(1) No Islamic bank shall-
(a) pay any dividend on its shares until all its Restrictions on payment not represented by tangible assets) has been
(b) the seamity ofits ovan or er,dir facility against
[Pr. V, S. 24-25) Act 125. Act 102. Aci6. sups. ÁAC34 Prohibition of loans, etc., to directors, officers and employees. unsecured loans or
(c) grant unsecured advances' in excess of, in the unsecured credit facilities aggregate and outstanding at any one time, ten thousand ringgit to any corporation which is deemed to be related to the bank as described in section 6 of the Companies Act 1965, other than an Islamic bank, a licensed bank under the Banking Act 1973, a finance company licensed under the Finance Companies Act 1969, or any other financial institution approved by the Central Bank.
(2) For the purpose of this section "unsecured advances", "unsecured loans" and "unsecured credit facilities" mean respectively advances, loans and credit facilities made without security, or, in respect ot any advance, loan and credit facility made with security, any portion thereof which at any time exceeds the market value of the assets constituting the security or, where the Central Bank is satisfied that there is no established market value, the value made on the basis of a valuation approved by the Central Bank.
(1)/Exeept as-provided-under paragraph (c)-of subsection -(1)-of section 24-and-subsection (2) of this section, no Islamic bank shall grant advances, loans or credit facilities to-
(a) any of its directors, officers or employees or other persons being persons receiving remuneration from it (other than accountants, advocates and solicitors, architects, estate agents, doctors and any other persons receiving remuneration from it in respect of their professional services);
(b) any firm in which any of its directors, officers or employees is interested as partner, manager, agent or guarantor;
(c) any corporation in which any of its officers or material interest as determined by the Central Bank;
1 loans or of, in the one time, tion which 3 described 965, other ank under company ›anies Act institution 'unsecured ired credit and credit ect of any h security, xceeds the ecurity or. ere is ne n the basis
(e)-of-sub- ()) of thin ral Bank with ded for under Iployees or ig remuneants, advoate agents, ving remu- ›rofessional ars, officers r, manager, i officers or , agent o • shares of ees has any the Centrãl IPt. V, S. 25]
(d) any corporation in which any of its directors (not being an executive director, he being within the ambit of the provisions of paragraph (c) pursuant to subsection (3)) is a member, director, manager, agent or guarantor, or any corporation in the shares of which any such director of the Islamic bank has any interest whatsoever directly or indirectly; or
(e) any individual for whom any of its directors, officers or employees is a guarantor.
(2) An Islamic bank may grant to any of its officers or employees loans which are provided under its appropriate soheme of service and, where the bank is satisfied that special or compassionate circumstances exist, a loan not exceeding at any one time six months' remuneration of that officer or employee on such terms and conditions as the bank thinks fit.
(3) The provisions of paragraph (c) of subsection (1) and of subsection (2) shall also apply to the executive directors of Islamic banks.
(4) The provisions of paragraph (d) of subsection (1) shall not apply to the granting of advances, loans or credit facilities by an Islamic bank to-
(a) a corporation which is listed on a recognized stock exchange and in the shares of which no director of that Islamic bank has, directly or indirectly, any material interest as determined by the Central Bank; and
(b) a public company in which a director of that Islamic bank has no interest in his personal capacity, as determined by the Central Bank : Provided that for the purposes of this subsection the director concerned is not an executive director of that Islamic bank.
(5) For the purposes of this section, "director", "officer" or "employee" includes a spouse, parent or child of a director, an officer or employee.
on grant of loan, advance or credit facility under section 25 (4). [Pt. V, S. 26-27]
No Islamic bank shall grant any advance, loan or credit facility under the exemption referred to in subsection (4) of section 25 unless the following conditions are satisfied:
(a) that the advance, loan or credit facility meets the standards of credit-worthiness required of other appllcant borrowers;
(b) that the terms of the advance, loan or credit facility are not less favourable to the bank than those offered to others;
(c) that the grant of the advance, loan or credit facility will serve the best interest of the bank; and
(d) that the advance, loan or credit facility has been approved by the votes of not less than twothirds of all the other directors of the bank at a duly constituted meeting of the full board of directors and the approval has been recorded in the minutes of that meeting. of credit to single customer.
(1) No Islamic bank shall grant any customer any credit facilities or incur any other liabilities on his behalf to an aggregate amount in excess of such percentage as may be determined from time to time by the Central Bank in relation to such bank's capital funds unimpaired by losses or otherwise.
