Payment Systems Act 2003 Part IV — Powers of the bank

Requirement to submit information

s 31

(1) An operator, participant or issuer shall, within such time as the Bank may specity, submit to the Bank all such documents and information regarding the payment system or payment instrument as the Bank may specify. (2) The documents and information referred to in subsection (1) shall include documents and information relating to any participant ot the payment system or user of the payment instrument, and the business, attairs, statistics and information on transactions relating to the payment system or payment instrument as the Bank may specify under subsection (1). (3) The provisions of subsection (1) shall be without prejudice to, and shall not in any manner derogate from, any other power conferred on the Bank or an investigating officer under this Act. (4) The provisions of this section shall have effect notwithstanding the provisions of any written law as to secrecy or other restriction on the disclosure of information or of any oath, undertaking or requirement of secrecy, to the contrary, or of any obligation under any contract, agreement or arrangement, whether express or implied, to the contrary.

Power to make modifications

s 32

(1) The Bank may, by written notice, require an operator of a designated payment system or issuer of a designated payment instrument to make modifications or alterations to— (a) the designated payment system or designated payment instrument including governance arrangements reférred to in section 13 or 27; (b) operational arrangements referred to in section 14 or 28; (c) documents and information submitted under subsection 5(3) or 25(1); and (d) any other documents relating to the designated payment system or designated payment instrument. (2) In exercising its powers under subsection (1), the Bank shall have regard to- (a) systemic risk; (b) the object of the Bank to promote monetary stability and a sound financial structure; (c) the interest of the public including market conditions and behaviour; (d) the safety, integrity, efficiency or reliability of the designated payment system or designated payment instrument including security and operating standards and infrastructure arrangements; (e) the interests of the current participants of the designated payment system or users of the designated payment instruments; or (f) the interests of persons who, in the future, may want access to the designated payment system or may want to use the designated payment instrument. (3) An operator of a designated payment system or an issuer of a designated payment instrument shall make such modifications or alterations as may be required under subsection (1) within such time as the Bank may specify. (4) The Bank shall give the operator of a designated payment system or issuer of a designated payment instrument a reasonable opportunity to make representations before making a decision to impose the requirement under subsection (1). Power to issue directives

s 33

(1) Where the Bank is of the opinion that an operator or a participant of a designated payment system or issuer of a designated payment instrument- (a) is engaging or is about to engage, in any act, or course of conduct or has omitted any act or is about to omit any act that results or is likely to result in systemic risk being inadequately controlled, or that is detrimental to the interests of its participants, users or creditors or the public generally; (b) has contravened any provision of this Act, whether or not there has been no criminal prosecution in respect thereof, or any guideline issued under section 70; or (c) has become or is likely to become unable to meet all or any of his obligations, the Bank may issue a directive in writing requiring the operator or participant of the designated payment system or issuer of the designated payment instrument to- (aa) take any steps, take any action, do or not to do any act or thing, in relation to the designated payment system or the designated payment instrument which in the opinion of the Bank is necessary to remedy the situation; (bb) cease to operate the designated payment system; or (cC) cease to issue the designated payment instrument. (2) In giving any directive under subsection (1), the Bank may include requirements of a consequential, ancillary or incidental nature to be complied with by the operator or participant of a designated payment system or the issuer of a designated payment instrument and the Bank may impose such terms, conditions and requirements as it deems necessary or expedient. (3) An operator or participant of a designated payment system or an issuer of a designated payment instrument shall comply with any directive issued under subsection (1) within such time as the Bank may specify. (4) If the Bank exercises its power under paragraph (1)(bb), the operator is prohibited from operating the designated payment system and if the Bank exercises its power under paragraph (1)(cc) the approval to issue a designated payment instrument is deemed to have been revoked under section 26. . (5) The Bank shall give the operator, participant or issuer, as thé case may be, referred to in subsection (1) an opportunity to make representations before making a decision to issue a directive under that subsection.

Examination by the Bank

s 34

The Bank may, where it is of the opinion that it is necessary for the purposes of carrying out its functions under this Act, examine, with or without any prior written notice, the premises, apparatus, equipment, machinery, books or other documents, accounts or transactions of an operator or issuer and any of his offices in or outside Malaysia. Production of person's books, etc.

s 35

(1) For the purposes of an examination under section 34, any person under examination and that person's directors and officers shall afford any officer of the Bank carrying out the examination access to all his premises, apparatus, equipment, machinery, books or other documents and accounts, including documents of title to his assets, all securities held by him in respect of his customers' transactions, all his cash, and to all such documents, information and facilities as may be required by that officer for the purpose of the examination, and shall produce to that officer all such apparatus, equipment, machinery, books or other documents, accounts, titles, securities or cash, and give all such information, orally or in writing, as he may require, however, so far as is consistent with the conduct of the examination, such apparatus, equipment, machinery, books or documents, accounts, titles, securities and cash shall not be required to be produced at such times or at such places as may interfere with the proper conduct of the normal daily business of that person. (2) Notwithstanding the generality of subsection (1), any officer of the Bank authorized by the Bank in writing for this purpose may take possession of any apparatus, equipment, machinery, books or other documents, accounts, titles, securities or cash to which he has access under subsection (1) if in his opinion— (a) the inspection of them, the copying of them or the making of extracts from them cannot reasonably be undertaken without taking possession of them; (b) it may be interfered with or destroyed unless he takes possession of them; or (c) it may be needed as evidence in any legal proceedings, whether civil or criminal, which may be instituted under or in connection with this Act, the Central Bank of Malaysia Act 1958 or any other written law. (3) A person who is or was at any time- (a) a director or officer of an operator or issuer; (b) an agent of or who performs any of the functions of an operator or issuer; (c) a participant of a payment system or user of a payment instrument; or (d) an auditor of an operator or issuer, shall give such information or document as the Bank may require within such time as the Bank may specify in carrying out an examination under section 34. (4) An auditor referred to in paragraph (3)(d) shall not be liable for breach of contract relating to, or duty of, confidentiality for giviniaty information or document to the officer carying out the

