Development Financial Institutions Act 2002: Laws of Malaysia

Act 618 Page 1 of 77
LAWS OF MALAYSIA
Act 618
Development Financial
Institutions Act 2002
Date of Royal Assent 29-Jan-2002
Date of publication in the
Gazette 7-Feb-2002
An Act to make provisions for the regulation and supervision

of development financial institutions and for matters
connected therewith.
PU(B) 51/2002.
[15 February 2002]
ARRANGEMENT OF SECTIONS
PART I
PRELIMINARY
1. Short title and commencement
2. Application
3. Interpretation
4. Functions of the Bank
PART II
MANAGEMENT, OWNERSHIP AND CONTROL

5. Board of directors
6. Appointment of Chief Executive Officer and directors
7. Disqualification of Chief Executive Officer and director
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8. Effect of disqualification
9. Exemption from disqualification
10. Notice of cessation of office
11. Disclosure of interest
12. Acquisition of interest in shares
13. Report of acquisition to the Bank
14. Change in control, amalgamation and merger
15. Transfer of business
16. Application to High Court for transfer of business
17. Transfer of immovable property
18. Own shares or shares of holding company as collateral
19. Application to the Bank
20. Defence relating to contravention
21. Effect of contravention
22. Preliminary order by the Bank
23. Confirmation of preliminary order
24. Direction to give effect to order
PART III
RESTRICTIONS ON BUSINESS
25. Control of establishment or acquisition of subsidiaries
26. Direction in respect of subsidiaries
27. Restriction or prohibition of business
28. Prohibition of credit facilities
29. Restriction of credit to single person
30. Restriction on giving of credit facility
31. Disclosure of director’s interest
32. Control of credit limit
33. Investment of assets
PART IV
OBLIGATIONS AND SOURCING OF FUNDS

34. Statement of corporate intent
35. Annual funding
36. Restrictions on payment of dividend

37. Maintenance of liquid assets
38. Maintenance of capital funds
39. Maintenance of reserve fund
40. Maintenance of assets in Malaysia
41. Other prudential requirements
42. Amendment of constituent documents
PART V
DEALINGS WITH GOVERNMENT FUNDS

43. Establishment and maintenance of trust fund
44. Utilisation of trust funds
45. Investment of trust fund
46. Credit into trust fund
47. Property of trust fund as collateral
48. Valuation of trust fund
49. Transfer of trust fund
50. Breach of trust
51. Determination of trust fund
52. Application of a trust fund in a winding-up
PART VI
CONTROL OF DEFAULTER
53. Inability to meet obligations
54. Action by the Bank
55. Action by the Minister
56. Representation in respect of order
57. Appointment under section 54
58. Removal from office under section 54
59. Assumption of control
60. Reduction of share capital and cancellation of shares
61. Extension of jurisdiction
62. Moratorium
PART VII
AUDITOR AND ACCOUNTS

63. Appointment of auditor
64. Disqualification of auditor
65. Restriction on audit firm
66. Consent to act as auditor
67. Appointment of audit firm
68. Auditor not deemed to be employee
69. Auditor’s report
70. Additional requirement on auditor
71. Auditor to report certain matters to the Bank
72. Information to auditor
73. Annual accounts
74. Quarterly returns
75. Accounting standards
76. Annual accounts and quarterly returns to be rectified
77. Submission of annual accounts
78. Action in relation to annual accounts
79. Admissibility of document
80. Liability where proper accounting records not kept
81. Application to trust fund
PART VIII
EXAMINATION AND INVESTIGATION

82. Examination by the Bank
83. Power of Minister to direct examination
84. Duty to produce and provide access to document and
information
85. Examination of person other than prescribed institutions
86. Appearance before examiner
87. Investigation by the Bank
88. Appointment of investigating officer
89. Powers of an investigating officer
90. Power to examine persons
91. Admissibility of evidence

92. Search of person
93. Obstruction to exercise of powers by an investigating officer
94. Requirement to provide translation
95. Delivery of property, record, report or document
96. Seizing of property, record, report or document
97. Release of property, record, report or document seized
98. Investigating officer may arrest without warrant
99. Arrested person to be made over to police officer
100. Assistance to police or other public officer
101. Investigating officer deemed to be public servant and public
officer
102. Report to Minister
103. Powers of Minister
104. Application of sections 84 to 86
105. Application of sections 89 to 101
106. Provisions of this Part to prevail
PART IX
MISCELLANEOUS
107. General offence
108. Falsification, concealment and destruction of document
109. Offence by body corporate
110. Offence by an individual
111. Joinder of offences
112. Seizable offence
113. Power of Governor to compound offences
114. Attempts, preparations, abetments and conspiracies
punishable as offences
115. Annual report
116. Submission of information and statistics
117. Indemnity
118. Prohibition on receipt of gifts, commission, etc.
119. Secrecy
120. Permitted disclosure

121. Decision of Minister to be final
122. Exemptions
123. Regulations
124. Amendment of Schedule
125. Application of other laws
126. Power to issue guidelines, etc.
127. Application of Exchange Control Act 1953
128. Contravention not to affect contract, agreement or
arrangement
129. Islamic banking or financial business
130. Savings
SCHEDULE Minimum Criteria for Appointment
PART I
PRELIMINARY
Short title and 1. (1) This Act may be cited as the Development Financial
commencement Institutions Act 2002.
(2) This Act comes into operation on a date to be

appointed by the Minister by notification in the Gazette.
Application 2. (1) This Act shall apply to such development financial

institutions as may be prescribed by the Minister by order
published in the Gazette.
(2) For the avoidance of doubt, the Minister may, by order
published in the Gazette, on the recommendation of the
Bank, provide that all or any part of the provisions of this
Act shall not apply in respect of any development financial
institution, or shall apply with such modifications as may be
set out in the order and such modifications must be
consistent with the intent and purpose of this Act.
Interpretation 3. (1) In this Act, unless the context otherwise requires—
“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 any custom recognised by a
class of persons in or outside Malaysia;

“member”, in relation to an institution which is—
(a) a corporation, means a shareholder; and
(b) a partnership, means a partner;
“statutory body” means any authority or body, whether
corporate or unincorporate, established, appointed or
constituted by any written law, but does not include any local
authority;
Act 519.
“Bank” means the Central Bank of Malaysia established
under the Central Bank of Malaysia Act 1958 [Act 519];
Act 125.
“related”, in relation to a corporation, means related within
the meaning of section 6 of the Companies Act 1965 [Act
125];
“collateral” 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);
“specify” means specify in writing;
“prescribe” means prescribed by order published in the
Gazette;
Act 56.
“document” has the same meaning as in the Evidence Act
1950 [Act 56];
“constituent documents”, in relation to an institution,
means the statute, charter, memorandum of association and
articles of association, rules and by-laws, partnership
agreement, or other instrument, under or by which the
institution is established and its governing and administrative
structure and the scope of its functions, business, powers and
duties are set out, whether contained in one or more
documents;
“Governor” means the Governor of the Bank, and includes
a Deputy Governor of the Bank;
“property” means any movable or immovable property 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; and
(b) any conveyance executed for conveying, assigning,
appointing, surrendering, or otherwise transferring or
disposing of immovable property where the person

executing the conveyance is the proprietor or
possessor, or is entitled to a contingent right, either for
the whole or part of the interest;
“individual” means a natural person;
“development financial institution” means an institution
which carries on any activity, whether for profit or
otherwise, with or without any Government funding, with the
purpose of promoting development in the industrial,
agricultural, commercial or other economic sector, including
the provision of capital or other credit facility; and for the
purposes of this definition, “development” includes the
commencement of any new industrial, agricultural,
commercial or other economic venture or the expansion or
improvement of any such existing venture;
“prescribed institution” means a development financial
institution which is prescribed by the Minister under
subsection 2(1);
Act 125.
“approved company auditor” has the same meaning as in
the Companies Act 1965;
“credit facility” means an advance, loan or other facility by
which the borrower has access, directly or indirectly, to the
funds of the lender and includes the giving of a guarantee or
credit insurance in relation to a credit facility;
“interest in a share” means a legal or equitable interest in a
share;
“Government” means the Federal Government, or any
State Government, any local authority, or any other authority
or body, whether corporate or unincorporate, established,
appointed or constituted by any written law;
“Chief Executive Officer”, in relation to an institution,
means an individual, who either individually or jointly with
one or more other persons, is responsible, subject to the
authority of the directors, for the conduct of the business and
the administration of the institution;
“client” includes a customer;
“trust fund” means any fund established under section 43;
“liabilities” includes debts, duties and obligations of every
kind, whether present or future, or whether vested or
contingent;
“Minister” means the Minister for the time being charged
with the responsibility for finance;
“officer”, in relation to an institution, means any of its
employees and includes its Chief Executive Officer;

“office” includes the principal place of business, a branch,
an agency, a mobile place of business, a place of business set
up and maintained for a limited period only and any other
place of business;
“stakeholder”, in relation to a prescribed institution, means
the Government or any person who provides funding or any
other assistance to the prescribed institution, or its members,
customers, depositors, policy owners or creditors, as the case
may be;
“director” includes any person who occupies the position
of a director, and includes a person in accordance with
whose directions and instructions the directors or officers are
accustomed to act and an alternate or substitute director, and
without prejudice to the foregoing, in the case of—
(a) a co-operative society, means a member of the board,
or other governing body, of the co-operative society;
(b) a statutory body, means a member of the board,
committee, council or other governing body of the
statutory body;
(c) a partnership, means a partner;
(d) a sole proprietorship, means the sole-proprietor; and
(e) any other body, association or group of persons,
whether corporate or unincorporate, means a person
having the direction and control of the management of
its business or affairs;
“controller”, in relation to an institution, means a person
who—
(a) has an interest in more than fifty per cent of the shares
of the institution;
(b) has the power to appoint or cause to be appointed a
majority of the directors of the institution; or
(c) has the power to make or cause to be made decisions
in respect of the business or administration of the
institution, and to give effect to such decisions or
cause them to be given effect to,
and the word “control” shall be construed accordingly;
Act 125.
“corporation” has the same meaning as in the Companies
Act 1965;
“agreement” means an agreement whether formal or
informal, oral or written, express or implied;
“arrangement” means an arrangement whether formal or

informal, oral or written, express or implied;
“business” means any activity carried on for the purpose of
gain or profit and includes all property derived from, or used
in, or for the purpose of, carrying on such activity and all
rights and liabilities arising from such activity;
“premises” includes any land, building, structure or place;
“relative”, in relation to a person, means—
(a) the spouse of the person;
(b) the brother or sister of the person;
(c) the brother or sister of the spouse of the person; or
(d) any lineal ascendant or descendant of the person;
“associate”, in relation to a person, means—
(a) any person who is a nominee or an officer of that
person;
(b) any person who manages the affairs of that person;
(c) any firm of which such person, or any nominee of his,
is a partner or a person in charge or in control of its
business or affairs;
Act 125.
(d) any corporation within the meaning of the Companies
Act 1965, of which such person, or any nominee of
his, is a director or is in charge or in control of its
business or affairs, or in which such person, alone or
together with any nominee of his, has or have a
controlling interest, or shares to the total value of not
less than thirty per cent of the total issued capital of
that corporation; or
(e) the trustee of any trust, where—
(i) the trust has been created by that person; or
(ii) the total value of the assets contributed by that
person to the trust at any time, whether before or
after the creation of the trust, amounts, at any time,
to not less than twenty per cent of the total value of
the assets of the trust;
Act 125.
“subsidiary” has the same meaning as in section 5 of the
Companies Act 1965;
Act 125.
“company” has the same meaning as in the Companies Act
1965;
Act 125.
“holding company” has the same meaning as in section 5
of the Companies Act 1965;
“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;
“modification” includes amendment, adaptation, alteration,
variation, addition, division, substitution or exclusion;
“capital funds” means paid-up capital and reserves, and
includes, for the purposes of sections 38 and 39, the whole or
such proportion of any other class, category or description of
capital as the Bank may specify.
(2) For the purposes of this Act—
(a) “persons acting in concert” means persons who have
entered into an agreement or arrangement to acquire
jointly or severally interests in shares of a corporation
for the purpose of obtaining or consolidating control of
that corporation or act jointly for the purpose of
exercising control over a corporation by means of
interests in shares of that corporation already held by
them jointly or severally; and
(b) without prejudice to the generality of paragraph (a),
the following persons shall be presumed to be persons
acting in concert, unless the contrary is established:
(i) a corporation and its related and associate
corporations;
(ii) a corporation and any of its directors, or the relative
or associate of any of its directors, or any related
trusts;
(iii) a corporation and any pension fund established by
it;
(iv) a person and any investment company, unit trust or
other fund whose investments such person manages
on a discretionary basis; or
(v) a financial adviser and its client which is a
corporation, where the financial adviser manages
on a discretionary basis the client’s funds and has
ten per cent or more interest in the shares of the
client.
(3) For the purpose of this Act—
(a) a corporation is established when it is incorporated;
(b) a statutory body is established when it comes into
existence under the law establishing, appointing or
constituting it;
(c) a co-operative society is established when it is
registered;
(d) a partnership is established when it is formed;

(e) a sole-proprietorship is established when it
commences its business;
(f) any other individual, body, association or group of
persons, whether corporate or unincorporate, which
requires registration or other form of recording or
recognition under any written law before it can
lawfully commence its activities, is established when it
is so registered, recorded or recognized.
(4) For the purpose of this Act, a corporation is an
associate corporation of another corporation if not less than
twenty per cent and not more than fifty per cent of the shares
of the first-mentioned corporation are held by that other
corporation.
Functions of the Bank 4. (1) The Bank shall have all the functions conferred on it
by this Act and the Governor shall perform the functions of
the Bank on its behalf.
(2) The Bank may authorise any of its officers to perform
any of its functions under this Act.
(3) The Bank may, either generally or in a particular case,
appoint a person who is not an officer of the Bank to perform
any or all of its functions or render such assistance in the
performance of its functions under this Act as the Bank may
specify.
PART II
MANAGEMENT, OWNERSHIP AND CONTROL
Board of directors 5. The board of directors of a prescribed institution shall be

responsible for carrying out the policy and general
administration of the affairs and business of the prescribed
institution in accordance with this Act.
Appointment of Chief 6. (1) A prescribed institution shall appoint a Chief

