities,

and any conditions imposed on such persons under the repealed Acts
referred to in paragraphs (a), (b) and (c) before the appointed date
shall be deemed to be imposed under subsection 15(1).

Savings and transitional
provision in respect of
specific provisions of

repealed Insurance Act
1996

275.   Notwithstanding the repeal of the Insurance Act 1996 under
section 271—

(a) subsections 147(4) and (5), and sections 150 and 151 of the
repealed Insurance Act 1996 shall continue to remain in full
force and effect until such date to be appointed by the
Minister in accordance with subsection 1(2) for the coming
into operation of section 129 and Schedule 9;

(b) sections 144 and 224 of the repealed Insurance Act 1996 shall
continue to remain in full force and effect until such sections
are repealed by the Minister by notification in the Gazette;
and

(c) an insurance fund established and maintained under section
38 of the repealed Insurance Act 1996 shall be deemed to
have been established and maintained under section 81.

Conversion to single
insurance business

276.   A licensed insurer, other than a licensed professional reinsurer,
lawfully carrying on both life business and general business under
the repealed Insurance Act 1996 shall comply with subsection 16(1)
within five years of the appointed date or such longer period as may
be specified by the Minister, on the recommendation of the Bank, by
notice in writing to the insurer upon its written application before the
expiry of the five years.

Designated payment
systems deemed certified

PU(A) 3/2009.

277.   The Real Time Electronic Transfer of Funds and Securities
System or RENTAS and the Sistem Penjelasan Informasi Cek
Kebangsaan secara Elektronik or eSPICK, which were prescribed as
designated payment systems under the Payment Systems
(Designated Payment Systems) Order 2009 [P.U.(A) 3/2009] in force
before the appointed date shall be deemed to be certified designated
payment systems under this Act.

Savings in respect of
approvals granted,

notification given and
prescription made under

repealed Payment
Systems Act 2003

278.   (1)   An operator of a payment system who has received a
written notification under subsection 5(1) of the repealed Payment
Systems Act 2003 shall be deemed to have been approved under
section 11 or deemed to be registered under subsection 18(1)
respectively, provided that the business of the operator of that
payment system corresponds to either a payment system set out in

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Division 1 of Part 1 of Schedule 1 or a payment system set out in
Part 2 of Schedule 1.

  (2)   An issuer of a designated payment instrument who has
obtained a written approval under subsection 25(1) of the repealed
Payment Systems Act 2003 shall be deemed to have been approved
under section 11 in respect of the issuance of that designated
payment instrument.

Savings in respect of
interest in shares

279.   (1)   Where a person holds five per cent or more of interest in
shares of a licensed person on the appointed date, but was not
required to obtain an approval under section 45 of the repealed
Banking and Financial Institutions Act 1989 or section 67 of the
repealed Insurance Act 1996, as the case may be, such person shall
be deemed to be approved under paragraph 90(3)(a) provided that he
submits such documents or information as may be specified by the
Bank within six months after the appointed date.

  (2)   Where an individual has been approved by the Minister under
section 67 of the repealed Insurance Act 1996 to hold interest in
shares of a licensed person of more than the percentage specified in
section 92, such holding shall be deemed to be lawful and valid for a
period of five years after the appointed date and such individual
shall, before the expiry of such period, take necessary actions to
comply with section 92.

Savings in respect of
financial holding

company

280.   (1)   A company which has been approved by the Minister
under section 45 or 46 of the repealed Banking and Financial
Institutions Act 1989 to hold more than fifty per cent of interest in
shares of a licensed bank or licensed merchant bank as defined in
subsection 2(1) of that Act and has been designated by the Bank as a
financial holding company or bank holding company, as the case
may be, shall be deemed to be approved as a financial holding
company under subsection 112(3).

  (2)   Where the Bank has not designated a financial holding
company or bank holding company for a licensed bank or licensed
merchant bank before the appointed date, a company which holds
more than fifty per cent of interest in shares of such licensed bank or
licensed merchant bank shall submit an application to the Bank for it
to be approved as a financial holding company within a period of
twelve months from the appointed date or such longer period as may
be specified by the Bank.

  (3)   A company which has been approved by the Minister under
section 67 of the repealed Insurance Act 1996 to hold more than fifty
per cent of interest in shares of a licensed insurer, shall submit an
application to the Bank for it to be approved as a financial holding
company within a period of twelve months from the appointed date
or such longer period as may be specified by the Bank.

  (4)   An application referred to in subsection (2) or (3) shall be dealt
with as if it was made under section 110 and a company referred to
in subsection (2) or (3) which fails to submit an application after the
expiry of the twelve months or such longer period specified by the
Bank under subsection (2) or (3) commits a breach and the Bank
may take any action under subsection 234(3).

Savings in respect of 281.   (1)   Subject to the provision of this section, nothing contained

Page 144 of 180

deposits accepted by co-
operative societies

in sections 137 and 138 shall render invalid any deposit accepted
lawfully by a co-operative society from a person who is not a
member of such co-operative society before the appointed date
provided that such co-operative society shall, within six months from
the appointed date or such longer period as may be specified by the
Bank, submit an application to the Bank together with such
documents or information as may be specified by the Bank for it to
continue accepting deposits from non-members.

  (2)   The Bank may approve, with or without conditions, or reject
the application referred to in subsection (1) and a co-operative
society so approved shall comply with any condition imposed on it
by the Bank.

  (3)   The Bank may grant an approval under subsection (2) if the
Bank is satisfied that such co-operative society has given a written
undertaking that it will comply with such conditions as may be
imposed by the Bank under subsection (2).

  (4)   Section 259 shall apply to a written undertaking given under
this section.

  (5)   The Bank may, at any time, in writing amend or revoke any
existing condition imposed on such approval under subsection (2) or
impose any new condition thereto.

SCHEDULE 1

[Subsection 2(1), sections 8, 33, 35, 36, 156 and 278]

APPROVED AND REGISTERED BUSINESSES

PART 1

Approved business

Division 1

Businesses which require approval

1.   Operation of a payment system which—

(a) enables the transfer of funds from one banking account to
another, which includes any debit transfer, credit transfer or
standing instructions but does not include the operation of a
remittance system approved under section 40 of the Money
Services Business Act 2011; or

(b) provides payment instrument network operation which
enables payments to be made through the use of a payment
instrument.

2.   Issuance of a designated payment instrument.

3.   Insurance broking business.

4.   Money-broking business.

5.   Financial advisory business.

Division 2

Persons who do not require approval for financial advisory business

6.   A licensed person or an approved insurance broker under this

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Act.

7.   An insurance agent.

Act 100. 8.   A company registered under the Trust Companies Act 1949 [Act
100].

PART 2

Registered business

9.   Merchant acquiring services.

10.   Adjusting business.

SCHEDULE 2

[Paragraphs 2(1)(d) and 136(d)]

OTHER EXCLUSIONS FROM DEFINITION OF “DEPOSIT”

PART 1

Money paid by any person to—

(a) the Government or any State Government;

(b) the Bank;

(c) a statutory body or local authority which is authorized to
accept, receive or take the same under any written law;

(d) a co-operative society which is authorized under the Co-
operative Societies Act 1993 to accept deposits, provided
that, where such person is not a member of the co-operative
society as defined in the Co-operative Societies Act 1993, the
co-operative society has obtained both—

(i) the approval of the Malaysia Co-operative Societies
Commission under the Co-operative Societies Act 1993;
and

(ii) the approval of the Bank and complies with such
conditions as may be imposed by the Bank;

Act 109.
Act 44.

(e) a farmers’ organization registered under the Farmers’
Organization Act 1973 [Act 109] or a fishermen’s association
registered under the Fishermen’s Association Act 1971 [Act
44];

(f) its related or associate corporation;

(g) another person, in relation to any instrument or transaction
falling within paragraphs (a) to (e) of the definition of
“debenture” under subsection 2(1) of the Capital Markets and
Services Act 2007 provided that such other person obtains the
approval of the Bank and complies with such conditions as
may be imposed by the Bank;

(h) another person, in relation to any issue of, offer for
subscription or purchase of, or invitation to subscribe for or
purchase, securities as defined in subsection 2(1) of the
Capital Markets and Services Act 2007;

(i) another person who issues or offers to the public for
subscription or purchase, or invites the public to subscribe for
or purchase, any interest under an approved deed in

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accordance with Division 5 of Part IV of the Companies Act
1965;

(j) an approved issuer of a designated payment instrument
issuing electronic money in the course of carrying on its
authorized business; or

(k) another person, where both persons are individuals, in the
course of customary, social, friendly or family relationship
and the total number of such individuals who make the
payments to the other person does not at any time exceed ten.

PART 2

Money paid to any person, other than a licensed bank or licensed
investment bank, by—

(a) the Government or any State Government;

(b) the Bank;

(c) a statutory body, local authority or any other person which is
authorized to make such payment under any written law;

(d) a co-operative society which is authorized under the Co-
operative Societies Act 1993;

(e) a licensed person, an approved money-broker or an approved
issuer of a designated payment instrument issuing electronic
money, in the course of carrying on its authorized business;

Act 618. (f) a prescribed institution as defined in subsection 3(1) of the
Development Financial Institutions Act 2002 [Act 618], in the
course of its lawful business;

Act 81. (g) a pawnbroker licensed under the Pawnbrokers Act 1972 [Act
81], in the ordinary course of its lawful business;

Act 400. (h) a moneylender licensed under the Moneylenders Act 1951
[Act 400], in the ordinary course of its lawful business;

(i) any person lawfully carrying on any financial intermediation
activity as defined in section 211 in the course of its ordinary
business; or

(j) its related or associate corporations.

PART 3

Money paid by a licensed bank and licensed investment bank, to any
person in the course of buying or borrowing securities from that
person where the securities will be repurchased or returned as part of
the same transaction.

SCHEDULE 3

[Subsection 2(1)]

INTEREST IN SHARES

Direct interest in shares 1.   Where a person holds shares or has entered into a contract to
acquire shares in a body corporate or has a right to have the shares in
a body corporate to be transferred to him or otherwise has any legal
or beneficial interest in the shares of the body corporate, he shall be
taken to have a direct interest in shares of the body corporate.