(2) Subsection (1) shall not apply to-
(a) transactions with other Islamic banks, with Act 102. licensed banks under the Banking Act 1973 and with finance companies licensed under the Act 6. Finance Companies Act 1969;
(b) any facilities granted in respect ot imports into or exports from.Malaysia or trade within Malaysia against letters of credit or bills of exchange; or
(c) any other transactions which the Central Bank may approve from time to time.
(3) For the purposes of subsection (1), the expression "capital funds" shall have the meaning assigned to it by subsection (2) of section 5. bld.AAL3H→2TA.--
ace, loan or 1 to in sub- 3 conditions cility meets required of ın or credit e bank than ın or credit of the bank; Lity has been s than twnemployee of any advance, i the limnit of 1y directions section, the ce direct an information edure for the credit facility, athority of a of the Islamic from time to :r shall have ank to amend = Islamic bank , loan or credit if authority in enes any of the any directions ste foa one noe ringgit or to exceeding three imprisonment.l IPt. V, S. 28]
(1) Every director of an Islamic bank who is in any Disclosure manner whatsoever, whether directly or indirectly, by direcsos. interested in an advance, loan or credit facility or proposed advance, loan or credit facility from that Islamic bank shall as soon as practicable declare the • nature of his interest to the board of directors of that Islamic bank and the secretary of that Islamic bank shall cause such declaration to be circulated forthwith to all the directors. n any hesreguirem the onf suet of on e d fhallr conpl only in being a member or creditor of a corporation which is interested in an advance, loan or credit facility or proposed advance, loan or credit facility from that Islamic bank if the interest of the director may properly be regarded as not being a material interest.
(3) For the purposes of subsection (1), a generalnotice given to the board of directors of an Islamic bank by a director to the effect that he is an officer or member of a specified firm or a member of a specified corporation and he is to be regarded as interested in any advance, loan or credit facility which may, after the date of the notice, be made to that firm or corporation shall be deemed to be a sufficient declaration of interest in relation to any advance, loan or credit facility so made if-
(a) it specifies the nature and extent of his interest in à specified firm or corporation;
(b) his interest shall not be different in nature or greater in extent than the nature and extent so specified in the notice at the time any advance, loan or credit facility is made; and
(c) it is given at the meeting of the directors or the director takes reasonable steps to ensure that it is brought up and read at the next meeting of the directors after it is given.
(4) Every director of an Islamic bank who holds any difrectly or mosiestey dinties or interest migt be created in conflict with his duties or interest as a director shall declare at a meeting of the directors of the Islamic bank the fact and the nature, character and extent of the conflict.
Limitation on credit facility for purpose of financing the purchase or holding of shares. [Pt. V, S. 28-29]
(5) The declaration referred to in subsection (4) shall be made at the first meeting of the directors heid--
(a) after he becomes a director of the Islamic bank;
(b) (if already a director) after he commenced to hold office or to possess the property as the case may require.
(6) The secretary of the Islamic bank shall cause to be brought up and read any declaration made under subsection (1) or (4) at the next meeting of the directors alter it is given, and 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
(7) Any director who acts in contravention of subsection (1) oI (4) shall be guilty of an offence and shall on conviction be liable to a fine not exceeding twenty thousand ringgit or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.
(1) Any credit facility granted by any Islamic bank to any person for the purpose of financing the purchase or the "holding of shares shall not exceed such percentage of the market value of the shares at the time the credit facility is granted, as may be directed by the Central Bank in writing.
(2) A credit facility granted under this section to any person shall be accounted for in an account stparate from that kept for any other credit facility
(3) The Central Bank may give direction in writing to any Islamic bank in respect of the following matters, that is to say—
(a) the basis and method for determining the market value of sharos held as security for suchcredit facility;
(b) the withdrawal of funds or shares by the person to whom such credit facility was granted; c) the substitution of other shares for shares hel s security for such credit facility; an
(d) such other matters as may be deemed necessary.
[Pt. V-VI, S. 29-33]
(4) Any Islamic bank which acts in contravention of the provisions of this section or any direction given under this section shall be guilty of an offence under this Act.
Any Islamic bank; if at any time called upon in Poopiance writing by the Central Bank to do so, shall satisfy it com! by the production of such evidence or information as 55528,224, it may require that the bank is not acting in contra- and 29. vention of any of the provisions of sections 24, 25, 26, 27 and 29. PART VA. ins, a0 1307
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