Executive Officer and Executive Officer and directors for an initial term not
directors
exceeding two years and the Chief Executive Officer and
directors shall, subject to the constituent documents of the
prescribed institution, be eligible for annual reappointment.
(2) Notwithstanding subsection (1), a prescribed
institution shall, prior to the appointment of any person as its
Chief Executive Officer or director, seek the Bank’s

verification on whether such a person satisfies the criteria set
out in the Schedule.
(3) Any prescribed institution that contravenes subsection
(1) or (2) commits an offence and shall on conviction be
liable to a fine not exceeding one million ringgit and, in the
case of a continuing offence, to a further fine not exceeding
one thousand ringgit for each day during which the offence
continues after conviction.
(4) A prescribed institution shall notify the Bank of the
appointment of its Chief Executive Officer and its directors
within fourteen days from the date of the appointment.
(4) commits an offence and shall on conviction be liable to a
fine not exceeding one hundred thousand ringgit and, in the
one hundred ringgit for each day during which the offence
Disqualification of 7. (1) No prescribed institution shall appoint a person and

Chief Executive no person shall accept appointment as a Chief Executive
Officer and director
Officer or director of a prescribed institution—
(a) if he is a bankrupt or has compounded with his
creditors, whether in or outside Malaysia;
(b) without prejudice to paragraph (c), if a charge for a
criminal offence relating to dishonesty, fraud or
violence under any written law punishable with
imprisonment for one year or more, whether by itself,
or in lieu of, or in addition to, a fine, has been proved
against him in any court in or outside Malaysia;
(c) if a charge for any offence under this Act has been
proved against him;
(d) if there has been made against him any order of
detention, supervision, restricted residence,
banishment or deportation, or if there has been
imposed on him any form of restriction or supervision,
by bond or otherwise, under any law relating to
prevention of crime, or preventive detention for the
prevention of crime or drug trafficking, or restricted
residence, or banishment or immigration; or
(e) if he has been a director of, or directly concerned in
the management of, any corporation which is being or
has been wound up by a court or other authority
competent to do so in or outside Malaysia.
(2) Any prescribed institution or person who contravenes

subsection (1) commits an offence and shall on conviction be
Effect of 8. (1) Where a person becomes disqualified by virtue of

disqualification subsection 7(1), he shall cease to hold office, and the
prescribed institution shall terminate his appointment in such
capacity, and that person, notwithstanding any contract of
service, shall not be entitled to claim any compensation for
his loss of office or termination of appointment.
(2) Notwithstanding subsection (1), the Bank, with the
concurrence of the Minister charged with the responsibility
for a prescribed institution, may direct the prescribed
institution to terminate the appointment of any person who
becomes disqualified by virtue of subsection 7(1) and the
prescribed institution shall terminate the appointment of that
person in such capacity, and that person, notwithstanding
any contract of service, shall not be entitled to claim any
compensation for his loss of office or termination of
appointment.
(3) During the pendency of any criminal proceedings in
any court for any offence referred to in paragraph 7(1) (b) or
(c) against any person who is a Chief Executive Officer or
director of a prescribed institution, such person shall not act
in such capacity, or hold any other office, or act in any other
capacity, in that prescribed institution, or in any manner,
whether directly or indirectly, be concerned with, or take part
or engage in, any activity, affairs or business of, or in
relation to, that prescribed institution, except as may be
authorised by the Bank, and subject to such conditions as the
Bank may impose.
(4) Any prescribed institution that fails to comply with the
direction under subsection (2) or any person who
contravenes subsection (3) commits an offence and shall on
conviction be liable to a fine not exceeding three million
ringgit, and, in the case of a continuing offence, to a further
fine not exceeding three thousand ringgit for each day during
which the offence continues after conviction.
(5) For the purpose of subsection (3), criminal proceedings
referred to in that subsection 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.
Exemption from 9. (1) A person who is disqualified by virtue of paragraph

disqualification 7(1) (e) may, with the written consent of the prescribed
institution in which he is holding office or is to be appointed,
apply to the Bank in writing to exempt him from that
paragraph, and, the Bank may, with the concurrence of the
Minister, grant such exemption, subject to such conditions as
the Bank considers fit to impose.
(2) The person applying for an exemption under
subsection (1) and the prescribed institution in which he is
holding office or is to be appointed shall submit such
particulars and information as the Bank may specify.
Notice of cessation of 10. (1) A prescribed institution shall notify the Bank in
office writing of the fact that a person has ceased to be its Chief
Executive Officer or director and the reasons for it within
fourteen days from the date of the cessation.
Disclosure of interest 11. (1) A director who has an interest, directly or

indirectly, in relation to any matter being considered, or
about to be considered, by the board of directors of the
prescribed institution must disclose the nature of his interest
to the meeting of the board as soon as practicable after the
relevant facts have come to the director’s knowledge.
(2) Any person who contravenes subsection (1) commits
an offence and shall on conviction be liable to a fine not
exceeding two hundred and fifty thousand ringgit or to
imprisonment for a term not exceeding three months or to
both and, in the case of a continuing offence, to a further fine
not exceeding two hundred and fifty ringgit for each day
during which the offence continues after conviction.
(3) The secretary to the board shall record in the board’s
minutes the disclosure referred to in subsection (1).
exceeding ten thousand ringgit.
(5) After the disclosure has been made and recorded, the
director shall, in relation to that matter—

(a) refrain from taking part or from being present in any
deliberation or decision of the board; and
(b) be disregarded for the purpose of constituting a
quorum of the board.
exceeding two hundred and fifty thousand ringgit and, in the
two hundred and fifty ringgit for each day during which the
offence continues after conviction.
(7) No act or proceedings of the board shall be invalidated
on the ground that any member of the board has contravened
the provisions of this section.
Acquisition of interest 12. (1) Unless the Minister otherwise approves, no person
in shares shall acquire, together with any interests in the shares of a
prescribed institution which are already held by him, or by
him and by persons acting in concert with him, an aggregate
interest in shares of five per cent or more of the shares of that
prescribed institution, or such other percentage as the
Minister may prescribe.
(2) No person who has obtained an approval of the
Minister under subsection (1) shall acquire any further
interest in the shares of such prescribed institution without
obtaining the approval of the Minister and subsection (1)
shall apply to an application for approval under this
subsection.
(3) Any person who contravenes subsection (1) or (2)
commits an offence and shall on conviction be liable to a
fine not exceeding three million ringgit or to imprisonment
for a term not exceeding three years or to both, and, in the
three thousand ringgit for each day during which the offence
Report of acquisition 13. (1) Where it comes to the knowledge of a prescribed

to the Bank institution that any acquisition as is referred to in subsection
12(1) has been effected or is about to be effected in respect
of itself, the prescribed institution shall report it to the Bank
within thirty days from the date the prescribed institution
becomes aware of such acquisition.
fine not exceeding five million ringgit.
Change in control, 14. (1) Unless the Minister otherwise approves, no person
amalgamation and shall—
merger
(a) subject to subsection 12(1), take control of a

prescribed institution or its holding company; or
(b) amalgamate or merge with any prescribed institution.
exceeding ten million ringgit or to imprisonment for a term
not exceeding ten years or to both.
Transfer of business 15. (1) Unless the Minister otherwise approves, a

prescribed institution shall not sell, dispose of, or transfer the
whole or any part of its business, including all property
derived from, or used in or for the purpose of such business.
fine not exceeding ten million ringgit or to imprisonment for
a term not exceeding ten years or to both.
Application to High 16. (1) A prescribed institution transferring its business

Court for transfer of under paragraph 14(1) (b) or subsection 15(1) to another
business
person may make a joint application to the High Court by
way of an ex parte originating summons for all or any of the
following orders—
(a) the date on and from which the transfer shall take
effect, being a date earlier or later than the date of the
application;
(b) the vesting of any property held by the prescribed
institution, either alone or jointly with any other
person, in the other person either alone or, as the case
may be, jointly with any other person, on and from the
transfer date, in the same capacity, upon the trusts, and
with and subject to the powers, provisions and
liabilities, respectively;
(c) 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
prescribed institution, to be construed and to have
effect as if for any reference to the prescribed
institution there were substituted a reference to the
other person;
(d) for any existing agreement to which the prescribed

institution was a party to have effect as if the other
person had been a party instead of that prescribed
institution;
(e) for any account between the prescribed institution and
any of its customers to become an account between the
other person and the customer and such account to be
deemed for all purposes to be a single continuing
account;
(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
prescribed institution, either alone or jointly with
another person, to have effect, in respect of anything
due to be done, as if given to the other person either
alone or, as the case may be, jointly with such other
person;
(g) for any negotiable instrument or order for payment of
money drawn on, or given to, or accepted or endorsed
by, the prescribed institution or payable at the place of
business of that prescribed institution, 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 other person
or were payable at the place of business of the other
person;
(h) for the custody of any document, goods or thing held
by the prescribed institution as bailee immediately
before the transfer date to pass to the other person and
the rights and obligations of the prescribed institution
under any contract of bailment relating to any such
document, goods or thing to be transferred to the other
person;
(i) for any collateral held immediately before the transfer
date by the prescribed institution, or by a nominee of,
or trustee for, the prescribed institution, as collateral
for the payment or discharge of any liability of any
person, to be held by the other person or, as the case
may be, to be held by that nominee or trustee as the
nominee of, or trustee for, the other person, and to the
extent of those liabilities, be available to the other
person as collateral for the payment or discharge of
those liabilities and where any such collateral extends
to future advances or future liabilities, to be held by,
and to be available to, the other person as collateral for
future advances by, and future liabilities to, the other
person in the same manner in all respects as future
advances by, or future liabilities to, that prescribed

institution were collateralised immediately before the
transfer date;
(j) where any right or liability of the prescribed institution
is transferred to the other person, for the other person
to have the same rights, powers and remedies and in
particular the same rights and powers as to the taking
or resisting of legal proceedings or the making or
resisting of 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 other person, including those
rights or liabilities in respect of any legal proceedings
or applications to any authority pending immediately
before the transfer date by or against that prescribed
institution;
(k) for any judgment or award obtained by or against the
prescribed institution and not fully satisfied before the
transfer date to be enforceable by or, as the case may
be, against the other person; and
(l) for all such incidental, consequential and supplemental
orders as are necessary to secure that the transfer shall
be fully and effectively carried out.
(2) On the hearing of an application under subsection (1),
the High Court may grant an order in the terms applied for,
or with such modification as the Court deems just or proper
in the circumstances of the case.
(3) Where the order of the High Court under subsection
(1) provides for the transfer of any business vested in or held
by the prescribed institution, either alone or jointly with any
other person, then, by virtue of the order, that business shall,
on and from the transfer date, become vested in or held by
the other person 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 or
in any rule of law, and shall be binding on any person
affected by it, regardless that the person so affected is not a
party to the proceedings under this section or any other
related proceedings, or had no notice of the proceedings
under this section or of other related proceedings.
(4) The order of the High Court made under subsection (1)
shall, subject to the directions of the High Court, be
published by the person acquiring the business 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 the English language.
(5) The prescribed institution shall lodge, within thirty

days of the making of the order of the High Court under
subsection (1), an authenticated copy of such order together
with an authenticated copy of the agreement or arrangement
for the transfer approved by the Minister under subsection 19
(5), and an authenticated copy of the Minister’s approval,
with—
(a) the Registrar of Companies or Registrar General of
Co-operative Societies, as the case may be; and
(b) 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.
fine not exceeding one million ringgit and, in the case of a
continuing offence, to a further fine not exceeding one
thousand ringgit for each day during which the offence
(7) An order of the High Court under subsection (1) may
relate to any property or business of the prescribed institution
outside Malaysia and, if it so relates, effect may be given to
it either in accordance with any reciprocal arrangements
relating to enforcement of judgements that may exist
between Malaysia and the country, territory or place outside
Malaysia in which such property or business is, or where
there are no such arrangements, in accordance with the law
applicable in such country, territory or place.
Transfer of immovable 17. Where an order of the High Court under subsection 16 [sic]
property (2) vests any alienated land or any share or interest in any
alienated land in an other person—
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 56/1965], 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 the provisions of subsections 420(2),
(3) and (4) of the 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 the 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