Effective interest in 2.   Where a series of body corporates hold shares in succession in

Page 147 of 180

shares the subsequent level body corporate one after the other, and if a
person has a direct interest in shares of a body corporate in that
series (hereinafter referred to as “first level body corporate”)—

(a) such person shall be taken to have an effective interest in
shares of any other body corporate (hereinafter referred to as
“second level body corporate”) in which the first level body
corporate has a direct interest in shares; and

(b) such person shall be taken to have an effective interest in
shares in each subsequent level body corporate in that series
following the second level body corporate, provided each
preceding level body corporate in the series has a direct
interest in shares of each subsequent level body corporate in
that series.

Computation of effective
interest in shares

3.   The effective interest in shares of a person in a body corporate X
in the series of body corporates referred to in paragraph 2 shall be
derived by multiplying the percentage of his direct interest in the
first level body corporate in the series and the direct interest of each
subsequent level body corporate down to the direct interest in shares
held by the preceding body corporate, in that body corporate X as
follows:

EFx = DI¹ x DI² x DI³ ... x DIx

Where—

EFx represents the effective interest in shares of the person in the
body corporate X;

DI¹ represents the percentage of direct interest in shares of the
person in the first level body corporate;

DI² represents the percentage of direct interest in shares of the
first level body corporate in the second level body corporate;

DI³ represents the percentage of direct interest in shares of the
second level body corporate in the third level body corporate;
and

DIx represents the percentage of direct interest in shares of the
preceding level body corporate in the series in body corporate
X.

Aggregate interest in
shares

4.   Where in this Act, a reference is made to an aggregate interest in
shares held by any person in a body corporate, the aggregate interest
shall be computed by adding the legal, beneficial, direct and
effective interest held by the person in that body corporate.

5.   In computing the aggregate interest in shares held by a person in
a body corporate, the holding of his spouse, child, family corporation
or persons acting in concert with him shall be added to his holding.

Family corporation 6.   For the purpose of paragraph 5, “family corporation” means a
corporation in which—

(a) the individual;

(b) that individual’s spouse; or

(c) that individual’s child,

holds, or any two or more of the persons mentioned in paragraphs
(a), (b) and (c) hold, severally or jointly, interests in shares of more
than fifty per cent of the shares of the corporation.

Legal and beneficial

Page 148 of 180

interest in shares 7.   A person shall be taken to have an interest in shares of a body
corporate if the person has any legal or beneficial interest in those
shares.

8.   A person is taken to have an interest in shares if—

(a) the person has entered into a contract or arrangement to
acquire the share; or

(b) the person has a right (otherwise than because of having an
interest under a trust) to have the share transferred to the
person or to the person’s order (whether the right is
exercisable presently or in the future and whether or not on
the fulfilment of a condition).

9.   A person is taken to have an interest in shares if the person holds
the interest in the share jointly with another person.

10.   For the purpose of determining whether a person holds an
interest in shares, it is immaterial that the interest cannot be related
to a particular share.

11.   An interest in shares is not to be disregarded only because of—

(a) its remoteness;

(b) the manner in which it arose; or

(c) the fact that the exercise of a right conferred by the interest is,
or is capable of being made, subject to restraint or restriction.

Certain interest to be
disregarded

12.   There shall be disregarded—

(a) an interest in shares held by a person whose ordinary business
includes the provision of finance if the person holds the
interest as security;

(b) an interest in shares if the interest is that of a person who
holds the shares as bare trustee;

(c) an interest in shares held by a person, being an interest held
by the person because the person holds an office as may be
prescribed by the Bank; and

(d) an interest of a prescribed kind in a share, being an interest
held by such persons as may be prescribed by the Bank.

13.   Paragraphs 8 to 12 shall not by any implication limit the
generality of paragraph 7.

SCHEDULE 4

[Paragraph 5(5)(c)]

BUSINESS WHICH IS NOT INSURANCE BUSINESS

1.   The operation by an employer, otherwise than for profit, of a
scheme or arrangement making financial provision for his
employees’ retirement, or future termination of service through death
or disability.

2.   The business carried on in accordance with Part II of the
Societies Act 1966 by a mutual benefit society as defined in section
2 of that Act.

3.   Export credit or other credit guarantee insurance business carried

Page 149 of 180

on by Export-Import Bank of Malaysia Berhad.

4.   Business in relation to a scheme or an arrangement for the
provision of benefits consisting of the supply of funeral, burial or
cremation services, with or without the supply of goods connected
with any such service or the payment of money, upon the death of a
person for the purpose of meeting the whole or a part of the expenses
of, and incidental to the funeral, burial or cremation of that person,
but no other benefits except benefits incidental to the scheme or
arrangement.

5.   A scheme for members under which assistance for an accident to
or breakdown of a vehicle is provided whereby such assistance is in
the form of—

(a) repairs to the vehicle at the place where the accident or
breakdown has occurred and may include the delivery of
parts, fuel, oil, water or keys to that vehicle; or

(b) removal of the vehicle to the nearest or most appropriate
place at which repairs may be carried out or to the home or
point of departure or original destination of the driver and
passengers.

SCHEDULE 5

[Sections 10 and 11]

FACTORS FOR CONSIDERATION IN ASSESSING
APPLICATION FOR LICENCE UNDER SECTION 10 OR

APPROVAL UNDER SECTION 11

PART 1

1.   The character and integrity of the applicant or, if the applicant is
a body corporate, its reputation for being operated in a manner that is
consistent with the standards of good governance and integrity.

2.   The business of the person to be authorized is not detrimental to
the interests of its future depositors, policy owners, participants,
users or the public generally.

3.   The soundness and feasibility of the plans of the applicant for the
future conduct and development of the business of the person to be
authorized.

4.   The nature and sufficiency of the financial resources of the
applicant as a source of continuing financial support for the person to
be authorized.

5.   The business record and experience of the applicant.

6.   The person to be authorized will be operated responsibly by
persons with the competence and experience suitable for
involvement in the operation of the person to be authorized.

7.   Whether the application will be in the best interest of Malaysia,
having regard to—

(a) the effect of the investment on the level and nature of
economic activity in Malaysia, including the effect on
productivity, efficiency and quality of financial services;

(b) the contribution towards enhancing international trade and
investment linkages between Malaysia and other countries;

Page 150 of 180

(c) the effect of the investment on the stability of the financial
system, including on conduct and behaviours that could pose
a risk to the financial system; or

(d) the degree and significance of participation of Malaysians in
the financial sector.

PART 2

8.   Whether the nature, scale and activities of the corporate group of
the applicant applying for a licence will impede the effective
regulation and supervision of the person to be licensed, including
having regard to the nature and degree of regulation and supervision
of any financial institution within that corporate group.

SCHEDULE 6

[Subsections 90(2), 91(1) and 112(2)]

FACTORS FOR CONSIDERATION IN ASSESSING
SHAREHOLDER SUITABILITY

1.   The character and integrity of the applicant, or if the applicant is
a body corporate, its reputation for being operated in a manner that is
consistent with the standards of good governance and integrity.

2.   The soundness and feasibility of the plans of the applicant for the
future conduct and development of the business of the licensed
person.

3.   The nature and sufficiency of the financial resources of the
applicant as a source of continuing financial support to the licensed
person.

4.   The business record and experience of the applicant.

5.   Whether the nature, scale and activities of the corporate group of
the applicant will impede the effective regulation and supervision of
the licensed person, including having regard to the nature and degree
of regulation and supervision of any financial institution within that
corporate group.

6.   Whether the application will be in the best interest of Malaysia,
having regard to—

(a) the effect of the investment on the level and nature of
economic activity in Malaysia, including the effect on
productivity, efficiency and quality of financial services;

(b) the contribution towards enhancing international trade and
investment linkages between Malaysia and other countries;

(c) the effect of the investment on the stability of the financial
system, including on conduct and behaviours that could pose
a risk to the financial system; or

(d) the degree and significance of participation of Malaysians in
the financial sector.

SCHEDULE 7

[Subsection 124(1)]

LIST OF PROHIBITED BUSINESS CONDUCT

Page 151 of 180

1.   Engaging in conduct that is misleading or deceptive, or is likely
to mislead or deceive in relation to the nature, features, terms or
price of any financial service or product.

2.   Inducing or attempting to induce a financial consumer to do an
act or omit to do an act in relation to any financial service or product
by—

(a) making a statement, illustration, promise, forecast or
comparison which is misleading, false or deceptive;

(b) dishonestly concealing, omitting or providing material facts
in a manner which is ambiguous; or

(c) recklessly making any statement, illustration, promise,
forecast or comparison which is misleading, false or
deceptive.

3.   Exerting undue pressure, influence or using or threatening to use
harassment, coercion, or physical force in relation to the provision of
any financial service or product to a financial consumer, or the
payment for any financial service or product by a financial
consumer.

4.   Demanding payments from a financial consumer in any manner
for unsolicited financial services or products including threatening to
bring legal proceedings unless the financial consumer has
communicated his acceptance of the offer for such financial services
or products either orally or in writing.

5.   Exerting undue pressure on, or coercing, a financial consumer to
acquire any financial service or product as a condition for acquiring
another financial service or product.

6.   Colluding with any other person to fix or control the features or
terms of any financial service or product to the detriment of any
financial consumer, except for any tariff or premium rates or policy
terms which have been approved by the Bank.

SCHEDULE 8

[Section 128]

PROVISIONS RELATING TO POLICIES

Paragraph

1.   Misstatement of age

2.   Objection to life policy

3.   Insurable interest

4.   Capacity of minor to insure

5.   Life policy moneys to be paid without deduction

6.   Surrender of life policy

7.   Non-payment of life policy premiums

8.   Election for paid-up policy

9.   Additional rights conferred by paragraphs 6, 7 and 8

10.   Disclosure requirements

11.   Requirements relating to group policies

Page 152 of 180

12.   Refund of premium

Misstatement of age 1.   (1)   A licensed life insurer shall not avoid a life policy or refuse
a claim under a life policy by reason only of a misstatement of the
age of the life insured.

