Control of establishment or acquisition of subsidiaries or acquisition or holding of material interest in corporations
Open ↗(1) Unless the Bank otherwise approves in writing, no prescribed institution shall establish or acquire any subsidiary in or outside Malaysia, or acquire or hold any material interest in any corporation.
(2) (Deleted by Act A1502).
(3) The Bank may approve an application to establish or acquire a subsidiary or acquire or hold any material interest in any corporation, under subsection (1), with or without conditions, or reject the application.
(4) Every prescribed institution shall at all times comply with any condition as may be specified by the Bank under subsection (3).
(5) The Bank may specify what constitutes “material interest” for the purposes of subsection (1) and paragraph 26(1)(d).
Direction in respect of subsidiary or material interest in corporations
Open ↗(1) Notwithstanding any approval under subsection 25(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;
(c) wind up any of its subsidiaries; or
(d) dispose of all or any of its interest in its subsidiary or corporation in which it holds a material interest.
(1A) In determining the interest of a prescribed institution under subsection (1), the Bank shall take into consideration matters that the Bank considers relevant including whether the activities of that subsidiary or corporation in which the prescribed institution holds a material interest—
(a) is consistent with the business carried on by the prescribed institution; or
(b) directly or indirectly affect the safety and soundness of the prescribed institution.
(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.
(3) (Deleted by Act A1502).
Restriction or prohibition of business
Open ↗(1) Except with the prior written approval of the Bank, 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.
(2) (Deleted by Act A1502).
(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.
(4) (Deleted by Act A1502).
Prohibition of financing facilities
Open ↗(1) No prescribed institution shall grant to any person any financing 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.
(2) (Deleted by Act A1502).
(3) Unless otherwise specified by the Bank, no prescribed institution shall grant any financing facility to—
(a) any of its members, directors or officers or any other person receiving remuneration from it (other than any 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; and
(c) (Deleted by Act A1502).
(d) any person for whom any of its members, directors or officers has given any guarantee or other undertaking involving financial liability.
(3A) No prescribed institution shall grant any financing facility to 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.
(4) Notwithstanding subsection (3), a prescribed institution may, subject to such terms and conditions as it may impose, grant to any of its officers or its executive director—
(a) any financing 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 such period as may be specified by the Bank.
(5) For the purposes of this section, “director” or “officer” includes a spouse, child or parent of a director or officer, or any other person as may be specified by the Bank.
Single counterparty exposure limit
Open ↗(1) Subject to subsection 28(1) and except as may be approved by the Minister on the recommendation of the Bank, no prescribed * NOTE—For application to Bank Kerjasama Rakyat Malaysia Berhad, deleted the word “members” —see the Development Financial Institutions (Bank Kerjasama Rakyat Malaysia Berhad) (Modification) Order 2016 [P.U. (A) 15/2016] w.e.f. 31.01.2016.
institution shall have an exposure to a single counterparty, whether in relation to its own funds or any trust fund it manages under section 43, which exceeds the limit as may be specified by the Bank.
(1A) An exposure to a single counterparty referred to in subsection
(1) shall include an exposure to any group of persons connected to such single counterparty but shall not include any exposure to, and any exposure explicitly guaranteed by, the Bank or the Government.
(1B) For the purposes of this section, the Bank may specify what constitutes “connected”, “counterparty” or “exposure”.
(2) (Deleted by Act A1502).
(3) (Deleted by Act A1502).
(4) (Deleted by Act A1502).
(5) (Deleted by Act A1502).
(6) (Deleted by Act A1502).
Restriction on giving of financing facility
Open ↗A prescribed institution may, whether from its own funds or any trust fund it manages under section 43, and notwithstanding paragraph 28(3)(a), grant a financing 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 financing facility is given has creditworthiness which is not less than that normally required by the prescribed institution of other persons to whom financing facilities are given;
(b) the terms of the financing facility are not less favourable to the prescribed institution than those normally offered to other persons;
(c) the giving of the financing facility will be in the interests of the prescribed institution; and
(d) the financing 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 director’s interest
Open ↗(1) Every director of a prescribed institution who has in any manner, whether directly or indirectly, any interest in a proposed financing 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.
(2) (Deleted by Act A1502).
(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 financing facility is proposed to be given shall be deemed to be sufficient declaration of interest in relation to such proposed financing 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.
(7) (Deleted by Act A1502).
Control of credit limit
Open ↗(1) A director or officer of a prescribed institution shall not grant any financing 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.
(2) (Deleted by Act A1502).
(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 financing 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 authorized to grant financing 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.
(5) (Deleted by Act A1502).
Investment of assets
Open ↗(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) (Deleted by Act A1502).
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).