[Cap. 68];
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 as provided under section 171 of the Land Code
of Sarawak [Cap. 81]; or
(d) where such alienated land is in the Federal Territory of
Labuan, 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 as provided
under subsection 114(2) of the Land Ordinance of
Sabah as modified by the Federal Territory of Labuan
(Modification of Land Ordinance) Order 1984.
Own shares or shares 18. (1) Unless the Bank otherwise approves in writing, no
of holding company as person shall grant a credit facility to any person against the
collateral
collateral of the shares or property of a prescribed institution
or its holding company if the shares or property to be
provided as collateral for the proposed credit facility, by
itself, or together with any other shares or property of that
prescribed institution already held as collateral for any other
credit facilities given by him, would constitute five per cent
or more of the shares or property of that prescribed
institution or its holding company.
(2) Unless the Bank otherwise approves, no prescribed
institution shall grant any credit facility, or enter into any
other transaction, against the collateral of its own shares or
property or the shares or property of its holding company.
(3) Any person who contravenes subsection (1) or any
prescribed institution that contravenes subsection (2)
for a term not exceeding three years or to both.
Application to the 19. (1) Any application for the Minister’s approval under
Bank subsection 12(1), 14(1) or 15(1) shall be made to the Bank
together with such information and documents as the Bank
may specify.
(2) Where any information or document required by the
Bank is not provided within the time specified or any
extended time granted by the Bank, the application shall,

without prejudice to a fresh application being made, be
deemed to be withdrawn.
(3) The Bank shall consider the application under
subsection (1) and make a recommendation to the Minister
whether the application should be approved or refused.
(4) A recommendation to approve an application shall not
be made if the Bank is satisfied that it would be contrary to
the public interest to do so.
(5) Upon receiving an application and the
recommendation of the Bank under this section, the Minister
may approve the application with or without any
modification or condition, or refuse the application.
(6) Any person who fails to comply with any modification
or condition imposed by the Minister under subsection (5)
(7) Where the Minister refuses an application, the Bank
shall notify the applicant in writing of the refusal.
(8) A person who submits or provides any information or
document under subsection (1) which he knows, or has
reason to believe, to be false or misleading commits an
offence and shall on conviction be liable to a fine not
exceeding one million ringgit.
Defence relating to 20. It shall be a defence to a charge for an offence relating

contravention to contraventions under section 12, 13, 14, 15 or 18 for the
accused to prove that he had no knowledge of the acts,
omissions, facts or circumstances constituting the
contravention, provided he had reported the contravention to
the Bank within seven days of becoming aware of those acts,
omissions, facts or circumstances which constituted such
contravention.
Effect of contravention 21. (1) Where the Bank is satisfied that any person has
contravened subsection 12(1) regardless as to whether or not
there is any prosecution of any person for such
contravention, the Bank may make a preliminary order in
writing—
(a) prohibiting the transfer of, or the carrying out of the
agreement to transfer, such shares or, in the case of
unissued shares, prohibiting the transfer of, or the

carrying out of the agreement to transfer, the right to
be issued with them;
(b) prohibiting the exercise of any voting rights in respect
of such shares;
(c) prohibiting the issue of any further shares in right of
such shares or in pursuance of any offer made to their
holder; or
(d) except in a liquidation, prohibiting the payment of any
sums due from the prescribed institution on such
shares, whether in respect of capital or otherwise.
(2) Any person who fails to comply with an order under
liable to a fine not exceeding five hundred thousand ringgit
or to imprisonment for a term not exceeding six months or to
both.
(3) Where the Bank is satisfied that any person has
contravened subsection 18(1), the Bank may make a
preliminary order in writing prohibiting the exercise of any
rights under any collateral, or right to transfer any shares or
property constituting such collateral regardless as to whether
or not there is any prosecution of the person for such
contravention.
(4) Any person who fails to comply with an order under
liable to a fine not exceeding five hundred thousand ringgit
or to imprisonment for a term not exceeding six months or to
both.
(5) Any transaction, including any agreement or
arrangement in relation to any shares, or interest in shares, or
security, which is in contravention of a preliminary order, or
an order confirmed under subsection 23(1), or of any
direction of the Bank under subsection 24(1), shall be void
and of no effect.
(6) A person is not entitled to be given an opportunity to
be heard before the Bank makes a preliminary order under
subsection (1) against him or which affects him in any
manner.
Preliminary order by 22. (1) A preliminary order under section 21 shall be

the Bank served on the defaulting person as soon as practicable, and
may be publicised in such manner as the Bank deems fit, if,
in the opinion of the Bank, it needs to be publicised.
(2) A preliminary order shall be binding on—
(a) the defaulting person;

(b) any person for the time being holding any shares to
which such order applies; and
(c) any other person specified in the order or to whom the
order is directed.
(3) Any person holding any shares to which a preliminary
order applies shall within seven days of its service on the
defaulting person, or such longer period as the Bank may
allow, surrender such shares to the Bank.
exceeding five hundred thousand ringgit or to imprisonment
for a term not exceeding six months or to both, and, in the
five hundred ringgit for each day during which the offence
(5) Any defaulting person against whom a preliminary
order has been made, or any other person prejudicially
affected by such order, may, within fourteen days of the
service of the order on the defaulting person, make
representations in writing to the Bank applying for a
revocation of the order on the ground that he had not
contravened the provisions in relation to which the order was
made, or for a modification of the order on the ground that it
would be just and proper to modify it for reasons to be set
out in the representations.
Confirmation of 23. (1) The Bank may, after considering the

preliminary order representations made under subsection 22(5), either confirm
the preliminary order, or revoke it, or vary it in such manner
as it deems fit.
(2) Where the Bank confirms a preliminary order, it may
dispose of the shares surrendered to it under subsection 22(3)
to such person and to such extent as the Bank may
determine.
(3) The proceeds of the disposal of the shares under
subsection (2) 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 proceeds to him.
Direction to give effect 24. (1) The Bank may direct the directors or officers of the
to order prescribed institution to give effect to a preliminary order of
the Bank under subsection 22(1) or an order of the Bank

confirmed under subsection 23(1), or to take such action as
may be incidental, ancillary or consequential to such order.
(2) Any person who fails to comply with the direction
under subsection (1) commits an offence and shall on
conviction be liable to a fine not exceeding five hundred
thousand ringgit or to imprisonment for a term not exceeding
six months or to both and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit
for each day during which the offence continues after
conviction.
PART III
RESTRICTIONS ON BUSINESS
Control of 25. (1) Unless the Bank otherwise approves in writing, no

establishment or prescribed institution shall establish or acquire any
acquisition of
subsidiaries subsidiary in or outside Malaysia.

fine not exceeding three million ringgit and, in the case of a
continuing offence, to a further fine not exceeding three
(3) The Bank may approve an application to establish or
acquire a subsidiary under subsection (1), with or without
conditions, or reject the application.
terms and conditions imposed under subsection (3) commits
exceeding five hundred thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence
Direction in respect of 26. (1) Notwithstanding any approval under subsection 25

subsidiary (1), the Bank may, in the interest of a prescribed institution,
direct the prescribed institution to—
(a) rationalise the business of any of its subsidiaries;
(b) transfer the business of any of its subsidiaries to
another corporation, including the prescribed
institution or any of its other subsidiaries; or
(c) wind up any of its subsidiaries.

(2) For the purposes of subsection (1), the prescribed
institution shall comply with the Bank’s direction within
such period as the Bank may specify.
direction under this section commits an offence and shall on
conviction be liable to a fine not exceeding one million
ringgit and, in the case of a continuing offence, to a further
fine not exceeding one thousand ringgit for each day during
Restriction or 27. (1) Except with the prior written approval of the Bank,
prohibition of business a prescribed institution shall not carry on, whether on its own
account or on a commission basis, and whether alone or with
others, any activity in or outside Malaysia, otherwise than in
connection with or for the purposes of carrying on its
business.
fine not exceeding three million ringgit, and, in the case of a
(3) The Bank may, in the interest of promoting orderly
development in any economic sector—
(a) prohibit or restrict a prescribed institution from
carrying on such description of business as it may
specify; or
(b) direct a prescribed institution to carry on such
description of business as it may specify.
prohibition, direction or restriction under subsection (3)
Prohibition of credit 28. (1) No prescribed institution shall grant to any person
facilities any credit facility, whether from its own funds or any trust
fund it manages under section 43, except for such purposes
or on such collateral as the Bank may specify.

(3) No prescribed institution shall grant any credit facility
to—
(a) any of its members, directors or officers or any other
person receiving remuneration from it (other than an
accountant, advocate, architect, estate agent, doctor or
any other person receiving remuneration from it in
respect of his professional services);
(b) any body corporate or unincorporate, or any sole
proprietorship, in which any of its members, directors
or officers is a director or manager, or for which any
of its members, directors or officers is a guarantor or
an agent;
(c) any corporation in the shares of which any of its
members, directors or officers has any interest which,
in aggregate, is of an amount that is in excess of such
percentage as the Bank may specify; and
(d) any person for whom any of its members, directors or
officers has given any guarantee or other undertaking
involving financial liability.
institution may, subject to such terms and conditions as it
may impose, grant to any of its officers or its executive
director—
(a) any credit facility which is provided for under his
scheme of service; or
(b) where there is no such provision and the prescribed
institution is satisfied that special or compassionate
circumstances exist, a loan not exceeding at any one
time—
(i) six months of his remuneration; or
(ii) his remuneration for such longer period as may be
approved by the Bank.
(5) For the purposes of this section, “director” or “officer”
includes a spouse, child or parent of a director or officer.
Restriction of credit to 29. (1) Subject to subsection 28(1), no prescribed

single person institution shall grant to any single person any credit facility,
whether from its own funds or any trust fund it manages
under section 43 which in aggregate is of an amount that is
in excess of such percentage as the Bank may specify.

institution may enter into such transaction, and with such
person, as the Minister may, on the recommendation of the
Bank, direct the prescribed institution.
(4) In computing the amount of credit facility granted to a
single person, any credit facility given to the following
persons shall be deemed to be a credit facility granted to
such single person:
(a) where such single person is an individual, his or her
spouse, child or family corporation;
(b) where such single person is a corporation, its related or
associate corporations;
Act 502.
(c) where such single person is a society registered under
any written law relating to co-operative societies, its
subsidiaries as defined in section 2 of the Co-
operatives Societies Act 1993 [Act 502], and the
related or associate corporations of such subsidiaries;
or
(d) persons acting in concert with such person.
(5) For the purposes of paragraph (4) (a), “family
corporation” means a corporation in which—
(a) the individual;
(b) the individual’s spouse; or
(c) that individual’s child,
holds, or any two or more 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.
(6) Notwithstanding subsection (4), the Bank may specify
that all or any persons mentioned in paragraph (4) (a), (b),
(c) or (d) shall be excluded in the application of that
subsection in relation to any particular person to whom a
credit facility is to be given, and at the same time specify the
criteria or the basis on which that person is to be so
excluded.
Restriction on giving 30. (1) A prescribed institution may, whether from its own
of credit facility funds or any trust fund it manages under section 43, and
notwithstanding paragraph 28(3) (a), grant a credit facility to
the spouse, child or parent of any of its directors or officers
for the purchase of a house if—
(a) the person to whom the credit facility is given has
creditworthiness which is not less than that normally

required by the prescribed institution of other persons
to whom credit facilities are given;
(b) the terms of the credit facility are not less favourable
to the prescribed institution than those normally
offered to other persons;
(c) the giving of the credit facility will be in the interests
of the prescribed institution; and
(d) the credit facility is approved by all other directors of
the prescribed institution at a duly constituted meeting
of the directors where not less than three quarters of all
the directors of the prescribed institution are present
and such approval has been recorded in the minutes of
that meeting.
Disclosure of 31. (1) Every director of a prescribed institution who has

director’s interest in any manner, whether directly or indirectly, any interest in
a proposed credit facility, whether from its own funds or
from any trust fund it manages under section 43, to be given
to any person by such prescribed institution shall as soon as
practicable declare in writing the nature of his interest to a
duly constituted meeting of directors, and the secretary of the
prescribed institution, or other officer appointed by the
prescribed institution for the purpose, shall cause a copy of
such declaration to be circulated immediately to every
director regardless whether he was present or not at such
meeting.
exceeding three million ringgit and, in the case of a
(3) For the purposes of subsection (1), a general notice in
writing served on each director of the prescribed institution
by a director to the effect that he is a director, officer or
member of the body corporate or unincorporate or a director
or officer of the sole proprietorship to which the credit
facility is proposed to be given shall be deemed to be
sufficient declaration of interest in relation to such proposed
credit facility if the general notice—
(a) sets out the nature and extent of his interest in the
body or sole proprietorship, as the case may be; and
(b) is brought up and read at the meeting of the directors
of the prescribed institution at which it is served or, if
it is not served at a meeting of directors, at the next

meeting of directors after it has been served on each
director.
(4) Every director of a prescribed institution who holds
any office, or possesses any property, whereby, directly or
indirectly, duties or interests might be created in conflict
with his duties or interests as a director of the prescribed
institution shall declare at a meeting of the directors of the
prescribed institution the fact of his holding such office or
possessing such property and the nature, character and extent
of the conflict.
(5) The declaration referred to in subsection (4) shall be
made at the first meeting of the directors held—
(a) after he becomes a director of the prescribed
institution; or
(b) if already a director, after he commences to hold such
office or to possess such property.
(6) The secretary of the prescribed institution or the other
officer referred to in subsection (1) shall record any
declaration made under this section in the minutes of the
meeting at which it was made or at which it was brought up
and read.
exceeding ten thousand ringgit.
Control of credit limit 32. (1) A director or officer of a prescribed institution

shall not grant any credit facility in excess of the limit, or
outside the scope of any terms and conditions, imposed on
him by the prescribed institution, or in contravention of any
directions given to him, or any agreement made with him, by
the prescribed institution.
exceeding five million ringgit or to imprisonment for a term
not exceeding five years or to both.
(3) Subsection (1) applies to the funds of the prescribed
institution and any trust fund it manages under section 43.
(4) The Bank may by written notice direct a prescribed
institution to—
(a) submit any information relating to its policy and
procedure for the granting of any credit facility;
(b) submit a report on the limit or the terms and conditions
imposed, the directions given, and the agreements

made, in relation to the authority of each of its
directors or officers authorised to grant credit
facilities; or
(c) modify the policies or procedures referred to in
paragraph (a), or vary the matters mentioned in
paragraph (b), as the Bank deems fit and proper, either
generally, or in relation to any class of directors or
officers, or in relation to any particular director or
officer, and such modification or variation shall be
binding on the prescribed institution and its directors
and officers.
[sic]
direction under subsection (4) commits an offence and shall
on conviction be liable to a fine not exceeding one million
ringgit, and, in the case of a continuing offence, to a further
which the affence continues after conviction.
Investment of assets 33. (1) Subject to subsection (2), a prescribed institution