  (2)   Where the true age as shown by the proof is greater than that
on which a life policy is based, the licensed life insurer may vary the
sum insured by, and the bonuses allotted to, the life policy so that, as
varied, they bear the same proportion to the sum insured by, and the
bonuses allotted to, the life policy before variation as the amount of
the premium that has been paid under the life policy as issued bears
to the amount of the premium that would have become payable if the
life policy had been based on the true age.

  (3)   Where the true age as shown by the proof is less than that on
which the life policy is based, the licensed life insurer shall either—

(a) vary the sum insured by, and the bonuses allotted to, the life
policy so that, as varied, it bears the same proportion to the
sum insured by, and the bonuses allotted to, the life policy
before variation as the amount of the premium that has been
paid under the life policy as issued bears to the amount of the
premium that would have become payable if the life policy
had been based on the true age; or

(b) reduce the premium as from the date of issue of the life
policy, to the amount that would have been payable if the life
policy had been based on the true age and repay the policy
owner the amount of over-payments of premium less any
amount that has been paid as the cash value of bonuses in
excess of the cash value that would have been paid if the life
policy had been based on the true age.

  (4)   Where the period of coverage of a life policy is calculated by
reference to the age of the life insured, and such age is not the true
age of the life insured as shown by the proof, the licensed life insurer
may instead of, or in addition to, effecting subparagraph (2) or (3) as
the case may be, vary the life policy by changing its period of
coverage to the period that would have been the period of coverage
if the life policy had been based on the true age of the life insured.

  (5)   Nothing in this paragraph shall prevent the licensed life insurer
from calling for proof of age at any time and no life policy shall be
deemed to be disputed merely because the terms of the life policy are
adjusted in accordance with subparagraph (2), (3) or (4).

Objection to life policy 2.   (1)   A policy owner may, within fifteen days or such longer
period as may be specified by the Bank after the delivery of a life
policy of any description to him, return the life policy to the licensed
life insurer and it shall immediately refund any premium which has
been paid in respect of the life policy subject only to the deduction of
expenses incurred for the medical examination of the life insured.

  (2)   Upon refund of premium under subparagraph (1), the life
policy shall be deemed cancelled and the liability of the licensed life
insurer shall cease.

  (3)   For the purposes of subparagraph (1), in respect of a life policy
which is an investment-linked policy, the licensed life insurer shall
refund—

(a) any unallocated premium;

(b) the value of any units allocated at the unit price at the next

Page 153 of 180

valuation date; and

(c) any insurance charges and fees which have been deducted,

less any expenses incurred for the medical examination of the life
insured.

  (4)   For the purposes of subparagraph (1)—

(a) a life policy is deemed to be delivered to the policy owner on
the date he received it, if personally delivered;

(b) where a life policy is delivered to the policy owner in such
manner other than by personal delivery, the licensed life
insurer shall take reasonable steps to ensure that the life
policy is delivered to the policy owner; and

(c) a life policy shall be deemed to be returned to a licensed life
insurer by the policy owner on the date the life policy is
received by the insurer or on the date of posting if it is sent by
registered post or on the date of transmission if it is
electronically transmitted.

  (5)   In respect of a group life policy insuring the lives of three or
more persons from whom premium is payable—

(a) a person insured under the policy may notify the group policy
owner to cancel his cover within fifteen days or such longer
period as may be specified by the Bank after the delivery of
his certificate of insurance; and

(b) the group policy owner shall immediately inform the licensed
life insurer to cancel the cover for that person insured referred
to in subsubparagraph (a), and the insurer shall immediately
refund any premium paid by that person insured subject only
to the deduction of expenses incurred for the medical
examination of that person insured directly to him and upon
the refund of premium, the liability of the insurer shall cease
only in respect of the cover for that person insured.

  (6)   For the purposes of subparagraph (5), where a group policy is
an investment-linked policy, the licensed life insurer shall refund—

(a) any unallocated premium;

(b) the value of any units allocated at the unit price at the next
valuation date; and

(c) any insurance charges and fees which have been deducted,

less any expenses incurred for the medical examination of the person
insured.

Insurable interest 3.   (1)   A life policy insuring the life of anyone other than the
person effecting the insurance or a person mentioned in
subparagraph (3) shall be void unless the person effecting the
insurance has an insurable interest in that life at the time the
insurance is effected.

  (2)   A group life policy shall not be void by reason only that the
group policy owner did not have, at the time when the insurance was
effected, an insurable interest in the lives of the persons insured
under the policy.

  (3)   A person shall be deemed to have an insurable interest in the
life of another person if that other person is—

(a) his spouse or child;

Page 154 of 180

(b) his ward under the age of majority at the time the insurance is
effected;

(c) his employee; or

(d) a person on whom he is wholly or partly dependent for
maintenance or education at the time the insurance is
effected.

  (4)   In this paragraph, insuring the life of a person means insuring
the payment of moneys on a person’s death or on the happening of
any contingency dependent on his death or survival and includes
granting an annuity to commence on his death or at a time referred to
in the annuity.

Capacity of minor to
insure

4.   (1)   Notwithstanding any law to the contrary, a minor who has
attained the age of ten years but has not attained the age of sixteen
years, with the consent in writing of his parent or guardian—

(a) may effect a life policy upon his own life or upon another life
in which he has an insurable interest; or

(b) may assign the life policy on his own life or take an
assignment of a life policy.

  (2)   A minor who has attained the age of sixteen years—

(a) may effect a life policy upon his own life or upon another life
in which he has an insurable interest; or

(b) may assign the life policy on his own life or take an
assignment of a life policy,

and is as competent in all respects to have and exercise the powers
and privileges of a policy owner in relation to a life policy of which
he is the owner as he would be if he had attained the age of majority.

  (3)   A minor who has attained the age of sixteen years shall obtain
the consent in writing of his parent or guardian to assign a life policy
on his own life under subsubparagraph (2)(b).

Life policy moneys to be
paid without deduction

5.   (1)   Policy moneys payable under a life policy, or moneys
payable on the surrender of a life policy, shall be paid without any
deduction for moneys not due under the life policy or under an
assignment of the life policy, unless the deduction is made with the
consent of the person entitled to the policy moneys.

  (2)   A provision contained in a life policy or an agreement relating
to deduction of moneys not due under the life policy shall be void to
the extent it entitles the licensed life insurer to deduct the moneys
from policy moneys payable under, or moneys payable on the
surrender of the life policy without the consent of the person entitled
to the policy moneys.

  (3)   Subparagraphs (1) and (2) apply to a Malaysian life policy but
shall not apply to a life policy issued before 21 January 1963.

  (4)   In any proceedings for the recovery of policy moneys due
under, or payable on the surrender of, a life policy, no set-off or
counter-claim shall be allowed except for moneys due under the life
policy or under an agreement charging the moneys on the life policy.

Surrender of life policy 6.   (1)   At any time after inception of a life policy which provides
for surrender value, the policy owner may, by notice in writing to the
licensed life insurer, surrender the life policy, and he shall be entitled
to receive the surrender value of the life policy, which shall be
determined—

Page 155 of 180

(a) in accordance with generally accepted actuarial principles;

(b) in a manner ensuring the fair treatment of policy owners; and

(c) in compliance with standards on business conduct or fair
treatment of policy owners specified by the Bank.

  (2)   A licensed life insurer shall disclose to a proposer for a life
policy, at the time of sale, the surrender value payable under the life
policy including the cost of any applicable surrender charge, and
where no surrender value is payable, the insurer shall provide a
written statement to that effect.

  (3)   The surrender value of any life policy issued on or before 31
December 2008 shall be determined in accordance with the terms set
out on surrender value in that life policy.

  (4)   Where the Bank is of the opinion that a licensed life insurer
has not determined the surrender value of a life policy as required
under subsubparagraphs (1)(a), (b) and (c), the Bank may—

(a) require the insurer to determine the surrender value of the life
policy on a basis approved by the Bank; and

(b) require the basis under subsubparagraph (a) or a different
basis approved by the Bank to be applied retrospectively to a
life policy already issued.

  (5)   A life policy shall remain in force until the licensed life insurer
has effected payment of the surrender value of the life policy.

Non-payment of life
policy premiums

7.   (1)   Where a life policy provides for surrender value, it shall not
lapse or be forfeited by reason of non-payment of premiums but shall
have effect subject to such modification as to the period for which it
is to be in force, or of the benefits receivable under it, or both.

  (2)   A modification made under subparagraph (1) shall be
determined in accordance with the established policies of the
licensed life insurer applicable to the life policy.

Election for paid-up
policy

8.   (1)   Where a life policy provides for surrender value, the policy
owner may, by notice in writing to the licensed life insurer, elect to
exchange the life policy for a paid-up life policy for a sum insured
which shall be determined—

(a) in accordance with generally accepted actuarial principles;

(b) in a manner ensuring the fair treatment of policy owners;

(c) in a manner consistent with the surrender value payable under
paragraph 6; and

(d) in compliance with standards on business conduct or fair
treatment of policy owners specified by the Bank.

  (2)   Where the Bank is of the opinion that a licensed life insurer
has not determined the paid-up value of a life policy as required
under subsubparagraphs (1)(a), (b), (c) and (d), the Bank may—

(a) require the insurer to determine the paid-up value of the life
policy on a basis approved by the Bank; and

(b) require the basis under subsubparagraph (a) or a different
basis approved by the Bank to be applied retrospectively to a
life policy already issued.

  (3)   A life policy shall be deemed to remain in force, in the event
of an election for conversion to a paid-up life policy, until the date

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on which the next premium for the original policy is due.

  (4)   A life policy issued in place of an earlier life policy shall be
treated as having come into force on the date the earlier life policy
came into force.