shall invest any of its assets in such manner, and maintain
the assets in such place, as the Bank, with the approval of the
Minister, may specify.
(2) The Bank may direct a prescribed institution in
writing—
(a) not to make investment of a specified class or
description; or
(b) to realise, before the expiry of a specified period or
such extended period as the Bank may approve, the
whole or a specified proportion of its investment.
(3) Any prescribed institution that fails to comply with a
direction under subsection (1) or (2) commits an offence and
shall on conviction be liable to a fine not exceeding three
million ringgit and, in the case of a continuing offence, to a
further fine not exceeding three thousand ringgit for each day
PART IV
OBLIGATIONS AND SOURCING OF FUNDS
Statement of corporate 34. (1) A prescribed institution shall, for each financial
intent year, submit to the Bank within such period as the Bank may
specify, such statement of corporate intent as may be
approved by the Minister charged with the responsibility for

that prescribed institution.
(2) The statement of corporate intent under subsection (1)
shall be in such form as the Bank may specify and shall
include the prescribed institution’s strategic plans and
manner of sourcing for funds for the following financial
year.
(3) The Bank may, on receipt of the prescribed
institution’s approved statement of corporate intent under
subsection (1), accept it with or without modification or
condition or refuse it.
(4) A prescribed institution whose statement of corporate
intent is rejected under subsection (3) shall submit a
modified statement of corporate intent under subsection (1)
within such time as the Bank may specify.
(5) A prescribed institution shall implement the statement
of corporate intent accepted by the Bank with or without
modification or condition under subsection (3) and the Bank
shall measure the performance of the prescribed institution
according to that statement of corporate intent.
(1), (2), (4) or (5) commits an offence and shall on
conviction be liable to a fine not exceeding one million
Annual funding 35. (1) A prescribed institution shall, for each financial
year, submit to the Bank an annual funding requirement for
the Minister’s approval, within such period, and in such
form, as the Bank may specify.
(3) The funding requirement submitted under subsection
(1) shall include a copy each of the following—
(a) an operational plan and financial plan for the
following financial year; and
(b) any other information as the Bank may specify.
institution may—
(a) apply to the Minister for additional funding for its own
account, an existing trust fund or a new trust fund; or
(b) apply to the Bank for approval to borrow from its
related or associate corporation.
(5) The Minister, on the recommendation of the Bank, or
the Bank, as the case may be, may approve an application
under this section subject to such purpose, terms and
conditions as the Minister or the Bank, as the case may be,
may specify.
(6) The Minister or the Bank, as the case may be, may
reject an application under this section within three months
of receiving the application without assigning any reasons
for the rejection.
Restrictions on 36. (1) A prescribed institution shall not pay any dividend
payment of dividend on its shares until all its capitalised expenditure (including
preliminary expenses, organisation expenses, shares selling
commission, brokerage, amount of losses incurred, and any
other item of expenditure not represented by tangible assets)
has been written off.
(2) Before a prescribed institution declares any dividend, it
shall apply in writing for the approval of the Bank in respect
of the amount proposed to be declared, and the Bank may
approve such amount, or a reduced amount, or prohibit
payment of any dividend, having regard to the financial
condition of the prescribed institution.
liable to a fine not exceeding three million ringgit and, in the
Maintenance of liquid 37. (1) The Bank may specify that a prescribed institution
assets shall hold such minimum, or minimum average, amount of
liquid assets in Malaysia as may be set out in the
specification at all times or for such period, and in such ratio
or formula.
fine not exceeding five million ringgit and, in the case of a
(3) For the purpose of subsection (1), the minimum, or

minimum average, amount of liquid assets shall be expressed
as a percentage of all or such of its liabilities incurred by its
offices in Malaysia as may be set out in the specification.
(4) For the purpose of subsection (1), the Bank shall
specify a period of not less than seven days within which a
prescribed institution shall comply with the specification.
(6) The Bank may prohibit any prescribed institution from
giving any credit facilities to any person during the period in
which the prescribed institution has failed to comply with
any requirement of a specification under this section.
Maintenance of capital 38. (1) The Bank may require a prescribed institution to
funds maintain capital funds, unimpaired by losses, in such ratio to
all or any of its assets or to all or any of its liabilities,
including those of all its offices in and outside Malaysia, as
the Bank may specify.
Maintenance of 39. (1) The Bank may require a prescribed institution to—
reserve fund
(a) maintain a reserve fund; and

(b) before declaring any dividend from its net profits of
each year (after due provision made for taxation),
transfer to its reserve fund out of the net profits of
each year—
(i) a sum equal to not less than fifty per cent of the net
profits of that year, so long as the amount of the
reserve fund is less than fifty per cent of its paid-up
capital; or
(ii) a sum equal to not less than twenty-five per cent of
the net profits of that year, so long as the amount of
the reserve fund is fifty per cent but less than one
hundred per cent of its paid-up capital.

(2) Notwithstanding subsection (1), the Bank may specify
a different portion of the net profits of each year to be
transferred to the reserve fund of a prescribed institution for
the purpose of ensuring that the amount of its reserve fund is
sufficient for the purpose of its business and adequate in
relation to its liabilities.
(3) Notwithstanding subsection (1), the reserve fund of a
prescribed institution may, with the approval of the Bank and
subject to such terms and conditions as the Bank may
impose, be applied in paying up any unissued shares to be
issued to its members as fully paid bonus shares.
(4) Nothing in this section shall authorise the prescribed
institution to pay dividends out of its reserve fund.
(5) Any prescribed institution that contravenes this section
fine not exceeding one million ringgit, and, in the case of a
Maintenance of assets 40. (1) Unless the Bank otherwise approved in writing, a
in Malaysia prescribed institution shall hold at all times in Malaysia such
minimum amount of assets as the Bank may specify.
(2) For the purpose of subsection (1), the minimum
amount of assets to be held in Malaysia shall be expressed as
a percentage of all or such of the liabilities of the prescribed
institution as the Bank may specify.
(4) For the purpose of subsection (1), the Bank may
specify a period of not less than seven days within which the
prescribed institution shall comply with the specification.
Other prudential 41. (1) The Bank may require a prescribed institution to
requirements meet such other prudential requirements, and within such
time, as the Bank may specify.
(2) Any prescribed institution that contravenes any
requirements under subsection (1) commits an offence and
shall on conviction be liable to a fine not exceeding five
further fine not exceeding five thousand ringgit for each day
Amendment of 42. (1) A prescribed institution shall not make any

constituent documents amendment to its constituent documents, unless it has
furnished to the Bank in writing particulars of the proposed
amendment and obtained the prior written approval of the
Bank.
fine not exceeding one million ringgit.
(3) A prescribed institution shall, within thirty days after
making any amendment to its constituent documents, furnish
to the Bank—
(a) in writing particulars of the amendment duly verified
by a statutory declaration made by one of its directors;
and
(b) a copy of its amended constituent documents.
PART V
DEALINGS WITH GOVERNMENT FUNDS
Establishment and 43. A prescribed institution may, with the agreement of the
maintenance of trust Government, establish and maintain a separate trust for any
fund
fund allocated by the Government, and manage such trust
fund for and on behalf of the Government separately from its
own funds.
Utilisation of trust 44. (1) No prescribed institution shall apply the assets of a
funds trust fund to meet liabilities or expenses not properly
attributable to that trust fund.
(3) For the purposes of subsection (1), the Bank may

specify the amount and types of liabilities and expenses that
may be charged to any trust fund.
(4) The Bank may, if it is satisfied that a prescribed
institution has applied any assets of a trust fund to meet
liabilities or expenses not properly attributable to that trust
fund, direct the prescribed institution to charge such
liabilities or expenses to the assets of the relevant trust fund
or the assets of the prescribed institution.
direction under subsection (4) commits an offence and shall
on conviction be liable to a fine not exceeding one million
ringgit or to imprisonment for a term not exceeding one year
or to both and, in the case of a continuing offence, to a
further fine not exceeding one thousand ringgit for each day
Investment of trust 45. A prescribed institution may invest money in any trust
fund fund, in so far as the money is not for the time being required
to be expended or utilised for the purposes for which the
trust fund was set up, in such investments as the Bank may
specify and all income accruing in respect of such
investments shall be credited to the trust fund.
Credit into trust fund 46. (1) A prescribed institution shall pay into a trust fund
all money received by it in respect of the business to which
the trust fund relates.
(2) A prescribed institution shall pay to a trust fund all
income arising from the investment of the assets of that trust
fund.
(3) Any prescribed institution that contravenes this section
Property of trust fund 47. (1) No prescribed institution shall provide the property
as collateral of a trust fund as collateral for a credit facility granted by
any person to the prescribed institution or to any other
person.

Valuation of trust fund 48. (1) A prescribed institution shall value the assets and
determine the liabilities of a trust fund in such manner as the
Bank may specify.
specification under subsection (1) commits an offence and
shall on conviction be liable to a fine not exceeding five
hundred thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit
conviction.
Transfer of trust fund 49. (1) The Minister may, on the recommendation of the
Bank, direct a prescribed institution to transfer all the assets
and liabilities of any trust fund to another trust fund
maintained and managed by the prescribed institution.
(2) Notwithstanding subsection (1), the Minister may, on
the recommendation of the Bank, direct a prescribed
institution to transfer any trust fund to another person,
including a prescribed institution and section 16 shall apply
to the transfer with the necessary modification.
direction under subsection (1) or (2) commits an offence and
shall on conviction be liable to a fine not exceeding one
further fine not exceeding one thousand ringgit for each day
Breach of trust 50. (1) Any director or officer of a prescribed institution

who, being in any manner entrusted with property in any
trust fund or with any dominion over property in any trust
fund either solely or jointly with any other person,
dishonestly misappropriates, or converts to his own use, that
property, or dishonestly uses or disposes of that property in
violation of the provisions of this Part prescribing the mode
in which such trust is to be discharged, or wilfully suffers
any other person to do so, commits criminal breach of trust.
(2) Any person who commits criminal breach of trust as
set out in subsection (1) commits an offence and shall on
conviction be liable to a fine not exceeding twice the value
of the property which is the subject matter of the breach or
ten million ringgit, whichever is higher, or to imprisonment
for a term not exceeding ten years or to both.
Determination of trust 51. A trust fund established under section 43 shall be

fund determined upon its winding up or dissolution or the
completion of the transfer of its assets and liabilities to
another trust fund under section 49.
Application of a trust 52. (1) In the winding up of a prescribed institution, the

fund in a winding-up assets of a trust fund shall be applied to meet the liabilities of
the trust fund to the extent that they are apportioned to the
trust fund.
(2) Unless the Minister otherwise approves, where the
assets of a trust fund exceeds its liabilities, the surplus assets
shall not be applied to meet the liabilities of other trust funds
which are deficient.
fine not exceeding five million ringgit or to imprisonment for
a term not exceeding five years or to both and, in the case of
a continuing offence, to a further fine not exceeding five
PART VI
CONTROL OF DEFAULTER
Inability to meet 53. (1) A prescribed institution, which considers that it is

obligations insolvent, or is likely to become unable to meet all or any of
its obligations or that it is about to suspend payment to any
extent, shall immediately inform the Bank of that fact.
Action by the Bank 54. (1) Where the Bank is satisfied whether pursuant to
information under subsection 53(1) or after an examination
under Part VIII, or otherwise, that a prescribed institution—
(a) is carrying on its business in a manner detrimental to
the interests of its stakeholders or the public generally;

(b) is insolvent, or has become or is likely to become
unable to meet all or any of its obligations, or is about
to suspend payment to any extent; or
(c) has contravened any provision of this Act or any
provision of any written law, regardless that there has
been no criminal prosecution in respect of the
contravention,
the Bank may, by order in writing, exercise any one or more
of the powers in subsection (2).
(2) For the purpose of subsection (1), the Bank may—
(a) require the prescribed institution to take any steps, or
any action, or to do or not to do any act or thing in
relation to the institution, or its business, or its
directors or officers, which the Bank considers
necessary and which it sets out in the order, within
such time as may be set out in the order;
(b) prohibit the prescribed institution from extending any
further credit facility for such period as may be set out
in the order, and make the prohibition subject to such
exceptions, and impose such conditions in relation to
the exceptions, as may be set out in the order, and,
from time to time, by further order similarly made,
extend the period;
(c) notwithstanding anything in any written law, or any
limitations contained in the constituent documents of
the prescribed institution, for reasons to be recorded
by it in writing, remove from office, with effect from
such date as may be set out in the order, any officer of
the prescribed institution;
(d) notwithstanding anything in any written law, or any
limitations contained in the constituent documents of
the prescribed institution, and, in particular,
notwithstanding any limitation as to the minimum or
maximum number of directors, for reasons to be
recorded by it in writing—
(i) remove from office, with effect from such date as
may be set out in the order, any director of the
prescribed institution; or
(ii) appoint any person as a director of the prescribed
institution, and provide in the order for that person
to be paid by the prescribed institution such
remuneration as may be set out in the order; or
(e) appoint a person to advise the prescribed institution in
relation to the proper conduct of its business, and