Additional rights
conferred by paragraphs

6, 7 and 8

9.   The rights conferred by paragraphs 6, 7 and 8 shall be in addition
to, and not in derogation of, any other rights available to the policy
owner under the terms of the life policy or otherwise.

Disclosure requirements 10.   (1)   No person shall invite any person to make an offer or
proposal to enter into a contract of insurance without disclosing—

(a) the name of the licensed insurer;

(b) his relationship with the licensed insurer; and

(c) the premium charged by the licensed insurer.

  (2)   No person shall arrange a group policy for persons in relation
to whom he has no insurable interest without disclosing to that
person—

(a) the name of the licensed insurer;

(b) his relationship with the licensed insurer;

(c) the conditions of the group policy, including the remuneration
payable to him; and

(d) the premium charged by the licensed insurer.

Requirements relating to
group policies

11.   (1)   A licensed insurer shall be liable to a person insured under
a group policy if the group policy owner has no insurable interest in
the life of that person and if that person has paid the premium to the
group policy owner regardless that the insurer has not received the
premium from the group policy owner.

  (2)   The licensed insurer of a group policy, where the group policy
owner has no insurable interest in the life of a person insured, shall
pay the moneys due under the policy to that person insured or any
person entitled through him.

  (3)   Where the premium is paid by a person insured under a group
policy, such person insured or any person entitled through him may,
upon written notification to the group policy owner, take all
necessary steps to recover moneys due under the policy from the
licensed insurer in either of their own names, as the case may be, or
adding the group policy owner as a party to a recovery action or
proceedings in which event—

(a) if the group policy owner is added as a party to the recovery
action or proceedings, the person insured or any person
entitled through him shall indemnify the group policy owner
in respect of all legal costs and expenses including party and
party costs incurred in the conduct of the recovery action or
proceedings;

(b) upon receipt of the notice by the person insured or any person
entitled through him, the group policy owner may notify the
insurer of any indebtedness due and owing by the person
insured to the group policy owner;

(c) if the insurer agrees to pay the moneys due under the policy
or is required to pay such moneys by a court of law or dispute
resolution body, the insurer shall deduct moneys due and
owing under subsubparagraph (b) to the group policy owner

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and pay any balance directly to the person insured or any
person entitled through him; and

(d) for purposes of subsubparagraphs (a), (b) and (c), any person
entitled through the person insured shall include a trustee,
assignee, nominee or lawful executor or administrator, as the
case may be.

Refund of premium 12.   A licensed general insurer shall pay directly to a policy owner
any refund of premium in relation to a policy which may become
due to the policy owner for any reason including the cancellation of
the policy or alteration in its terms and conditions and such refund
shall under no circumstances be paid or credited to any insurance
agent.

SCHEDULE 9

[Section 129]

[Nyf]

PRE-CONTRACTUAL DISCLOSURE AND
REPRESENTATIONS, AND REMEDIES FOR

MISREPRESENTATIONS

PART 1

Preliminary

Paragraph

1.   Application of Schedule and other laws

2.   Interpretation

3.   Contracting out

PART 2

Pre-contractual disclosure and representations

4.   Pre-contractual duty of disclosure for insurance contracts other
than consumer insurance contracts

5.   Pre-contractual duty of disclosure for consumer insurance
contracts

6.   Duty to take reasonable care

7.   Misrepresentation in respect of insurance contracts

8.   Group policies

9.   Insurance on life of another

10.   Warranties and representations

11.   Insurer’s, etc., pre-contractual duty of disclosure

12.   Knowledge of, and statement by insurance agent

PART 3

Non-contestability and remedies for misrepresentations

Division 1

Non-contestability

13.   Non-contestability for life insurance contracts

Page 158 of 180

Division 2

Remedies for misrepresentation

14.   Application of Division

15.   Remedies for deliberate or reckless misrepresentation

16.   Remedies for careless or innocent misrepresentation

17.   Future treatment of contract

18.   Variations

Division 3

Modifications for group policies

19.   Modifications for group policies

PART 1

Preliminary

Application of Schedule
and other laws

1.   (1)   This Schedule shall not affect a contract of insurance
entered into, varied or renewed before the date on which section 129
and this Schedule come into operation.

Act 136.   (2)   Where there is a conflict or inconsistency between a provision
of this Schedule and the Contracts Act 1950 [Act 136], the provision
of this Schedule shall prevail.

  (3)   For the purposes of obtaining a declaration under subsection
96(3) of the Road Transport Act 1987 [Act 333], this Schedule shall
apply to determine if a consumer insurance contract which provides
cover for third party risks may be avoided by a licensed insurer for
misrepresentation.

Interpretation 2.   In this Schedule—

   “consumer” means the individual who enters into, varies or renews
a consumer insurance contract, or proposes to do so with a licensed
insurer;

   “consumer insurance contract” means a contract of insurance
entered into, varied or renewed by an individual wholly for purposes
unrelated to the individual’s trade, business or profession.

Contracting out 3.   (1)   A term of a consumer insurance contract, or of any other
contract, is rendered void to the extent that it would put the
consumer in a worse position in respect of the matters mentioned in
subparagraph (2) than he would be in by virtue of the provisions of
this Schedule.

  (2)   The matters referred to in subparagraph (1) are—

(a) disclosure and representations by the consumer to the
licensed insurer before the contract is entered into, varied or
renewed; and

(b) the non-contestability of contracts of life insurance and any of
the remedies for consumer insurance contracts provided in
Part 3 of this Schedule.

  (3)   This paragraph does not apply in relation to a contract for the
settlement of a claim arising under a consumer insurance contract.

PART 2

Page 159 of 180

Pre-contractual disclosure and representations

Pre-contractual duty of
disclosure for insurance

contracts other than
consumer insurance

contracts

4.   (1)   Before a contract of insurance other than a consumer
insurance contract is entered into, varied or renewed, a proposer
shall disclose to the licensed insurer a matter that—

(a) he knows to be relevant to the decision of the insurer on
whether to accept the risk or not and the rates and terms to be
applied; or

(b) a reasonable person in the circumstances could be expected to
know to be relevant.

  (2)   The duty of disclosure shall not require the disclosure of a
matter that—

(a) diminishes the risk to the licensed insurer;

(b) is of common knowledge;

(c) the licensed insurer knows or in the ordinary course of his
business ought to know; or

(d) in respect of which the licensed insurer has waived any
requirement for disclosure.

  (3)   Where a proposer fails to answer or gives an incomplete or
irrelevant answer to a question contained in the proposal form or
asked by the licensed insurer and the matter was not pursued further
by the insurer, compliance with the proposer’s duty of disclosure in
respect of the matter shall be deemed to have been waived by the
insurer.

  (4)   A licensed insurer shall, before a contract of insurance is
entered into, varied or renewed, clearly inform a proposer in writing
of the proposer’s pre-contractual duty of disclosure under this
paragraph, and that this duty of disclosure shall continue until the
time the contract is entered into, varied or renewed.

Pre-contractual duty of
disclosure for consumer

insurance contracts

5.   (1)   Before a consumer insurance contract is entered into or
varied, a licensed insurer may request a proposer who is a consumer
to answer any specific questions that are relevant to the decision of
the insurer whether to accept the risk or not and the rates and terms
to be applied.

  (2)   It is the duty of the consumer to take reasonable care not to
make a misrepresentation to the licensed insurer when answering any
questions under subparagraph (1).

  (3)   Before a consumer insurance contract is renewed, a licensed
insurer may either—

(a) request a consumer to answer one or more specific questions
in accordance with subparagraph (1); or

(b) give the consumer a copy of any matter previously disclosed
by the consumer in relation to the contract and request the
consumer to confirm or amend any change to that matter.

  (4)   It is the duty of the consumer to take reasonable care not to
make a misrepresentation to the licensed insurer when answering any
questions under subsubparagraph (3)(a), or confirming or amending
any matter under subsubparagraph (3)(b).

  (5)   If the licensed insurer does not make a request in accordance
with subparagraph (1) or (3) as the case may be, compliance with the

Page 160 of 180

consumer’s duty of disclosure in respect of those subparagraphs,
shall be deemed to have been waived by the insurer.

  (6)   Where the consumer fails to answer or gives an incomplete or
irrelevant answer to any request by the licensed insurer under
subparagraph (1) or subsubparagraph (3)(a), or fails to confirm or
amend any matter under subsubparagraph (3)(b), or does so
incompletely or provides irrelevant information, as the case may be,
and the answer or matter was not pursued further by the insurer,
compliance with the consumer’s duty of disclosure in respect of the
answer or matter shall be deemed to have been waived by the
insurer.

  (7)   A licensed insurer shall, before a consumer insurance contract
is entered into, varied or renewed, clearly inform the consumer in
writing of the consumer’s pre-contractual duty of disclosure under
this paragraph, and that this duty of disclosure shall continue until
the time the contract is entered into, varied or renewed.

  (8)   Subject to subparagraphs (1) and (3), a consumer shall take
reasonable care to disclose to the licensed insurer any matter, other
than that in relation to subparagraph (1) or (3), that he knows to be
relevant to the decision of the insurer on whether to accept the risk or
not and the rates and terms to be applied.

  (9)   Nothing in this Schedule shall affect the duty of utmost good
faith to be exercised by a consumer and licensed insurer in their
dealings with each other, including the making and paying of a
claim, after a contract of insurance has been entered into, varied or
renewed.

Duty to take reasonable
care

6.   (1)   In determining whether a consumer has taken reasonable
care not to make a misrepresentation under subparagraph 5(2) or (4),
the relevant circumstances may be taken into account including—

(a) the consumer insurance contract in question and the manner
in which the contract was sold to the consumer;

(b) any relevant explanatory material or publicity produced or
authorized by the licensed insurer; and

(c) how clear and specific, the licensed insurer’s questions were.

  (2)   Subject to subparagraph (3), the standard of care required of
the consumer under subparagraphs 5(2) and (4) shall be what a
reasonable consumer in the circumstances would have known.

  (3)   If the licensed insurer was, or ought to have been, aware of any
particular characteristics or circumstances of the consumer, the
insurer shall take into account such characteristics or circumstances.