provide in the order for that person to be paid by the
prescribed institution such remuneration as may be set
out in the order.
(3) Any prescribed institution that fails to comply with any
requirement under paragraph (2) (a) or contravenes any
prohibition under paragraph (2) (b), commits an offence and
shall on conviction be liable to a fine not exceeding ten
million ringgit, and, in the case of a continuing offence, to a
further fine not exceeding ten thousand ringgit for each day
(4) Notwithstanding subsections (1) and (2), the powers of
the Bank under paragraphs (2) (b), (c), (d) and (e) shall not
be exercised without the prior concurrence of the Minister.
Action by the Minister 55. Notwithstanding section 54, the Minister may, on the
recommendation of the Bank, prescribe—
(a) for the Bank to assume control of all or part of the
property, business and affairs of the prescribed
institution, and carry on all or part of its business and
affairs, or for the Bank to appoint any person to do so
on behalf of the Bank, and for the costs and expenses
of the Bank, or the remuneration of the person so
appointed, to be payable out of the funds and
properties of the prescribed institution as a first charge
on it;
(b) whether or not an order has been made under
paragraph (a), authorise an application to be made by
the Bank to the High Court to appoint a receiver or
manager to manage all or part of the business, affairs
and property of the prescribed institution, and 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; or
(c) whether or not an order has been made under
paragraph (a) or (b), authorise the Bank to present a
petition to the High Court for the winding up of the
prescribed institution.
Representation in 56. (1) Subject to subsection (2), no order under

respect of order subsection 54(1) or section 55 shall be made unless the
prescribed institution, and in the case of an order under
paragraph 54(1) (c) or subparagraph 54(2) (d) (i), also the
officer or director who is to be removed from office, has
been given a reasonable opportunity of making

representations against, or otherwise in respect of, the
proposed order.
(2) If in the opinion of the Minister or the Bank, as the
case may be, any delay would be detrimental to the interests
of the prescribed institution, its stakeholders or the public
generally, the order may be made first and the opportunity to
make representations against or otherwise in relation to the
order shall be given immediately after the order has been
made.
(3) The order of the Minister or the Bank may, in
consequence of such representations, either be confirmed,
with or without modification, or revoked under subsection
(4), subject to such conditions, if any, as the Bank, with the
concurrence of the Minister, or the Minister, on the
recommendation of the Bank, as the case may be, thinks fit
to impose.
(4) An order of the Minister or the Bank under this section
may at any time be revoked by an order similarly made by
the Bank, or by the Minister, as the case may be, and any
such order may contain all such direction of an incidental,
ancillary, or consequential nature, as may be deemed
necessary or expedient by the Bank or the Minister, as the
case may be.
liable to a fine not exceeding ten million ringgit and, in the
ten thousand ringgit for each day during which the offence
Appointment under 57. (1) A person appointed by the Bank under

section 54 subparagraph 54(2)(d)(ii), paragraph 54(2)(e), or paragraph
55(a) shall be appointed subject to such terms and
conditions, and for such period, as may be determined by the
Bank, and shall hold his appointment at the pleasure of the
Bank and shall not incur any obligation or liability solely by
reason of his holding such appointment.
(2) The appointment of a director under subparagraph 54
(2)(d)(ii) shall not affect any provision of the constituent
documents enabling the prescribed institution to have further
directors where the maximum number of directors allowed
under the constituent documents has not already been
reached or exceeded by the appointment.
(3) Where a receiver or manager has been appointed in
respect of a prescribed institution by the High Court under
paragraph 55(b), all proper costs, charges and expenses,

including the remuneration of such receiver or manager shall
be payable out of the assets of the prescribed institution in
priority to all other claims.
Removal from office 58. (1) Any officer or director removed from office in a
under section 54 prescribed institution under paragraph 54(2) (c) or
subparagraph 54(2) (d) (i) shall cease to hold the office from
which he is removed with effect from the date set out in the
order, and shall not hold any other office in that prescribed
institution or, in any manner, whether directly or indirectly,
be concerned with, or take part, or engage in, any activity,
affairs or business of, or in relation to, that prescribed
institution.
exceeding three million ringgit or to imprisonment for a term
not exceeding three years or to both and, in the case of a
(3) The removal of an officer or director under paragraph
54(2) (c) or subparagraph 54(2) (d) (i) shall be lawful and
valid notwithstanding anything contained in any contract of
service or other contract or agreement, whether express or
implied, whether individual or collective, and whether or not
made or provided for under any written law, and a person so
removed from office shall not be entitled to claim any
compensation for the loss or termination of office.
Assumption of control 59. (1) Where an order is made under paragraph 55(a), the
prescribed institution and its directors and officers shall
submit its property, business and affairs to the control of the
Bank or the person appointed by the Bank and shall provide
the Bank or such appointed person all such facilities as may
be required to carry on the business and affairs of the
exceeding five million ringgit and, in the case of a
continuing offence, to a fine not exceeding five thousand
ringgit for each day during which the offence continues after
conviction.
(3) The Bank, or the appointed person, as the case may be,
shall remain in control of the property, business and affairs
of the prescribed institution, and carry on its business and
affairs in its name and on its behalf, until such time as the
order is revoked under subsection 56(4).
(4) All the powers of the prescribed institution and its
directors under its constituent documents, or exercisable by
the prescribed institution or its directors under any written
law, regardless whether such powers are exercisable by
resolution, special resolution, or in any other manner shall be
vested in the Bank, or in the appointed person, as the case
may be, and any difficulty that arises may be resolved by the
Minister by a direction in writing.
(5) During the period that an order under paragraph 55(a)
is in force, no director of the prescribed institution shall,
either directly or indirectly, engage in any activity in relation
to the prescribed institution, except as may be required or
authorised by the Bank, or the appointed person, as the case
may be, and no remuneration shall accrue or be payable to
any director of the prescribed institution, except such as may
relate to any activity required or authorised by the Bank, or
the appointed person, as the case may be.
exceeding five million ringgit and, in the case of a
(7) For the avoidance of doubt, it is hereby declared that
an order under paragraph 55(a) shall not have the effect of
conferring on, or vesting in, the Bank, or the appointed
person, as the case may be, any title to, or any beneficial
interest in, any property of the prescribed institution.
Reduction of share 60. (1) Notwithstanding anything in any written law or the
capital and constituent documents of a prescribed institution, where the
cancellation of shares
paid-up capital of the prescribed institution is lost or
unrepresented by available assets, the Bank or the appointed
person, as the case may be, may apply to the High Court for
an order to reduce its share capital by cancelling any portion
of its paid-up capital which is lost or unrepresented by
available assets.
(2) Where the High Court makes an order under
subsection (1) to reduce the share capital of the prescribed
institution, the Court may, if, on the expiry of thirty days
from the date of any call made by the prescribed institution
on its members to pay on their respective shares, payment on
any such shares has not been made, order that such shares for
which payment has not been made be cancelled.
(3) Where the share capital of a prescribed institution is

reduced under subsection (1), or any of its shares is cancelled
under subsection (2), the Bank, or the appointed person, as
the case may be, may cause the constituent documents of the
prescribed institution to be altered accordingly.
Act 125.
(4) The powers conferred on the Bank and the appointed
person under this section shall be in addition to any powers
exercisable under subsection 64(1) of the Companies Act
1965, and where an application is made to the High Court
under subsection (1), the High Court may exercise any of the
powers conferred on it under section 64 of the Companies
Act 1965 in relation to an application for confirmation and
subsections 64(9) and 64(10) of that Act shall apply to the
application.
Extension of 61. Any reference in this Part to a prescribed institution

jurisdiction shall be read as including a reference to—
(a) its related corporation; and

(b) a person controlled by a director or directors of the
prescribed institution, or by persons acting in concert
with a director or directors of the prescribed
institution.
Moratorium 62. (1) Where the Bank or an appointed person has

assumed control of a prescribed institution, the Minister
may, on the recommendation of the Bank, if he considers it
to be in the interest of the stakeholders of the prescribed
institution or the public generally, prescribe for all or any of
the following:
(a) to prohibit the prescribed institution from carrying on
all of its business, or any part of it;
(b) to prohibit the prescribed institution from doing or
performing any act or function in connection with all
of its business or any part of it;
(c) to authorise the Bank, or the appointed person, as the
case may be, to apply to the High Court for an order
staying for a period not exceeding six months the
commencement or continuance of all or any actions
and proceedings of a civil nature by or against the
prescribed institution with respect to all or any of its
business;
(d) provide for all such matters of an incidental, ancillary
or consequential nature, or for which it may be
otherwise necessary or expedient to provide, to give
effect to the order, including provisions for the Bank

or the appointed person, as the case may be, to take
into custody or control the property, books, documents
or effects of the prescribed institution.
(2) Any prescribed institution that contravenes an order
made under subsection (1) commits an offence and shall on
conviction be liable to a fine not exceeding five million
fine not exceeding five thousand ringgit for each day during
(3) An order under subsection (1) shall not be made unless
the prescribed institution has been given a reasonable
opportunity of making representations against, or in relation
to, the proposed order, provided that where any delay would
be detrimental to the interests of the stakeholders, the order
may be made first, and the opportunity to make
representations shall be given immediately after the order
has been made, and in consequence of such representations,
the order may, on the recommendation of the Bank, either be
confirmed, or amended or be revoked under subsection (4),
by the Minister.
(4) An order made under subsection (1), or by virtue of
subsection (3), may at any time be revoked by the Minister
by an order made on the recommendation of the Bank, and
any such order may contain all such orders, directions or
provisions of an incidental, ancillary or consequential nature
as may be deemed necessary by the Minister.
PART VII
AUDITOR AND ACCOUNTS
Appointment of 63. (1) A prescribed institution shall appoint, for each

auditor financial year before a date to be specified by the Bank, an
auditor approved by the Bank.
(3) Where a prescribed institution fails to appoint an
auditor before the date specified in subsection (1), the Bank
may appoint an auditor for the prescribed institution and the
remuneration and expenses of the auditor as specified by the
Bank shall be paid by the prescribed institution.

(4) If the Bank considers it desirable that another auditor
should act with the auditor appointed under subsection (1) or
(3), the Bank may appoint another auditor, whose
remuneration and expenses, as specified by the Bank, shall
be paid by the prescribed institution.
Disqualification of 64. (1) No prescribed institution shall knowingly appoint

auditor as its auditor a person, and no person shall knowingly
consent to be appointed as an auditor of a prescribed
institution by the prescribed institution or by the Bank, if that
person—
(a) is not an approved company auditor;
(b) has any direct or indirect interest in that prescribed
institution, including an interest in its shares;
(c) is a director, controller or employee of that prescribed
institution;
(d) is indebted to that prescribed institution or to any
related corporation of that prescribed institution; or
(e) has been convicted of any offence under this Act or
the Companies Act 1965, or of any offence under any
other written law involving fraud or dishonesty.
(2) Any prescribed institution or person who contravenes
(3) Notwithstanding subsection (1), the Bank may approve
in writing a person who is disqualified by virtue of
subsection (1) to be appointed as an auditor if the Bank is
satisfied that it would not be contrary to the interest of the
(4) For the purposes of subsection (1), a person shall be
deemed to be an employee of a prescribed institution—
(a) if he is an employee of a related corporation of that
prescribed institution; or
(b) except where the Bank, in the circumstances of the
case, otherwise directs, if he has, within the preceding
period of twelve months, been an employee or
promoter of that prescribed institution or its related
corporation.
Act 125.
(5) Unless approved by the Bank under subsection (3), an
auditor for a prescribed institution who is disqualified under

subsection (1) or section 9 of the Companies Act 1965 shall
immediately cease to be the auditor of the prescribed
institution.
exceeding one million ringgit or to imprisonment for a term
not exceeding one year or both and, in the case of a
Restriction on audit 65. (1) A firm shall not knowingly consent to be

firm appointed, and shall not knowingly act, as auditor for a
prescribed institution unless—
(a) all the partners of the firm who are resident in
Malaysia are approved company auditors; and
(b) subject to subsection 64(3), no partner is disqualified
under paragraph 64(1) (b) to (e), from acting as the
auditor of the prescribed institution.
(2) Any firm that contravenes subsection (1) commits an
Consent to act as 66. No prescribed institution shall appoint a person as

auditor auditor under subsection 63(1) unless that person, prior to his
appointment, has consented in writing to act as auditor, and
consent in the case of a firm shall be under the hand of at
least one of its partners.
Appointment of audit 67. The appointment of a firm in the name of the firm as
firm auditor shall take effect and operate as an appointment of the
persons who are members of that firm at the time of the
appointment.
Auditor not deemed to 68. For the purposes of this Part, a person shall not be
be employee deemed to be an employee of a prescribed institution or its
related corporation by reason only of his having been
appointed an auditor of the prescribed institution or its
related corporation.
Auditor’s report 69. (1) An auditor of a prescribed institution shall submit a

report of the audit to the members of the prescribed
institution and the report—

(a) in the case of a prescribed institution which is a
company, shall be made in accordance with section
174 of the Companies Act 1965; and
(b) in the case of a prescribed institution, other than a
company, shall certify whether or not in the opinion of
the auditor—
(i) all the information and explanations which are in
the opinion of the auditor necessary for the
purposes of the audit have been obtained;
(ii) according to the best of the information and
explanations given to him, the profit and loss
account and balance sheet give a true and fair view
of the state of the affairs of the prescribed
institution for the financial year concerned;
(iii) books of account have been kept properly by the
prescribed institution so far as it appears from the
audit of the accounts; and
(iv) proper returns adequate for the purposes of the
audit have been received by him from offices of the
prescribed institution not visited.
Additional 70. (1) The Bank may require an auditor to—