Misrepresentation in
respect of insurance

contracts

7.   (1)   Part 3 of this Schedule—

(a) in Division 1, makes provision for a misrepresentation made
in relation to a contract of life insurance, whether or not a
consumer insurance contract, which has been effected for a
period of more than two years; and

(b) in Division 2, sets out the remedies available to a licensed
insurer for a misrepresentation made in respect of—

(i) a consumer insurance contract of life insurance which has
been effected for a period of two years or less; and

(ii) a consumer insurance contract of general insurance.

Page 161 of 180

  (2)   The remedies set out in Division 2 shall be available to a
licensed insurer for a misrepresentation made by a consumer before
a consumer insurance contract referred to in subsubparagraph (1)(b)
was entered into, varied or renewed if—

(a) the consumer has made a misrepresentation in breach of his
duty under subparagraph 5(2) or (4); and

(b) the licensed insurer shows that had it known the true facts, it
would not have entered into the contract, or agreed to the
variation or renewal, or would only have done so on different
terms.

  (3)   For the purposes of this Schedule, a misrepresentation for
which a licensed insurer has a remedy in Division 2 against a
consumer may be classified as—

(a) deliberate or reckless;

(b) careless; or

(c) innocent.

  (4)   A misrepresentation is deliberate or reckless if the consumer
knew that—

(a) it was untrue or misleading, or did not care whether or not it
was untrue or misleading; and

(b) the matter to which the misrepresentation related was relevant
to the licensed insurer, or did not care whether or not it was
relevant to the insurer.

  (5)   A misrepresentation made dishonestly is to be regarded as
having being made deliberately or recklessly.

  (6)   A misrepresentation is careless or innocent, as the case may
be, if it is not deliberate or reckless.

  (7)   It is for the licensed insurer to show that a misrepresentation
was deliberate or reckless on a balance of probability.

  (8)   Unless the contrary is shown, it is to be presumed that the
consumer knew that a matter about which the licensed insurer asked
a clear and specific question was relevant to the insurer.

Group policies 8.   (1)   This paragraph shall apply to a group policy which so far as
the cover for a person insured under that group policy is concerned,
such policy, if entered into, varied or renewed by the person insured
instead of the group policy owner, would have been a consumer
insurance contract referred to in subsubparagraph 7(1)(b).

  (2)   So far as the cover for the person insured referred to in
subparagraph (1) is concerned—

(a) paragraph 5 shall apply in relation to any disclosure, answer
or representation made by the person insured to the licensed
insurer as if the person insured was proposing to enter into,
vary or renew a consumer insurance contract for the relevant
cover with the insurer; and

(b) subject to subparagraphs (3) and (4) and the modifications set
out in Division 3 of Part 3 of this Schedule to the insurer’s
remedies in Division 2 of Part 3 of this Schedule, the
remaining provisions of this Schedule shall apply in relation
to the cover for the person insured as if the person insured
had entered into, varied or renewed a consumer insurance

Page 162 of 180

contract for that cover with the insurer.

  (3)   Subsubparagraph 7(2)(b) shall apply to a group policy as if it
reads as follows:

“the licensed insurer shows that had it known the true facts, it
would not have provided cover for the person insured, agreed
to the variation or renewal or would only have done so on
different terms.”.

  (4)   A breach of the duty to take reasonable care not to make a
misrepresentation under paragraph 5 on the part of one of any of the
persons insured under a group policy shall not affect the policy so far
as it relates to the other persons insured under that policy.

  (5)   Nothing in this paragraph shall affect any duty owed by the
group policy owner to the licensed insurer, or any remedy which the
insurer may have against the group policy owner for breach of such a
duty.

Insurance on life of
another

9.   Where a consumer takes out a consumer insurance contract on
the life of another individual who is not a party to the contract, any
information provided to the licensed insurer by the life insured,
whether requested or otherwise, is to be treated for purposes of this
Schedule as if it was provided by the consumer and shall be subject
to paragraph 5.

Warranties and
representations

10.   Any representation made before a consumer insurance contract
was entered into, varied or renewed shall not be converted into a
warranty by means of any provision of the consumer insurance
contract or of any terms of the variation or of any other contract,
whether by declaring the representation to form the basis of the
contract or otherwise.

Insurer’s, etc., pre-
contractual duty of

disclosure

11.   (1)   No licensed insurer, insurance agent, approved insurance
broker, approved financial adviser or financial adviser’s
representative in order to induce a person to enter into, vary or
renew, or offer to enter into, vary or renew, a contract of insurance,
whether or not a consumer insurance contract, with it or through
him—

(a) shall make a statement which is misleading, false or
deceptive, whether fraudulently or otherwise;

(b) shall fraudulently conceal a material fact; or

(c) in the case of an insurance agent, use any sales brochure or
sales illustration not authorized by the licensed insurer.

  (2)   Where a person is induced to enter into, vary or renew a
contract of insurance in a manner described in subparagraph (1), the
contract of insurance shall be voidable and the person shall be
entitled to rescind it.

Knowledge of, and
statement by insurance

agent

12.   (1)   A person who is authorized by a licensed insurer to be its
insurance agent and who solicits or negotiates a contract of insurance
in that capacity shall be deemed, for the purpose of the formation or
variation of the contract of insurance, to be the agent of the insurer
and the knowledge of that insurance agent shall be deemed to be the
knowledge of the insurer.

  (2)   A statement made, or an act done, by the insurance agent shall
be deemed, for the purpose of the formation or variation of the
contract of insurance, to be a statement made, or act done, by the
licensed insurer notwithstanding the insurance agent’s contravention

Page 163 of 180

of subparagraph 11(1) or any other provision of this Act.

  (3)   Subparagraph (1) shall not apply—

(a) where there is collusion or connivance between the insurance
agent and the proposer in the formation or variation of the
contract of insurance; or

(b) where a person has ceased to be an insurance agent of a
licensed insurer and the insurer has taken all reasonable steps
to inform, or bring to the knowledge of policy owners of the
fact of such cessation.

PART 3

Non-contestability and remedies for misrepresentations

Division 1

Non-contestability

Non-contestability for life
insurance contracts

13.   (1)   This paragraph shall apply to contracts of life insurance,
whether or not consumer insurance contracts.

  (2)   Where a contract of life insurance has been in effect for a
period of more than two years during the lifetime of the insured,
such a contract shall not be avoided by a licensed life insurer on the
ground that a statement made or omitted to be made in the proposal
for insurance or in a report of a doctor, referee, or any other person,
or in a document leading to the issue of the life policy, was
inaccurate or false or misleading unless the insurer shows that the
statement was on a material matter or suppressed a material fact and
that it was fraudulently made or omitted to be made by the policy
owner or the insured.

  (3)   For the purposes of subparagraph (2), “material matter” or
“material fact” means a matter or fact which, if known by the
licensed life insurer, would have led to its refusal to issue a life
policy to the policy owner or would have led it to impose terms less
favourable to the policy owner than those imposed in the life policy.

Division 2

Remedies for misrepresentation

Application of Division 14.   This Division sets out the remedies available to a licensed
insurer for a misrepresentation by a consumer made in respect of—

(a) a consumer insurance contract of life insurance which has
been effected for a period of two years or less; and

(b) a consumer insurance contract of general insurance.

Remedies for deliberate
or reckless

misrepresentation

15.   If a misrepresentation was deliberate or reckless, a licensed
insurer may avoid the consumer insurance contract and refuse all
claims.

Remedies for careless or
innocent

misrepresentation

16.   (1)   If a misrepresentation was careless or innocent, the
licensed insurer’s remedies shall be based on what it would have
done if the consumer had complied with the duty set out in
paragraph 5 and subparagraphs (2) to (4) are to be read accordingly.

  (2)   If the licensed insurer would not have entered into or renewed
the consumer insurance contract on any terms, the insurer may avoid
the contract and refuse all claims, but shall return to the consumer
any premium paid by him.

Page 164 of 180

  (3)   If the licensed insurer would have entered into or renewed the
consumer insurance contract, but on different terms excluding terms
relating to the premium, the contract is to be treated as if it had been
entered into or renewed on those different terms if the insurer so
requires.

  (4)   In addition, if the licensed insurer would have entered into or
renewed the consumer insurance contract, whether the terms relating
to matters other than the premium would have been the same or
different, but would have charged a higher premium, the insurer may
reduce proportionately the amount to be paid on a claim as may be
specified by the Bank.

Future treatment of
contract

17.   (1)   This paragraph shall apply if a misrepresentation was
careless or innocent but does not relate to any outstanding claim.

  (2)   Where a licensed insurer discovers a misrepresentation that
was careless or innocent and if the insurer would not have entered
into or renewed the consumer insurance contract on any terms,
subparagraph 16(2) will apply.

  (3)   If the licensed insurer would have entered into or renewed the
consumer insurance contract, but on different terms or for a higher
premium or both, the insurer shall either notify the consumer that it
intends to treat the contract as subsisting on different terms or it may
terminate the contract by giving reasonable notice to the consumer.

  (4)   Where the consumer receives notice that the licensed insurer
intends to continue the consumer insurance contract on different
terms, the consumer has a choice of either continuing with the
contract on those amended terms or terminating the contract by
giving reasonable notice to the insurer.

  (5)   Where either the licensed insurer or the consumer terminates
the contract under this paragraph, the insurer shall refund any
premium paid for the terminated cover in respect of the balance of
the contract term.

  (6)   Termination of a consumer insurance contract under this
paragraph does not affect the treatment of any claim arising under
the contract in the period before termination and any such claim
arising shall be dealt with accordingly under paragraph 16.

  (7)   Nothing in this paragraph shall affect any contractual right of
the parties to terminate the consumer insurance contract.

Variations 18.   (1)   Where a misrepresentation is made by a consumer in
respect of a variation to an existing consumer insurance contract, it is
necessary to ascertain whether the subject matter of the variation can
reasonably be treated separately from the subject matter of the rest of
the contract.