requirement on auditor
(a) submit such additional information in relation to his

audit as the Bank may specify; or
(b) enlarge or extend the scope of his audit of the business
and affairs of the prescribed institution in such manner
or to such extent as the Bank may specify,
within such time as the Bank may specify and the prescribed
institution shall pay to the auditor such remuneration as the
Bank may specify.
(2) Any person who fails to comply with the requirements
of subsection (1) commits an offence and shall on conviction
be liable to a fine not exceeding five hundred thousand
fine not exceeding five hundred ringgit for each day during
Auditor to report 71. (1) An auditor shall immediately report to the Bank if,
certain matters to the in the course of his duties as an auditor of a prescribed
Bank
institution, he is satisfied that—
(a) there has been a contravention of or failure to comply
with any provision of this Act or any specification or
requirement made, or any order in writing, direction,
instruction, or notice given, or any limit, term,
condition or restriction imposed under this Act;
(b) an offence involving fraud or dishonesty under any
other written law has been committed by the
prescribed institution or any of its employees;
(c) losses have been incurred by the prescribed institution
which reduce its capital funds to an extent that the
prescribed institution is no longer able to comply with
the specifications of the Bank under subsection 38(1);
(d) any irregularity which jeopardises the interest of
stakeholders of the prescribed institution, or any other
serious irregularity, has occurred; or
(e) he is unable to confirm the claims of the stakeholders
of the prescribed institution.
(3) Notwithstanding any obligation as to secrecy or other
restriction on the disclosure of information imposed by any
written law or otherwise, the auditor of a prescribed
institution shall not be liable for breach of a duty of
confidentiality between the auditor and the prescribed
institution for reporting to the Bank in good faith in
compliance with subsection (1).
Information to auditor 72. (1) A prescribed institution, and its director, controller
or employee shall—
(a) furnish to its auditor any information within its
knowledge which the auditor may require; and
(b) ensure that information furnished to the auditor is not
false or misleading or incomplete in any material
particular.
Annual accounts 73. (1) A prescribed institution shall, within ninety days
after the end of each financial year, or such further period as
the Bank may approve, submit to the Bank, in respect of its
entire operations inside and outside Malaysia, a copy each in
print and in record stored or recorded by electronic means
and on electronic medium the following documents in such
form as the Bank may specify:
(a) duly audited revenue account together with supporting
statements;
(b) duly audited profit and loss account and balance sheet
together with supporting statements;
(c) a certificate by the auditor;
(d) a report by the board of directors on its operations in
the financial year; and
(e) a statutory declaration by one of its non-executive
directors and its chief executive officer in respect of
matters in paragraphs (a), (b) and (d).
(3) The revenue account, profit and loss account and
balance sheet laid before the general meeting of a prescribed
institution or submitted to the Registrar of Companies or the
Registrar-General of Co-operative Societies shall be in such
form as the Bank may specify and the amounts appearing in
the revenue account, profit and loss account and balance
sheet shall be the same as those reported under this section
and any qualification in respect of the returns under this
section shall also be incorporated in those accounts.
(4) A prescribed institution shall submit to the Bank
within sixty days from the date of its auditor’s report or such
further period as the Bank may approve—
(a) a copy of any report made by its auditor to its board of
directors following the audit of its annual accounts;
and
(b) a report on the action taken by its board of directors on
the auditor’s report.

Quarterly returns 74. (1) A prescribed institution shall submit to the Bank in
respect of its operations for each quarter of a calendar year
two copies each of the following in such form, and within
such time, as the Bank may specify:
(a) a revenue account together with supporting statements;
(b) a profit and loss account and balance sheet together
with supporting statements; and
(c) a certification of the documents mentioned in
paragraph (a) or (b) signed by the chief executive
officer and the employee responsible for its financial
management.
Accounting standards 75. (1) A prescribed institution shall maintain its accounts
in compliance with approved accounting standards.
Act 558.
(3) Approved accounting standards referred to in
subsection (1) shall have the same meaning assigned to it
under section 2 of the Financial Reporting Act 1997 [Act
558].
Annual accounts and 76. (1) The Bank may, by notice in writing, require a
quarterly returns to be prescribed institution to submit additional information or
rectified
explanation in relation to any document or information
submitted under section 73 or 74 within such time as the
Bank may specify.

(3) The Bank may require the additional information or
explanation to be certified by the prescribed institution’s
auditor.
(4) The Bank may, after considering the explanation
referred to in subsection (1), or if such explanation has not
been given by or on behalf of the prescribed institution
within the time specified—
(a) reject the document submitted under section 73 or 74;
or
(b) direct the prescribed institution to vary the document
or all other related documents within such time as is
specified in the direction.
(5) Where a direction is given by the Bank under
paragraph 4(b), the document to which it relates shall be
deemed not to have been lodged until it is re-submitted with
the variation required by the direction.
(6) The Bank, on the basis of information available to it or
on review of returns filed under section 74, may direct a
prescribed institution to obtain its confirmation of
compliance with section 73 before—
(a) laying its accounts before its general meeting; and
(b) publishing its accounts under section 78.
Submission of annual 77. (1) A prescribed institution shall, within fourteen days
accounts of the laying of its accounts at its annual general meeting, or
within such further period as the Bank may approve, submit
to the Bank, a copy each in print and in record stored or
recorded by an electronic means and on electronic medium,
of its accounts as laid before the annual general meeting
together with minutes of the meeting duly certified by its
company secretary.
Action in relation to 78. (1) A prescribed institution shall, within fourteen days
annual accounts of the laying of its accounts at its annual general meeting, or
within such further period as the Bank may approve—
(a) publish in not less than two daily newspapers
published in Malaysia and approved by the Bank, one
in the national language and another in English
language; and
(b) exhibit in a conspicuous position at each of its
branches in Malaysia,
a copy each of the reports of the board of directors, its
revenue account, profit and loss account and balance sheet as
laid before its general meeting and such other document as
the Bank may specify.
Admissibility of 79. In any proceedings, a certificate signed by an authorised

document officer of the Bank stating that a document is submitted by a
prescribed institution under section 73 or 74 or is a document
that accompanies a document so submitted, shall be
admissible in court as evidence of the fact so certified.
Liability where proper 80. (1) If accounting records necessary to exhibit and
accounting records not explain the transactions and true financial condition of a
kept
prescribed institution are not kept, a past and present
employee of the prescribed institution responsible for
keeping proper accounting records commits an offence
unless he 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.
Application to trust 81. For the avoidance of doubt, it is hereby declared that in
fund the preparation of documents in relation to a prescribed
institution’s operations under this Part, sections 69 to 80
shall apply with the necessary modifications to the operation
of each of the trust funds managed by the prescribed
institution under Part V.
PART VIII
EXAMINATION AND INVESTIGATION
Examination by the 82. The Bank may, from time to time, examine, with or
Bank without any prior notice, the books or other documents,
accounts and transactions of a prescribed institution and any
of its offices in or outside Malaysia.
Power of Minister to 83. The Minister may at any time direct the Bank to
direct examination examine the books or other documents, accounts and
transactions of any prescribed institution and any of its
offices in or outside Malaysia if he suspects that such
prescribed institution is carrying on its business in a manner
which is, or which is likely to be, detrimental to the interests
of its stakeholders or has insufficient assets to cover its
liabilities to the public, or is contravening any provision of
this Act or any other written law.
Duty to produce and 84. (1) A prescribed institution under examination and its
provide access to director, employee and agent—
document and
information
(a) shall afford the examiner access to its documents;

(b) shall provide the examiner facility to carry out the
examination; and
Act 519.
(c) shall give to the examiner, orally or in writing, such
information as he may require relating to the business
of that person, or his agent, within such time as may
be specified by the examiner.
(3) An examiner may take possession of a document or

cash to which he has access under subsection (1) where in
his opinion—
(a) it is necessary for the purpose of inspection, including
copying or making an extract;
(b) it may be interfered with, destroyed, concealed or
removed unless he takes possession of it; or
(c) it may be needed as evidence in any legal proceedings,
whether civil or criminal, which may be instituted
under this Act, the Central Bank of Malaysia Act 1958
or any other written law.
Examination of person 85. (1) The examiner may examine—

other than prescribed
institution
(a) a person who is, or was at any time, a director or

employee of a prescribed institution or of its agent;
(b) a person who is, or was at any time, a client of, or
otherwise having dealings with, the prescribed
institution; or
(c) a person whom he believes to be acquainted with the
facts and circumstances of the case, including the
auditor of a prescribed institution,
and that person shall give such document or information as
the examiner may require within such time as he may
specify.
not exceeding one year or to both and, in the case of a
(3) An auditor shall not be liable for breach of a contract
relating to, or duty of, confidentiality for giving a document
or information to the examiner.
Appearance before 86. (1) A person examined under section 82 or 83 or

examiner subsection 85(1) shall appear before the examiner at his
office at such time as he may specify.

Investigation by the 87. Where the Bank has reason to suspect the commission
Bank of an offence under this Act, the Bank shall cause an
investigation to be conducted.
Appointment of 88. (1) For the purposes of an investigation under this

investigating officer Part, the Bank may appoint its employee or any other person
to be an investigating officer.
(2) The Bank may instruct any person to take such steps as
may be necessary to facilitate an investigation under
subsection (1).
Act 519.
(3) An investigating officer who is not an employee of the
Bank shall be subject to, and enjoy such rights, protection
and indemnity as may be specified in this Act, the Central
Bank of Malaysia Act 1958 or other written law applicable
to an employee of the Bank.
(4) An investigating officer shall be subject to the
direction and control of the Bank which has authorised him
to act on its behalf.
Powers of an 89. (1) An investigating officer appointed under

investigating officer subsection 88(1) may, without a search warrant—
(a) enter any premises belonging to or in possession or

control of the prescribed institution or its holding
company, subsidiary, or employee;
[sic]
(b) search the premises for any property, record, report or
document and seize and detain my property, record,
report or document which is necessary in the
investigating officer’s opinion, for the purpose of an
investigation into an offence under this Act;
(c) inspect, make copies of, or take extracts from, any
record, report or document so seized and detained;
(d) take possession of, and remove from the premises, any
property, record, report or document so seized and
detained and detain it for such period as he deems
necessary;
(e) search any person who is in, or on such premises, if
the investigating officer has reason to suspect that that
person has on his person any property, report, record
or document, including personal document, necessary,

in the investigating officer’s opinion, for the purpose
of an investigation into an offence under this Act;
(f) break open, examine, and search, any article, container
or receptacle; or
(g) stop, detain or search any conveyance.
(2) An investigating officer may if it is necessary so to
do—
(a) break open any outer or inner door of any premises
and enter such premises;
(b) remove by force any obstruction to such entry, search,
seizure, detention or removal as he is empowered to
effect; or
(c) detain any person found on such premises until the
search is completed.
(3) An investigating officer may seize, take possession of,
and detain for such duration as he thinks necessary, any
property, record, report or document produced before him in
the course of his investigation or found on the person who is
being searched by him.
(4) An investigating officer, in the course of his
investigation
or search, shall—
(a) prepare and sign a list of every property, record, report
or document seized; and
(b) state in the list the location in which, or the person on
whom, the property, record, report or document is
found.
(5) The occupant of the premises entered in the course of
investigation, or any person on his behalf, shall be present
during the search, and a copy of the list prepared under
subsection (4) shall be delivered to such person at his
request.
Power to examine 90. (1) Notwithstanding any written law, or oath,

persons undertaking or requirement of secrecy or confidentiality to
the contrary, or an obligation under an agreement or
arrangement, express or implied, to the contrary, an
investigating officer conducting an investigation shall have
the power to administer an oath or affirmation to a person
who is being examined.
(2) An investigating officer may order, orally or in
writing, a person whom he believes to be acquainted with the

facts and circumstances of the case—
(a) to attend before him for examination;
(b) to produce before him any property, record, report or
document; or
(c) to furnish to him a statement in writing made on oath
or affirmation setting out such information as he may
require.
[sic]
an offence and shall on conviction be a liable to a fine not
(4) The person examined under subsection (2) shall be
legally bound to answer all questions relating to such case
put to him by the investigating officer, but he may refuse to
answer any question the answer of which would have a
tendency to expose him to a criminal charge or penalty or
forfeiture.
(5) A person making a statement under paragraph (2) (c)
shall be legally bound to state the truth, whether or not such
statement is made wholly or partly in answer to the questions
of the investigating officer.
(6) An investigating officer examining a person under
subsection (2) shall first inform that person of the provisions
of subsections (4) and (5).
(7) A statement made by any person under paragraph (2)
(c) shall, whenever possible, be reduced into writing and
signed by the person making it or affixed with his thumb
print—
(a) after it has been read to him in the language in which
he made it; and
(b) after he has been given an opportunity to make any
correction he may wish.
(8) Any person who—
(a) fails to appear before an investigating officer as
required under paragraph (2) (a);
(b) refuses to answer any question put to him by an
investigating officer under subsection (4); or
(c) furnishes to an investigating officer any information or
statement that is false or misleading in any material
particular,
[sic]
commits an offence and shall on conviction be a liable to a
fine not exceeding one million ringgit or to imprisonment for
a term not exceeding one year or to both and, in the case of a
thousand ringgit, for each day during which the offence
Admissibility of 91. The record of an examination under paragraph 90(2)

evidence (a), any property, record, report or document produced under
paragraph 90(2) (b) or any statement under paragraph 90(2)
(c) shall, notwithstanding any written law or rule of law to
the contrary, be admissible in evidence in any court
proceedings for, or in relation to, an offence under this Act,
or any other written law regardless whether such proceedings
are against the person examined, or who produced the
property, record, report or document, or who made the
written statement on oath or affirmation or against any other
person.
Search of person 92. (1) An investigating officer searching any person

under paragraph 89(1) (e) may detain the person for such
period as may be necessary to have the search carried out,
which shall not in any case exceed twenty-four hours without
the authorisation of a magistrate, and may, if necessary,
remove the person in custody to another place to facilitate
such search.
(2) No person shall be searched under this Part except by
an investigating officer of the same gender and such search
shall be carried out with strict regard to decency.
Obstruction to exercise 93. (1) Any person who—

of powers by an
investigating officer
(a) refuses any investigating officer access to any

premises or fails to submit to the search of his person;
(b) assaults, obstructs, hinders or delays an investigating
officer in effecting any entrance which he is entitled to
effect;
(c) fails to comply with any lawful demands of any
investigating officer in the execution of his duties
under this Part;
(d) refuses to give to an investigating officer any property,
document or information which may reasonably be
required of him and which he has in his power to give;

(e) fails to produce to, or conceal or attempt to conceal
from, an investigating officer, any property, record,
report or document, which the investigating officer
requires;
(f) rescues or attempts to rescue any thing which has been
duly seized;
(g) furnishes to an investigating officer as true any
information which he knows or has reason to believe
to be false; or
(h) before or after any search or seizure, breaks or
otherwise destroys any thing to prevent its seizure, or
the securing of the property, report, record or
document,
for a term not exceeding three years or to both and, in the
Requirement to 94. (1) Where an investigating officer finds, seizes,

provide translation detains, or takes possession of any property, record, report or
document which, wholly or partly, is in a language other
than the national language or English language, or is in any
sign or code, the investigating officer may, orally or in
writing, require the person who had the possession, custody
or control of the property, record, report or document, to
furnish to him a translation in the national language or
English language within such period as he may specify.
(2) No person shall knowingly furnish a translation under
subsection (1) which is not an accurate, faithful and true
translation of the document.
(3) Any person who fails to comply with the requirement
in subsection (1) or contravenes subsection (2) commits an
exceeding five hundred thousand ringgit or to imprisonment
for a term not exceeding six months or to both and, in the
five hundred ringgit for each day during which the offence
(4) Where the person required to furnish a translation
under subsection (1) is not the person who is suspected to
have committed the offence, the Bank may pay him
reasonable fees and reimburse him for such reasonable
expenses as he may have incurred in furnishing the

translation.
Delivery of property, 95. (1) An investigating officer may, by a notice in

record, report or writing, require any person to deliver to him any property,
document
record, report or document which he has reason to suspect
has been used in the commission of an offence under this Act
or is able to assist in the investigation of an offence under
this Act that is in the possession or custody of, or under the
control of, that person or within the power of that person to
furnish.
(2) An investigating officer may grant permission to any
person to inspect the property, record, report or document he
had detained and taken possession of under subsection (1) if
the person is entitled to inspect such property, record, report
or document under this Act.
(3) A person who—
(a) fails to deliver any property, record, report or
document that is required by an investigating officer;
or
(b) obstructs or hinders an investigating officer while
exercising any of his powers under subsection (1),
commits an offence and shall on conviction shall be liable to
a fine not exceeding one million ringgit or to imprisonment
for a term not exceeding one year or to both and, in the case
of a continuing offence, to a further fine not exceeding one
Seizing of property, 96. An investigating officer may seize, take possession of,
record, report or and retain for such duration as he deems necessary any
document
property, record, report or document produced before him in
the course of an examination under paragraph 90(2) (a) or
(b), or search of a person under subsection 92(1), for
ascertaining whether anything relevant to the investigation is
concealed, or is otherwise, upon such person.
Release of property, 97. (1) An investigating officer shall, unless otherwise

record, report or ordered by any court—
document seized
(a) on the close of an investigation or any proceedings

arising from the investigation; or
(b) with the prior written consent of the Bank or any
investigating officer superior to him in rank, at any
time before the close of investigation,

release any property, record, report or other document
seized, detained or removed by him or any other
investigating officer, to such person as he determines to be
lawfully entitled to the property, record, report or document
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.
(2) The investigating officer effecting the release under
subsection (1) shall record in writing the circumstances of,
and the reason for such release.
Act 593.
(3) Where the investigating officer is unable to determine
the person who is lawfully entitled to the property, record,
report or document or where there is more than one claimant
to such property, record, report or document or where the
investigating officer is unable to locate the person under
subsection (1) who is lawfully entitled to the property,
record, report or document, the investigating officer shall
report the matter to a magistrate who shall then deal with the
property, record, report or document as provided for in
paragraphs 413(ii), (iii) and (iv) and sections 414, 415 and
416 of the Criminal Procedure Code [Act 593].
Investigating officer 98. An investigating officer appointed under section 88 may

may arrest without arrest without warrant a person whom he reasonably suspects
warrant
to have committed or to be committing any offence under
this Act.
Arrested person to be 99. An investigating officer who makes an arrest under

made over to police section 98 shall make over the arrested person to a police
officer
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.
Assistance to police or 100. Notwithstanding any other written law, the Bank, on
other public officer its own initiative, or at the request of a police officer or a
public officer in the course of his investigation of an offence
under any written law, may allow that officer access to—
(a) a copy of a document seized, detained or taken
possession of;
(b) a record of examination; or
(c) a written statement on oath or affirmation.
Investigating officer 101. An investigating officer shall be deemed to be a public Act 574.
deemed to be public servant for the purposes of the Penal Code [Act 574], and to
servant and public
officer be a public officer for the purposes of the Criminal
Procedure Code.
Report to Minister 102. (1) The Minister charged with the responsibility for a
development financial institution or with the responsibility
for the subject or matter relating to any of the businesses or
activities carried on by a development financial institution
may submit a report to the Minister with a recommendation
to examine into the affairs of the development financial
institution under sections 84 to 86.
(2) The State Authority, in the case of—
(a) a development financial institution which is a statutory
body established by State law or by any subsidiary
legislation made under any State law; or
(b) any other development financial institution which falls
under the responsibility, powers, control or jurisdiction
of the State Authority,
may submit a report to the Minister with a recommendation
to examine the business and affairs of the development
financial institution under sections 84 to 86.
Powers of Minister 103. (1) Where the Minister receives a report and
recommendation under section 102, he may decide, on the
recommendation of the Bank—
(a) not to take any action in the matter, and inform the
Minister referred to in subsection 102(1) or the State
Authority referred to in subsection 102(2) which
submitted the report accordingly; or
(b) that it is necessary to examine into the business and
affairs of the development financial institution for the
protection of the interests of its stakeholders.
(2) For the avoidance of doubt, it is hereby declared that—
(a) before the Minister makes a decision under paragraph
(1)(b); or
(b) before the Minister referred to in subsection 102(1) or
the State Authority referred to in subsection 102(2),
submits the report and recommendation under section
102 to the Minister,
it shall not be necessary for the Minister, or the Minister
referred to in subsection 102(1) or the State Authority
referred to in subsection 102(2), to give an opportunity to the
development financial institution to make any representation

to the Minister, or to the Minister referred to in paragraph
102(1), or to the State Authority referred to in subsection 102
(2), as the case may be.
Application of sections 104. (1) Where the Minister decides that it is necessary to
84 to 86 examine the business and affairs of a development financial
institution under paragraph 103(1)(b), the provisions of
sections 84 to 86 shall apply to the development financial
institution as if it was prescribed in such manner, to such
extent, and with all such amendments as the Minister may,
on the recommendation of the Bank, prescribe.
(2) An order of the Minister under subsection (1) shall be
deemed to be an integral part of this Act and be read as one
with this Act, and shall have full force and effect
notwithstanding anything inconsistent with, or contrary to
this Act.
Application of sections 105. Where any development financial institution for which
89 to 101 an order is made under subsection 104(1) contravenes
subsection 84(1), 85(1) or 86(1), the provisions of sections
89 to 101 shall apply to that development financial
institution.
Provisions of this Part 106. The provisions of this Part shall have full force and
to prevail effect notwithstanding anything contained in any other
written law.
PART IX
MISCELLANEOUS
General offence 107. Any person who contravenes or fails to comply with—
(a) any provision of this Act or regulations made under it;

or
(b) any specification or requirement made, or any order in
writing, direction, instruction or notice given, or any
limit, term, condition or restriction imposed, in the
exercise of any power conferred under or pursuant to
any provision of this Act or regulations made under it,
commits an offence and shall on conviction, if no penalty is
expressly provided for the offence under this Act or the
regulations, be liable to a fine not exceeding five hundred

thousand ringgit or to imprisonment for a term of not
exceeding six months or to both.
Falsification, 108. A person, with intent to deceive, in respect of a

concealment and document to be produced or submitted under any provision
destruction of
document of this Act, who makes or causes to be made a false entry,
omits to make, or causes to be omitted, any entry, or alters,
abstracts, conceals or destroys, or causes to be altered,
abstracted, concealed or destroyed, any entry, forges a
document, or makes use of or hold in his possession a false
document, purporting to be a valid document, alters any
entry made in any document, or issues or uses a document
which is false or incorrect, wholly or partially, or misleading
fine not exceeding one million ringgit or to imprisonment for
a term not exceeding one year or to both and, in the case of a
Offence by body 109. (1) Where an offence is committed by a body

corporate corporate or an association of persons, a person—
(a) who is its director, controller, officer, or partner; 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
association of persons has not been convicted of the offence.
(3) Subsection (1) shall not affect the criminal liability of
the body corporate or association of persons for the offence
referred to in that subsection.
(4) Any person who would have committed an offence if
any act had been done or omitted to be done by him
personally commits that offence and shall on conviction be
liable to the same penalty if such act had been done or
omitted to be done by his agent or officer in the course of
that agent’s business or in the course of that officer’s
employment, as the case may be, unless he proves that the
offence was committed without his knowledge or consent

and that he took all reasonable precautions to prevent the
doing of, or omission to do, such act.
Offence by an 110. Where a person is liable under this Act to a penalty for
individual any act, omission, neglect or default, he 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.
Joinder of offences 111. Notwithstanding anything contained in any other

written law, where a person is accused of more than one
offence under this Act, he may be charged with and tried at
one trial for any number of the offences committed within
any length of time.
Seizable offence 112. Every offence punishable under this Act shall be a
seizable offence.
Power of Governor to 113. (1) The Governor may, with the consent of the Public
compound offences Prosecutor, offer in writing to compound any offence under
this Act, or under regulations made under this Act, by
accepting from the person reasonably suspected of having
committed the offence such amount not exceeding fifty per
cent of the amount of the maximum fine for that offence,
including the daily fine, if any, in the case of a continuing
offence, 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) Any money paid to the Governor pursuant to
subsection (1) shall be paid into and shall form part of the
Federal Consolidated Fund.
(3) 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 where the amount
specified in the offer is not paid within the time specified in
the offer, or such extended of time as the Bank may grant,
prosecution for the offence may be instituted at any time

after that against the person to whom the offer was made.
(4) 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.
Attempts, 114. (1) Any person who—

preparations,
abetments and
conspiracies
punishable as offences
(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 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.
Annual report 115. The Bank shall include in its annual accounts and
annual report made under subsection 48(1) of the Central
Bank of Malaysia Act 1958 an annual report on the working
of this Act during the preceding calendar year before the end
of April each year and the report shall include a summary of
documents lodged with it.
Submission of 116. (1) A prescribed institution and a development

information and financial institution for which an order is made under
statistics
subsection 104(1) shall submit to the Bank, or such person as
the Bank may specify, such document or information as it
may require by notice in writing within such time as it may
specify and the prescribed institution or the development
financial institution, as the case may be, shall not submit any
document which it knows, or has reason to believe, to be
false or misleading.
(2) Any prescribed institution or any development
institution that contravenes subsection (1) commits an

exceeding one million ringgit and, in the case of a continuing
offence, to a further fine not exceeding one thousand ringgit
conviction.
Act 372.
(3) A prescribed institution which is a scheduled
institution under the Banking and Financial Institutions Act
1989 [Act 372] shall submit under subsection (1) any
document, statement or information required to be submitted
under subsection 21(1) of that Act, and the prescribed
institution shall be deemed to have complied with that
subsection.
(4) The Bank may require the document or information
submitted under subsection (1) to be duly certified by the
auditor of the prescribed institution or the development
financial institution, as the case may be.
Indemnity 117. No action, suit, prosecution or other proceedings shall

lie or be brought, instituted or maintained in any court or
before any authority against the Minister, the Bank, its
director, officer or employee, or any person acting on its
behalf, either personally or in his official capacity, for, or on
account of, or in respect of an 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 of or in
execution of, or intended pursuance of or execution of, this
Act or any order in writing, direction, instruction or other
thing issued under this Act if such act or statement was done
or made, or was omitted to be done or made, in good faith.
Prohibition on receipt 118. (1) No director, officer or agent of a prescribed

of gifts, commission, institution, or any other person being a person receiving any
etc.
payment or remuneration in any capacity, professional or
otherwise, from such prescribed institution, shall, directly or
indirectly, ask for or receive, or consent or agree to receive,
any gift, commission, emolument, gratuity, money, property,
token or thing of value exceeding one hundred ringgit or any
service, facility or other intangible benefit, whether for his
own personal benefit or advantage or for the benefit or
advantage of any other person, from any person other than
from the prescribed institution, for procuring or
endeavouring to procure for any person—
(a) any credit facility from that prescribed institution; or
(b) any other thing relating to the business or affairs of
that prescribed institution.
(2) The provisions of subsection (1) shall not in any

manner derogate from, and shall be without prejudice to, any
other written law relating to corruption or illegal
gratification.
Secrecy 119. (1) Except for the purposes of this Act, nothing in
this Act shall authorise the Bank or the Minister to direct the
Bank to inquire specifically into the affairs of any individual
client of a prescribed institution or a development financial
institution.
(2) No director or officer of any prescribed institution or
of any external bureau established, or any agent appointed,
by the prescribed institution to undertake any part of its
business, whether during or after his tenure of office, or
during or after his employment, and no person who for any
reason has by any means access to any record, book, register,
correspondence, or other document, or material, relating to
the affairs or, in particular, the account of any particular
customer of the prescribed institution, shall give, produce,
divulge, reveal, publish or otherwise disclose, to any person,
or make a record for any person, of any information or
document relating to the affairs or account of such customer.
(3) This section shall not apply to information which at the
time of disclosure is, or has already been made, lawfully
available to the public from any source or to information
which is in the form of a summary or collection of
information where information relating to a particular
prescribed institution or a development financial institution
or its stakeholders is not explicitly stated.
(4) No person who has information which to his
knowledge has been disclosed in contravention of subsection
(1) shall disclose the information to another person.
Permitted disclosure 120. (1) Section 119 shall not apply to the disclosure of
information or document—
(a) to the Minister, the Bank, its director or employee, a
person appointed under subsection 4(3) or an
appointed person, where the disclosure is in the course
of performance of functions;
(b) to a person rendering service to the Bank in relation to
a matter requiring professional knowledge;
(c) which the customer, or his personal representative, has
given permission in writing to disclose;
(d) in a case where the customer is declared bankrupt, or,
if the customer is a corporation, the corporation is