  (2)   If the subject matter of the variation can reasonably be treated
separately from the subject matter of the rest of the consumer
insurance contract, the remedies set out in this Division shall apply
only in relation to that variation as it applies in relation to a contract.

  (3)   If the subject matter of the variation cannot be treated
separately from the subject matter of the rest of the consumer
insurance contract, the misrepresentation shall be treated as if it had
been made in relation to the whole contract and the remedies set out
in this Division shall apply in relation to the whole of the contract
rather than merely in relation to the variation.

Division 3

Page 165 of 180

Modifications for group policies

Modifications for group
policies

19.   This Division provides for the application of Division 2 of this
Part to a group policy in accordance with the following
modifications:

(a) reference to consumer insurance contract, however described
in Division 2, shall be references to that part of the group
policy which provides for cover for the person insured who
made the misrepresentation;

(b) reference to claims and premium shall be references to claims
and premium in relation to the cover for the person insured
who made the misrepresentation;

(c) any refund of premium under subparagraph 16(2) or 17(5)
shall be made to the person insured if he had paid the
premium for his cover; and

(d) in respect of the cover for the person insured, the right to
terminate his cover wherever referred to in Division 2, shall
be that of the group policy owner.

SCHEDULE 10

[Section 130]

PAYMENT OF POLICY MONEYS UNDER LIFE POLICY AND
PERSONAL ACCIDENT POLICY

Paragraph

1.   Application of Schedule

2.   Power to make nomination

3.   Revocation of nomination

4.   Payment of policy moneys where there is nomination

5.   Trust of policy moneys

6.   Nominee other than nominee under subparagraph 5(1)

7.   Assigned or pledged policy moneys

8.   Payment of policy moneys where there is no nomination

9.   Payment to person incompetent to contract

10.   Distribution of policy moneys in due course of administration

11.   Licensed insurer not bound to see application of policy moneys

12.   Interest on claim amount

13.   Schedule to prevail over policy and any other written law

Application of Schedule 1.   In this Schedule, a reference to a policy is a reference to a life
policy, including a life policy under section 23 of the Civil Law Act
1956, and a personal accident policy, effected by a policy owner
upon his own life providing for payment of policy moneys on his
death.

Power to make
nomination

2.   (1)   A policy owner who has attained the age of sixteen years
may nominate an individual to receive policy moneys payable upon
his death under the policy by notifying the licensed insurer in writing
the name, date of birth, national registration identity card number or

Page 166 of 180

birth certificate number and address of the nominee.

  (2)   A nomination under subparagraph (1) may be made—

(a) at the time the policy is issued; or

(b) if the policy has already been issued, by notifying the licensed
insurer in writing or by submitting the policy for an
endorsement of the nomination by the insurer.

  (3)   A nomination made under subparagraph (1) shall be witnessed
by a person of sound mind who has attained the age of eighteen
years and who is not a nominee named under that subparagraph.

  (4)   The licensed insurer—

(a) shall prominently display in the nomination form that the
policy owner has to assign the policy benefits to his nominee
if his intention is for his nominee, other than his spouse, child
or parent, to receive the policy benefits beneficially and not as
an executor;

(b) shall record the nomination and the particulars of the nominee
in its register of policies; and

(c) shall return the policy to the policy owner after endorsing the
nomination on the policy or by issuing an endorsement to the
original policy by registered mail to the policy owner and the
nomination shall take effect from the date the nomination is
registered by the insurer.

  (5)   A failure to comply with subparagraph (4) shall not affect the
validity of the nomination if it is otherwise proved that the
nomination was made by the policy owner and given to the licensed
insurer.

  (6)   A nomination made under subparagraph (1) may be in favour
of one person or several persons and where there is more than one
nominee, the policy owner may direct that specified shares be paid to
the nominees and in the absence of such direction by the policy
owner, the licensed insurer shall pay the nominees in equal shares.

Revocation of nomination 3.   (1)   A nomination, including a nomination to which paragraph 5
applies, shall be revoked—

(a) upon the death of the nominee, or where there is more than
one nominee, upon the death of all the nominees, during the
lifetime of the policy owner;

(b) by a notice in writing given by the policy owner to the
licensed insurer; or

(c) by any subsequent nomination.

  (2)   Subject to subparagraph (1), a nomination shall not be revoked
by a will or by any other act, event or means.

  (3)   Where there is more than one nominee and one of the
nominees predeceases the policy owner, in the absence of any
subsequent nomination by the policy owner disposing of the share of
the deceased nominee, the licensed insurer shall pay the share to the
remaining nominees in proportion to their respective shares.

Payment of policy
moneys where there is

nomination

4.   (1)   Subject to subparagraph (2), where a policy owner dies
having made a nomination, the licensed insurer shall pay the policy
moneys according to the direction of the nomination upon receipt of
a claim by the nominee together with proof of death of the policy

Page 167 of 180

owner.

  (2)   Where a nominee fails to claim the policy moneys within sixty
days of the licensed insurer becoming aware of the death of the
policy owner, the insurer shall immediately notify the nominee in
writing at his last known address of his entitlement to claim the
policy moneys.

  (3)   Where a nominee fails to claim the policy moneys within
twelve months of the licensed insurer becoming aware of the death
of the policy owner despite notification under subparagraph (2),
paragraph 8 shall apply as though no nomination was made.

  (4)   Where a nominee, other than a nominee under paragraph 5,
dies after the death of the policy owner but before any policy
moneys has been paid to him as nominee, paragraph 3 or 8 shall
apply to the policy, as the case may be.

Trust of policy moneys 5.   (1)   A nomination by a policy owner, other than a Muslim policy
owner, shall create a trust in favour of the nominee of the policy
moneys payable upon the death of the policy owner, if—

(a) the nominee is his spouse or child; or

(b) where there is no spouse or child living at the time of
nomination, the nominee is his parent.

  (2)   Notwithstanding any written law to the contrary, a payment
under subparagraph (1) shall not form part of the estate of the
deceased policy owner or be subject to his debts.

  (3)   The policy owner may, by the policy, or by a notice in writing
to the licensed insurer, appoint any person other than himself to be
trustee of the policy moneys and where there is no trustee
appointed—

(a) the nominee who is competent to contract; or

(b) where the nominee is incompetent to contract, the parent of
the incompetent nominee other than the policy owner and
where there is no surviving parent, the Public Trustee or a
trust company nominated by the policy owner,

shall be the trustee of the policy moneys and the receipt of a trustee
shall be a discharge to the insurer for all liability in respect of the
policy moneys paid to the trustee.

  (4)   If there is more than one nominee who is competent to
contract, the nominees shall be joint trustees and the consent for the
purposes of this paragraph shall be given by all such trustees.

  (5)   A policy owner shall not deal with a policy to which
subparagraph (1) applies by revoking a nomination or adding a
nominee other than his spouse, child or parent under the policy, by
varying or surrendering the policy, or by assigning or pledging the
policy as security, without the written consent of the trustee.

  (6)   If it is proved that the policy was effected and the premiums
paid with intent to defraud a creditor of the policy owner, the
creditor shall be entitled to receive from the policy moneys payable
under the policy a sum equal to the premiums paid under that policy.

Nominee other than
nominee under

subparagraph 5(1)

6.   (1)   A nominee, other than a nominee under subparagraph 5(1),
shall receive the policy moneys payable on the death of the policy
owner as an executor and not solely as a beneficiary and any
payment to the nominee shall form part of the estate of the deceased

Page 168 of 180

policy owner and be subject to his debts and the licensed insurer
shall be discharged from liability in respect of the policy moneys
paid.

  (2)   The nominee referred to in subparagraph (1) shall distribute
the policy moneys in due course of administration of the estate of the
deceased policy owner in accordance with the will of that policy
owner or the law relating to the distribution of the estate of deceased
persons as applicable to that policy owner.

  (3)   Notwithstanding subparagraph (1), a nominee to whom policy
moneys have been assigned under subsubparagraph 2(4)(a) shall
receive the policy moneys solely as a beneficiary and not as an
executor.

Assigned or pledged
policy moneys

7.   (1)   Notwithstanding a nomination under paragraph 2 or the
creation of a trust under subparagraph 5(1), where the policy
moneys, wholly or partly, have been pledged as security or assigned
to a person, the claim of the person entitled under the security or the
assignee shall have priority over the claim of the nominee and
subject to the rights under the security or the assignment being
preserved, the licensed insurer shall pay the balance of the policy
moneys to the nominee.

  (2)   Where more than one person is entitled under the security or
the assignment, the respective rights of the persons entitled under the
security or the assignment shall be in the order of priority according
to the priority of the date on which written notification of the
security or the assignment was given to the licensed insurer, both
security and assignment being treated as one class for this purpose.

Payment of policy
moneys where there is no

nomination

8.   (1)   Where a policy owner dies without having made a
nomination, subject to paragraph 7, the licensed insurer shall pay the
policy moneys of the deceased policy owner to the lawful executor
or administrator of his estate.

Act 300.   (2)   Where the licensed insurer is satisfied that there is no lawful
executor or administrator of the estate of the deceased policy owner
at the time of payment of policy moneys, the insurer may pay the
policy moneys to the deceased policy owner’s spouse, child or parent
in accordance with section 6 of the Distribution Act 1958 [Act 300]
and where there is no spouse, child or parent and—

(a) where the policy moneys do not exceed one hundred thousand
ringgit or such greater amount as may be prescribed by the
Bank, the insurer may pay all such policy moneys without
requiring a grant of probate or letters of administration or
distribution order to a person who satisfies the insurer that he
is entitled to the property of the deceased policy owner under
his will or under the law relating to the disposition of property
or that he is named as an executor in the will or has the
consent of all the lawful beneficiaries to be the administrator
of the estate of the deceased policy owner; or

(b) where the policy moneys exceed one hundred thousand
ringgit, or such greater amount as may be prescribed by the
Bank, the insurer may pay to the person referred to in
subsubparagraph (a) the amount referred to in that
subsubparagraph and pay the balance of the policy moneys to
the lawful executor or administrator of the estate of the
deceased policy owner.

  (3)   In this paragraph, a reference to policy moneys is a reference
to the aggregate amount of policy moneys in respect of all policies of

Page 169 of 180

the policy owner with that licensed insurer where the policy owner
has not made any nomination.

Act 97.   (4)   The grant of probate or letters of administration or distribution
order in respect of a personal estate comprising policy moneys, by a
court in Malaysia or a competent authority outside Malaysia, or its
court certified copy shall be sufficient proof to the licensed insurer to
pay the policy moneys to the person named therein as the lawful
executor or administrator provided that the same has been duly
registered with the court in Malaysia and sealed in accordance with
the Probate and Administration Act 1959 [Act 97].

  (5)   Policy moneys paid under this paragraph shall be deemed to
have been duly paid and the licensed insurer shall be discharged
from liability in respect of the policy moneys so paid
notwithstanding the absence or invalidity of, or any defect in the
grant of probate or letters of administration or distribution order or
any other document having the same effect.

  (6)   A person to whom a payment is made under this paragraph
shall give a receipt which shall be deemed to be a valid receipt.

Payment to person
incompetent to contract

Act 50.

9.   Where a person has not attained the age of eighteen years, or
who is certified by a medical practitioner fully registered under the
Medical Act 1971 [Act 50] to be of unsound mind and no committee
of his estate has been appointed, or to be incapable, by reason of
infirmity of mind or body, of managing himself and his property and
affairs, the licensed insurer—

(a) in the case of a nominee under subparagraph 5(1), shall pay
the policy moneys to the trustee appointed under
subparagraph 5(3), or where no such trustee has been
appointed, to the parent of the incompetent nominee, and
where there is no surviving parent of the incompetent
nominee—

(i) if the policy moneys do not exceed fifty thousand ringgit,
may pay the policy moneys to a person who satisfies the
insurer that he will apply the policy moneys for the
maintenance and benefit of the nominee under
subparagraph 5(1), as the case may be, or a person to
whom policy moneys are payable under subparagraph 8
(2), subject to the execution of an undertaking by that
person that the policy moneys will be applied solely for
the maintenance and benefit of the nominee; and

(ii) if the policy moneys exceed fifty thousand ringgit, shall
pay the policy moneys to the Public Trustee or a trust
company nominated by the policy owner; or

(b) in the case of a person to whom policy moneys are payable
under subparagraph 8(2), pay to the Public Trustee or a trust
company nominated by the policy owner.

Distribution of policy
moneys in due course of

administration

10.   A person to whom policy moneys may be paid under
subsubparagraphs 8(2)(a) and (b) shall receive the policy moneys as
an executor and not solely as a beneficiary and shall distribute the
policy moneys in due course of administration of the estate of the
deceased person in accordance with the terms of a will of the
deceased person, and if there is no such will, in accordance with the
law applicable to the administration, distribution and disposition of
his estate upon his intestacy.

Licensed insurer not 11.   A licensed insurer shall not in any circumstances be bound or

Page 170 of 180

bound to see application
of policy moneys

concerned to ensure the application of any policy moneys which it
has paid in respect of any person under this Schedule.

Interest on claim amount 12.   (1)   Where a claim or a part of a claim made under a life
policy, or under a personal accident policy upon the death of the
policy owner is not paid by the licensed insurer within sixty days of
notification of the claim, the insurer shall pay a minimum compound
interest at the average fixed deposit rate applicable for the period of
twelve months for licensed banks as published by the Bank plus one
per cent or such other rate as may be specified by the Bank, on the
amount of policy moneys upon expiry of the sixty days until the date
of payment.

  (2)   Where the balance of policy moneys are to be paid by a
licensed insurer to the lawful executor or administrator of the estate
of the deceased policy owner under subsubparagraph 8(2)(b), interest
payable under subparagraph (1) shall only apply to the balance of
policy moneys upon expiry of sixty days from the time that the
lawful executor or administrator produces the grant of probate or
letters of administration or distribution order until the date of
payment.

Schedule to prevail over
policy and any other

written law

13.   (1)   This Schedule shall have effect in relation to a policy
which is in force on or after the appointed date, and in relation to a
nomination made before, on or after the appointed date,
notwithstanding anything contained in the policy, and nothing
contained in a policy shall derogate from, or be construed as
derogating in any manner or to any extent from, this Schedule.

  (2)   This Schedule shall have full force and effect notwithstanding
anything inconsistent with or contrary to any other written law
relating to probate, administration, distribution, or disposition, of the
estates of deceased persons, or in any practice or custom in relation
to these matters.

SCHEDULE 11

[Section 134]

PERMITTED DISCLOSURES

First column

Purposes for or circumstances in
which customer documents or
information may be disclosed

Second column

Persons to whom documents or
information may be disclosed

1.  Documents or information
which is permitted in writing by
the customer, the executor or
administrator of the customer, or
in the case of a customer who is
incapacitated, any other legal
personal representative.

Any person permitted by the
customer or, as the case may be,
the executor, administrator or
legal personal representative.

Act 98. 2.  In connection with an
application for a Faraid
certificate, grant of probate,
letters of administration or a
distribution order under the Small
Estates (Distribution) Act 1955
[Act 98] in respect of a deceased

Any person whom a financial
institution in good faith believes
is entitled to obtain a Faraid
certificate, the grant of probate,
letters of administration or a
distribution order.

Page 171 of 180

customer’s estate.

3.  In a case where the customer
is declared bankrupt, is being or
has been wound up or dissolved
in Malaysia or in any country,
territory or place outside
Malaysia.

All persons to whom the
disclosure is necessary in
connection with the bankruptcy
or winding up or dissolution.

4.  Any criminal proceedings or
civil proceedings between a
financial institution and—

All persons to whom the
disclosure is necessary for the
purpose of the criminal
proceedings or civil proceedings.

(a) its customer, his
surety or guarantor
relating to the
customer’s
transaction;

(b) two or more parties
making adverse
claims to money in
a customer’s
account where the
financial institution
seeks relief by way
of interpleader; or

(c) one or more parties
in respect of
property in or over
which some right
or interest has been
conferred on the
financial
institution.

5.  Compliance by a licensed
bank or licensed investment bank
which has been served a
garnishee order attaching moneys
in the account of a customer.

All persons to whom the
disclosure is required to be made
under the garnishee order.

6.  Compliance with a court order
made by a court not lower than a
Sessions Court.

All persons to whom the
disclosure is required to be made
under the court order.

7.  Compliance with an order or
request made by an enforcement
agency in Malaysia under any
written law for the purposes of an
investigation or prosecution of an
offence under any written law.

An investigating officer
authorized under the written law
to investigate or any officer
authorized to carry out
prosecution or any court.

8.  Performance of functions of
the Malaysia Deposit Insurance
Corporation.

Any director or officer of the
Malaysia Deposit Insurance
Corporation or any other person,
authorized by the Malaysia
Deposit Insurance Corporation to
receive the documents or
information.

9.  Disclosure by a licensed Any officer of the Securities

Page 172 of 180

investment bank for the purpose
of performance of relevant
functions of—

Commission, approved stock
exchange or derivatives
exchange, approved clearing
house under the Capital Markets
and Services Act 2007 or
approved central depository
under the Securities Industry
(Central Depositories) Act 1991
authorized to receive the
documents or information.

(a) the Securities
Commission under
the securities laws
as defined in the
Securities
Commission Act
1993;

(b) the stock exchange
or derivatives
exchange approved
under the Capital
Markets and
Services Act 2007;

(c) the clearing house
approved under the
Capital Markets
and Services Act
2007; or

Act 453. (d) the central
depository
approved under the
Securities Industry
(Central
Depositories) Act
1991 [Act 453].

10.  Disclosure by a licensed
bank or licensed investment bank
for the purpose of performance of
functions of an approved trade
repository under the Capital
Markets and Services Act 2007.

Any officer of the approved trade
repository authorized to receive
the documents or information.

11.  Documents or information is
required by the Inland Revenue
Board of Malaysia under section
81 of the Income Tax Act 1967
for purposes of facilitating
exchange of information pursuant
to taxation arrangements or
agreements having effect under
section 132 or 132A of the
Income Tax Act 1967.

Any officer of the Inland
Revenue Board of Malaysia
authorized to receive the
documents or information.

Act 710. 12.  Disclosure of credit
information of a customer to a
credit reporting agency registered
under the Credit Reporting
Agencies Act 2010 [Act 710] for

Any officer of the credit
reporting agency authorized to
receive the documents or
information.

Page 173 of 180

purposes of carrying on credit
reporting business as defined in
the Credit Reporting Agencies
Act 2010.

13.  Performance of any
supervisory functions, exercise
any of supervisory powers or
discharge any of supervisory
duties by a relevant authority
outside Malaysia which exercises
functions corresponding to those
of the Bank under this Act.

Any officer of the relevant
authority authorized to receive
the documents or information.

14.  Conduct of centralized
functions, which include audit,
risk management, finance or
information technology or any
other centralized function within
the financial group.

The head office or holding
company of a financial institution
whether in or outside Malaysia or
any other person designated by
the head office or holding
company to perform such
functions.

15.  Due diligence exercise
approved by the board of
directors of the financial
institution in connection with—

Any person participating or
otherwise involved in the due
diligence exercise approved by
the board of the financial
institution.

(a) merger and
acquisition;

(b) capital raising
exercise; or

(c) sale of assets or
whole or part of
business.

16.  Performance of functions of
the financial institution which are
outsourced.

Any person engaged by the
financial institution to perform
the outsourced function.

17.  Disclosure to a consultant or
adjuster engaged by the financial
institution.

Consultant or adjuster engaged
by the financial institution.

18.  A financial institution has
reason to suspect that an offence
under any written law has been,
is being or may be committed.

Any officer of another financial
institution or the relevant
associations of financial
institutions authorized to receive
the documents or information.

SCHEDULE 12

[Subsection 139(2)]

RESTRICTION ON USE OF CERTAIN WORDS

PART 1

Bank

1.   An association of licensed banks or licensed investment banks,
or association of employees of any such licensed persons.