being or has been wound up, in Malaysia or in any
country, territory or place outside Malaysia;
(e) where the information is required by a party to a bona
fide commercial transaction, or to a prospective bona
fide commercial transaction, to which the customer is
also a party, to assess the creditworthiness of the
customer relating to such transaction, provided that the
information required is of a general nature and does
not enable the details of the customer’s account or
affairs to be ascertained;
(f) for the purposes of any criminal proceedings or in
respect of any civil proceedings—
(i) between a prescribed institution and its customer or
his guarantor relating to the customer’s transaction
with the prescribed institution; or
(ii) between the prescribed institution and two or more
parties making adverse claims to money in a
customer’s account where the prescribed institution
seeks relief by way of interpleader;
(g) where the prescribed institution has been served a
garnishee order attaching money in the account of the
customer;
(h) to an external bureau established, or to an agent
appointed, by the prescribed institution with the prior
written consent of the Bank;
(i) where such disclosure is required or authorised under
any other provision of this Act;
(j) where such disclosure is authorised under any Federal
law to be made to a police officer investigating into
any offence under such law and such disclosure to the
police officer being, in any case, limited to the
accounts and affairs of the person suspected of the
offence; or
(k) where such disclosure is authorised in writing by the
Bank.
(2) In any civil proceedings under subsection (1) (d) or (f)
where any information or document is likely to be disclosed
in relation to a customer’s account, such proceedings may, if
the court, of its own motion, or on the application of a party
to the proceedings, so orders, be held in camera and, in such
case, the information or document shall be secret as between
the court and the parties thereto, and no such party shall
disclose such information or document to any other person.
(3) Unless the court otherwise orders, no person shall

publish the name, address or photograph of any parties to
such civil proceedings as are referred to in subsection (2), or
any information likely to lead to the identification of the
parties thereto, either during the currency of the proceedings
or at any time after they have been concluded.
Decision of Minister to 121. Except as otherwise provided in this Act, any decision
be final made by the Minister under this Act, whether an original
decision by him or a decision on appeal to him from a
decision of the Bank, shall be final.
Exemptions 122. The Minister may, upon the recommendation of the

Bank, if he considers it consistent with the purposes of this
Act or in the interest of the public, by order published in the
Gazette, exempt any prescribed institution from any of the
provisions of this Act for such duration and subject to such
condition as the Minister may specify.
Regulations 123. (1) The Minister may, on the recommendation of the

Bank, make such regulations as are necessary or expedient to
give full effect to or for carrying out the provisions of this
Act.
(2) Without prejudice to the generality of subsection (1),
regulations may be made—
(a) to provide that any act or omission in contravention of
any provision of such regulations shall be an offence;
(b) to provide for the imposition of penalties for such
offences which shall not exceed a fine of one million
ringgit or imprisonment for a term not exceeding one
year or both; and
(c) to provide for the imposition of an additional penalty
for a continuing offence which shall not exceed one
thousand ringgit for each day that the offence
Amendment of 124. The Minister may, by order published in the Gazette,

Schedule amend the Schedule.
Application of other 125. (1) Where there is a conflict or inconsistency

laws between the provisions of this Act and that of the—
Act 372.
(a) Banking and Financial Institutions Act 1989;
Act 202.
(b) Bank Kerjasama Rakyat Malaysia Berhad (Special
Provisions) Act 1978 [Act 202];
Act 125.
(c) Companies Act 1965;
Act 502.
(d) Co-operatives Societies Act 1993; or
(e) the constituent documents of a prescribed institution,
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 prescribed
institution, 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.
(3) References to “this Act” in this section shall not
include any regulations, order or other subsidiary legislation
made under this Act.
Power to issue 126. The Bank may issue such guidelines, circulars or
guidelines, etc. notices in respect of this Act relating to the conduct of the
business and affairs of a prescribed institution as are
necessary or expedient to give full effect to or for carrying
out the provisions of this Act.
Application of 127. Nothing contained in this Act shall in any manner

Exchange Control Act affect, or derogate from, the provisions of the Exchange
1953
Act 17. Control Act 1953 [Act 17], and in the application of any
provision of this Act to any person, the provision shall apply
subject to the provisions of that Act and, accordingly, in the
event of any conflict or inconsistency between any provision
of this Act and that Act, the provisions of that Act shall
prevail.
Contravention not to 128. (1) Except as otherwise provided in this Act, or in

affect contract, pursuance of any provision of this Act, no contract,
agreement or
arrangement agreement or arrangement entered into in contravention of
any provision of this Act shall be void solely by reason of
such contravention.
(2) Subsection (1) shall not affect any criminal liability of
any person for an offence under this Act in respect of such
contravention.
Islamic banking or 129. (1) Nothing in this Act or the Islamic Banking Act
financial business 1983 [Act 276] shall prohibit or restrict any prescribed
Act 276.
institution from carrying on Islamic banking business or

Islamic financial business in addition to its existing business,
provided that the prescribed institution shall obtain the prior
written approval of the Bank before it carries on Islamic
banking business or any Islamic financial business.
(2) For the avoidance of doubt, it is declared that a
prescribed institution shall, in respect of the Islamic banking
business or Islamic financial business carried on by it, be
subject to the provisions of this Act.
(3) The Bank may, in consultation with the Syariah
Advisory Council established under the Banking and
Financial Institutions Act 1989, issue directions to a
prescribed institution on matters relating to Islamic banking
business or any other Islamic financial business and the
prescribed institution shall comply with the written
directions.
(4) The prescribed institution may, in carrying on Islamic
banking business or Islamic financial business, seek the
advice of the Syariah Advisory Council on the operations of
such business in order to ensure that it does not involve any
element which is not approved by the religion of Islam.
(5) For the purposes of this section—
Act 276.
(a) “Islamic banking business” has the same meaning
assigned to it by the Islamic Banking Act 1983; and
(b) “Islamic financial business” means any Islamic
financial business, the aims and operations of which
do not involve any element which is not approved by
the religion of Islam.
Savings 130. (1) Any requirement for the approval of the Minister
or the Bank, as the case may be, under this Act shall be
deemed to have been given in accordance with the provisions
of this Act and shall continue to remain in full force and
effect in relation to the persons to whom it applies until
modified, rescinded or revoked in accordance with the
provisions of this Act.
(2) The chief executive officer or director of a prescribed
institution shall, on the commencement date, be deemed to
have complied with the Minimum Criteria for Appointment
in the Schedule and notwithstanding any disqualification
under section 7, shall continue to remain in office until the
expiry of his term of appointment.
SCHEDULE
[Subsection 6(2)]
Minimum Criteria For Appointment

Chief Executive Officer and director to be “fit and
proper” persons
1. (1) Pursuant to subsection 6(2) of the Act, a prescribed
institution, in determining whether a person is a “fit and
proper” person to hold or is to hold the position of a Chief
Executive Officer or director, shall have regard to—
(a) his probity, his competence and soundness of
judgement for fulfilling the responsibilities of that
position;
(b) the diligence with which he is fulfilling or likely to
fulfil those responsibilities; and
(c) whether the interests of the stakeholders and the
general public are, or are likely to be, in any way
threatened by that position.
(2) Without prejudice to the generality of the foregoing
provisions, regard may be had to the previous business
conduct and activities of the person in question and, in
particular, to any evidence that he—
(a) has been compounded or convicted or as chief
executive officer or director, has caused to be
compounded or convicted, an offence which is
punishable with—
(i) imprisonment for one year or more, whether by
itself, or in lieu, or in addition to, a fine; or
(ii) a fine of twenty thousand ringgit or more;
(b) contravened any provision made by or under any
written law appearing to the Bank to be designed for
protecting members of the public against financial loss
due to dishonesty, incompetence or malpractice by
persons concerned in the provision of banking,
insurance, investment or other financial services or the
management of companies or against financial loss
due to the conduct of discharged or undischarged
bankrupts;
(c) engaged in or been associated with, any business
practices, or otherwise conducted himself in such a
way as to cast doubt on his competence and soundness
of judgement.
Additional criteria for a Chief Executive Officer
2. A person who is, or is to be, a Chief Executive Officer of
a prescribed institution—
(a) shall have the educational qualifications and
experience which will enable him to satisfactorily
discharge his responsibilities;
(b) shall not have held a position of responsibility in the
management of a company which has been convicted
of an offence under any written law during his tenure
of office unless he proves that such offence was
committed without his knowledge or consent and he
was not in a position to prevent the offence;
(c) shall not have held a position of responsibility in the
management of any company which during his tenure
of office—
(i) has defaulted in payment of any judgement sum
against it;
(ii) has suspended payment or has compounded with its
creditors; or
(iii) has had a receiver or manager appointed in respect
of its property;
(d) shall be available for full time employment, and shall
not carry on any other business or vocation, except as
a non-executive director or shareholder of another
company;
(e) shall not be engaged actively in any political activity;
(f) shall not have caused a conflict of interest situation
with that of the prescribed institution, either by
himself or through his relative;
(g) shall not have acted in a manner which may cast doubt
on his fitness to hold the position of chief executive
officer, or acted in blatant disregard for proper
professional conduct, especially in dealings with the
stakeholders and the general public; and
(h) shall not have been a party to any action or decision of
the management of a prescribed institution which is
detrimental to the interests of the prescribed
institution, its stakeholders, and the general public.
Additional criteria for a director
3. A person who is, or is to be, a director of a prescribed
institution—
(a) shall have the educational qualifications and
experience which will enable him to carry out and
perform his duties;
(b) shall not have acted in a manner which may cast doubt
on his fitness to hold the position of a director; and
PU(A) 285/2007.
(c) (Deleted).
(d) shall not have been a party to any action or decision of
the board or management of the prescribed institution
which is detrimental to its interests.
Other criteria as the Bank may prescribe
4. The Bank may, with the concurrence of the Minister,
prescribe such other additional criteria as in its opinion
expedient for the purpose of protecting the interests of the
prescribed institution, its stakeholders and the general public.
Discretion of the Bank
5. The Bank shall have full discretion to determine whether
a person has complied with this Schedule.
As at 30 October 2007 and incorprated with the latest amendment by PU(A) 285/2007

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Act 618 Page 1 of 77

An Act to make provisions for the regulation and supervision

MANAGEMENT, OWNERSHIP AND CONTROL

OBLIGATIONS AND SOURCING OF FUNDS

36. Restrictions on payment of dividend

DEALINGS WITH GOVERNMENT FUNDS

AUDITOR AND ACCOUNTS

EXAMINATION AND INVESTIGATION

91. Admissibility of evidence

120. Permitted disclosure

(2) This Act comes into operation on a date to be

Application 2. (1) This Act shall apply to such development financial

Interpretation 3. (1) In this Act, unless the context otherwise requires—

“child” includes an illegitimate child, a step-child and a

class of persons in or outside Malaysia;

disposing of immovable property where the person

employees and includes its Chief Executive Officer;

“arrangement” means an arrangement whether formal or

“share”, in relation to a corporation, means an issued share

(d) a partnership is established when it is formed;

MANAGEMENT, OWNERSHIP AND CONTROL

Board of directors 5. The board of directors of a prescribed institution shall be

Appointment of Chief 6. (1) A prescribed institution shall appoint a Chief

Chief Executive Officer or director, seek the Bank’s

Disqualification of 7. (1) No prescribed institution shall appoint a person and

(2) Any prescribed institution or person who contravenes

Effect of 8. (1) Where a person becomes disqualified by virtue of

Exemption from 9. (1) A person who is disqualified by virtue of paragraph

Disclosure of interest 11. (1) A director who has an interest, directly or

director shall, in relation to that matter—

Report of acquisition 13. (1) Where it comes to the knowledge of a prescribed

fine not exceeding five million ringgit.

(a) subject to subsection 12(1), take control of a

Transfer of business 15. (1) Unless the Minister otherwise approves, a

Application to High 16. (1) A prescribed institution transferring its business

(d) for any existing agreement to which the prescribed

advances by, or future liabilities to, that prescribed

(5) The prescribed institution shall lodge, within thirty

land as provided under the Land Ordinance of Sabah

extended time granted by the Bank, the application shall,

Defence relating to 20. It shall be a defence to a charge for an offence relating

unissued shares, prohibiting the transfer of, or the

Preliminary order by 22. (1) A preliminary order under section 21 shall be

(a) the defaulting person;

Confirmation of 23. (1) The Bank may, after considering the

the Bank under subsection 22(1) or an order of the Bank

Control of 25. (1) Unless the Bank otherwise approves in writing, no

(2) Any prescribed institution that contravenes subsection

Direction in respect of 26. (1) Notwithstanding any approval under subsection 25

(c) wind up any of its subsidiaries.

fine not exceeding five million ringgit.

Restriction of credit to 29. (1) Subject to subsection 28(1), no prescribed

fine not exceeding five million ringgit.

creditworthiness which is not less than that normally

Disclosure of 31. (1) Every director of a prescribed institution who has

it is not served at a meeting of directors, at the next

Control of credit limit 32. (1) A director or officer of a prescribed institution

imposed, the directions given, and the agreements

Investment of assets 33. (1) Subject to subsection (2), a prescribed institution

OBLIGATIONS AND SOURCING OF FUNDS

approved by the Minister charged with the responsibility for

(3) For the purpose of subsection (1), the minimum, or