Page 174 of 180

PART 2

Insurance or Assurance

2.   A person who appends to his name an insurance qualification
conferred on him by a prescribed body, where the qualification so
appended is followed with the initials of the name of that body.

3.   An association of licensed insurers, approved insurance brokers,
approved financial advisers, registered adjusters or association of
employees of any such persons.

4.   An insurance agent registered with any association of licensed
insurers.

PART 3

Financial Adviser

5.   A licensed insurer.

6.   An approved insurance broker.

7.   A licensed bank.

8.   A licensed investment bank.

9.   A licensed takaful operator or approved takaful broker under the
Islamic Financial Services Act 2012.

10.   A person who appends to his name an insurance qualification
conferred on him by a prescribed body, where the qualification so
appended is followed with the initials of the name of that body.

11.   An association of approved financial advisers or association of
employees of any such approved persons.

SCHEDULE 13

[Subsection 177(1)]

ADDITIONAL PROVISIONS RELATING TO COMPULSORY
TRANSFER

The Third Schedule of the Central Bank of Malaysia Act 2009 shall
apply in relation to an order of the Bank under Subdivision 4,
Division 2, Part XIII with the following modifications:

1.   A reference to subsection 36(18) in paragraph 1 of the Third
Schedule is a reference to section 175 of this Act.

2.   A reference to subparagraph 32(1)(c)(iii) in the Third Schedule is
a reference to section 176 of this Act.

3.   A reference to subsection 32(1A) in subparagraph 2(5) of the
Third Schedule is a reference to section 209 of this Act.

4.   A reference to section 94 in subparagraph 4(7)(j) of the Third
Schedule is a reference to section 260 of this Act.

5.   A reference to “shares or other capital instruments” in the Third
Schedule is not applicable for the purposes of this Subdivision.

6.   Paragraph 5 of the Third Schedule is not applicable for the
purposes of this Subdivision.

Page 175 of 180

SCHEDULE 14

[Subsection 214(2)]

LIST OF TRANSACTIONS

1.   The act of—

(a) buying, selling, exchanging, borrowing or lending;

(b) issuing, publishing or disseminating information in any form
or advertisements which may lead, directly or indirectly, to
the buying, selling, exchanging, borrowing or lending; or

(c) retaining or using,

of foreign currency, gold or other precious metals;

2.   The act of—

(a) borrowing or lending; or

(b) issuing, publishing or disseminating information in any form
or advertisements which may lead, directly or indirectly, to
the borrowing or lending,

of ringgit between non-residents or between a resident and a non-
resident; or

(c) retaining or using of ringgit by a non-resident;

3.   The making of any payment by a person to another person
including a payment—

(a) to or for the credit of a non-resident;

(b) by a resident or a non-resident;

(c) as consideration for or in association with—

(i) the receipt of a payment or the acquisition of a property,
outside Malaysia, by any person; or

(ii) the creation in favour of, or the transfer to, any person, of
a right to receive a payment or to acquire a property,
outside Malaysia;

(d) under a judgment or order of any court or an award of any
arbitrator or under any written law in favour of a non-
resident, or a resident outside Malaysia; or

(e) for settlement of property in favour of a non-resident, or a
resident outside Malaysia,

other than—

(A) payment in ringgit between residents in Malaysia; and

(B) payment in foreign currency between non-residents outside
Malaysia;

4.   The receiving of any payment in paragraph 3;

5.   The giving or obtaining of any guarantee, indemnity or
undertaking in respect of any debt, obligation or liability;

6.   The issuance, transfer or substitution or the doing of any act in
relation to a security or a financial instrument other than—

(a) the issuance or transfer of any ringgit-denominated security
between residents in Malaysia; or

Page 176 of 180

(b) the substitution of any ringgit-denominated security for other
ringgit-denominated security between residents in Malaysia;

7.   The importing into, or exporting from, Malaysia, of any ringgit,
foreign currency, gold, other precious metals, security, financial
instrument or any other article as may be specified by the Bank;

8.   The act of—

(a) receiving export proceeds by any person in Malaysia—

(i) for an amount that is less than the full value of the subject
matter exported; or

(ii) in a manner or within a period other than those as may be
specified by the Bank; or

(b) doing or refraining from doing any act by any person in
Malaysia which would lead to or result in the non-receipt of
export proceeds, in whole or in part; or

9.   The doing or refraining from doing any act by any person in
Malaysia, who has a right to receive an amount of ringgit or foreign
currency, which would lead to or result in the delay or the non-
receipt of the amount, in whole or in part.

SCHEDULE 15

[Paragraph 234(3)(b)]

IMPOSITION OF MONETARY PENALTY

A monetary penalty may be imposed in respect of a breach or non-
compliance with the following provisions or standards, requirements,
conditions, specifications, restrictions or otherwise made or imposed
pursuant to such provisions:

1.   subsection 15(3), (4), (5), (6) or (7);

2.   subsection 16(2);

3.   subsection 18(2);

4.   subsection 25(1) or (2);

5.   subsection 33(2);

6.   section 34;

7.   subsection 35(1), (2) or (3);

8.   subsection 48(1) or (2);

9.   section 49;

10.   subsection 50(1);

11.   subsection 51(1);

12.   section 52;

13.   subsection 54(1), (2), (3) or (4);

14.   subsection 55(1), (2) or (3);

15.   subsection 56(1), (2) or (3);

16.   paragraph 57(1)(a), (b) or (d);

17.   subsection 58(1), (2), (3) or (4);

Page 177 of 180

18.   subsection 59(2);

19.   subsection 60(1);

20.   subsection 61(1) or (2);

21.   section 62;

22.   section 64;

23.   section 65;

24.   subsection 66(1) or (2);

25.   subsection 67(1), (2) or (3);

26.   subsection 69(1) or (3);

27.   section 70;

28.   section 71;

29.   section 72;

30.   subsection 74(1), (2), (3) or (4);

31.   section 76;

32.   paragraph 77(c);

33.   subsection 78(1) or (2);

34.   section 79;

35.   subsection 81(1), (2) or (3);

36.   subsection 82(1) or (3);

37.   section 83;

38.   subsection 84(1);

39.   subsection 85(1);

40.   subsection 87(1) or (2);

41.   subsection 88(1);

42.   section 89;

43.   subsection 90(3), (7) or (10);

44.   subsection 91(2);

45.   section 92;

46.   subsection 93(1);

47.   subsection 94(6);

48.   subsection 97(1), (2), (4), (5) or (6);

49.   section 99;

50.   subsection 100(1), (2), (3) or (6);

51.   subsection 101(1) or (2);

52.   subsection 103(1);

53.   subsection 105(1) or (2);

54.   section 107;

55.   subsection 110(1) or (3);

Page 178 of 180

56.   section 111;

57.   subsection 112(1), (3) or (4);

58.   subsection 114(1) or (2);

59.   subsection 115(4);

60.   subsection 123(1);

61.   subsection 125(1);

62.   subsection 126(4);

63.   subsection 127(1) or (3);

64.   subsection 140(4);

65.   subsection 143(1) or (2), paragraph 143(3)(b), subsection 143
(4) or (6);

66.   subsection 144(1);

67.   subsection 150(1);

68.   subsection 217(2);

69.   subsection 280(4);

70.   subsection 281(2);

71.   paragraph 10 of Schedule 8; or

72.   any requirement imposed on a licensed insurer in Schedules 8, 9
and 10, except for paragraph 11 of Schedule 9.

SCHEDULE 16

[Section 272]

LIST OF SUBSIDIARY LEGISLATION REVOKED

PU(A) 352/2000. 1.   Banking and Financial Institutions (Single Customer Credit
Limit) Order 2000 [P.U.(A) 352/2000]

PU(A) 63/2001. 2.   Banking and Financial Institutions (Minimum Amount of Capital
Funds) (Licensed Discount Houses and Licensed Money-Brokers)
Order 2001 [P.U.(A) 63/2001]

PU(A) 327/1999. 3.   Banking and Financial Institutions (Scheduled Institutions)
(Regulation of Credit Token Institutions) Order 1999 [P.U.(A)
327/1999]

PU(A) 189/1991. 4.   Banking and Financial Institutions (Acquisition and Holding of
Shares and Interests in Shares) (Licensed Banks, Licensed Finance
Companies and Licensed Merchant Banks) Regulations 1991 [P.U.
(A) 189/1991]

PU(A) 119/1973. 5.   Exchange Control (Scheduled Territories) Order 1973 [P.U.(A)
119/1973]

PU(B) 163/1979. 6.   Authorisation to Compound Offences [P.U.(B) 163/1979]

PU(A) 463/1986. 7.   Exchange Control (Specified Currency) Order 1986 [P.U.(A)
463/1986]

PU(B) 504/1998. 8.   Appointment under subsection 3(2) [P.U.(B) 504/1998]

PU(A) 186/2000. 9.   Exchange Control (Money-Changing Business) (Exemption)
Order 2000 [P.U.(A) 186/2000]

Page 179 of 180

PU(B) 58/2001. 10.   Authorization under subparagraph 8(1) of Part II of the Fifth
Schedule [P.U.(B) 58/2001]

PU(B) 206/2007. 11.   Appointment under subsection 3(2) [P.U.(B) 206/2007]

PU(A) 399/2011. 12.   Payment Systems (Remittance System Approved under the
Money Services Business Act 2011) (Exclusion) Order 2011 [P.U.
(A) 399/2011]

PU(A) 8/1990. 13.   Insurance Guarantee Scheme (General Insurance Business)
Fund Regulations 1990 [P.U.(A) 8/1990]

PU(A) 377/1994. 14.   Insurance Guarantee Scheme Fund (General Insurance
Business) (Restriction on Payment) Regulations 1994 [P.U.(A)
377/1994]

PU(A) 278/1994. 15.   Insurance Guarantee Scheme (General Insurance Business)
Fund (Amendment) Regulations 1990 [P.U.(A) 278/1994]

Page 180 of 180