Operator of designated payment system insolvent

s 36

Any operator of a designated payment system who is insolvent or likely to become insolvent, or has become or likely to become unable to meet all or any of his obligations, or has suspended payments or compounded with his creditors shall immediately • inform the Bank of that fact. Directive in the event of insolvency

s 37

(1) Without prejudice to section 33, if the Bank is satisfied, upon being intormed by an operator of a designated payment system under section 36 or after an examination under section 34 or otherwise, that an operator of a designated payment system— (a) is insolvent or is likely to become insolvent; (b) has become or is likely to become unable to meet all or any of his obligations; or (c) has suspended payments or compounded with his creditors, the Bank may issue a directive in writing, exercising any one or more of the following powers, as it deems necessary— (aa) remove from office, with effect from such date as may be specified in the directive, any director or chief executive officer of the operator of the designated payment system; (bb) appoint any person as a director or chief executive officer of the operator of the designated payment system and provide in the directive for the person so appointed to be paid by the operator of the designated payment system such remuneration as may be set out in the directive; or (cc) appoint a person to advise the operator of a designated payment system in relation to the proper conduct of its business, and provide in the directive for the person so appointed to be paid by the operator of the designated payment system such remuneration as may be set out in the directive. (2) This section shall apply notwithstanding anything contained in any written law, or any limitations contained in the constituent documents of the operator of a designated payment system. Assumption of assets

s 38

(1) Where any of the circumstances set out in paragraphs 37(1)(a) to (c) exist in respect of an operator of a designated payment system, the Bank may, whether or not the Bank has exercised any of its powers under section 37, provide by order published in the Gazette— (a) for the Bank to assume control of the whole of the property, business and affairs of the operator of a designated payment system, and carry on the whole of its business and affairs, or to assume control of such part of its property, business and affairs, and carry on such part of its business and affairs, as may be set out in the order, 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, as the case may be, to be payable out of the funds and properties of the operator of the designated payment system as a first charge thereon; (b) whether or not an order has been made under paragraph (a), to authorize an application to be made by the Bank to the High Court to appoint a receiver or manager to manage the whole of the business, affairs and property of the operator of a designated payment system, or such part thereof as may be set out in the order, 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), to authorize the Bank to present a petition to the High Court for the winding up of the operator of a designated payment system. (2) An order under subsection (1) or a directive of the Bank under section 37 may, from time to time, be modified, amended, altered, varied or replaced either prospectively, or where it is not impracticable or unjust to do so, retrospectively, by an order under subsection (1) or a further directive under section 37, as the case may be. (3) No order under subsection (1) or (2) or directive under section 37 shall be made unless the operator of a designated payment system in respect of which the order or directive is to be made, and in the case of a directive under paragraph 37(1)(aa), the director or chief executive officer of the operator of the designated payment system 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 or directive. (4) Notwithstanding subsection (3), if in the opinion of the Bank any delay would be detrimental to the interests of the operator or participant of a designated payment system or creditors, or the public generally, an order under subsection (1) or (2) or directive under section 37 may be made first and the opportunity to make representations against or otherwise in respect of the order or directive shall, in such case, be given immediately after the order or directive has been made, and the order or directive may, in consequence of such representations, either be confirmed, or be modified, amended, altered, varied or replaced under subsection (2), or be revoked under subsection (5), subject to such conditions, if any, as the Bank thinks fit to impose. (5) An order of the Bank under subsection (1) or (2) or a directive of the Bank made under section 37, may at any time be revoked by an order or a directive similarly made by the Bank, as the case may be, and any such order or directive may contain all such provisions of an incidental, ancillary, or consequential nature, as may be deemed necessary or expedient by the Bank, as the case may be. (6) Where a receiver or manager has been appointed by the High Court under paragraph (1)(b), in respect of an operator of : lesignated payment system, all proper costs, charges and expenses including the remuneration, of such receiver or manager shall be payable out of the assets of the operator of the designated payment system in priority to all other claims. Effect of removal from office

s 39

The removal under paragraph 37(1)(aa) of any director or chief executive officer of an operator of a designated payment system 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 such person shall not be entitled to claim any compensation for the loss or termination of office. Provisions relating to assumption of control under paragraph 38(1)(a)

s 40

(1) Where control of an operator of a designated payment system has been assumed in pursuance of section 37 or an order under paragraph 38(1)(a), the operator of the designated payment system and its directors and officers shall provide the Bank or the person appointed by the Bank with such facilities, documents and information as may be required to carry on its business. (2) The Bank or the person appointed by the Bank shall control and carry on the property, business and affairs of the operator of the designated payment system. as the case may be, in the name and on behalf of that operator of the designated payment system until the directive issued under section 37 or order made under paragraph 38(1)(a) is revoked. (3) During the period for which a directive under section 37 or an order under paragraph 38(1)(a) is in force- (a) no director or chief executive officer of the operator of the designated payment system shall engage in any activity in relation to the designated payment system, directly or indirectly, except as may be required or authorized by the Bank or the person appointed by the Bank; (b) no remuneration shall accrue or be payable to a director or chief executive officer of the operator of the designated payment system unless approved in writing by the Bank or the person appointed by the Bank; and (c) the Bank or the person appointed by the Bank shall be vested with all the powers of the operator of a designated payment system, and its board of directors, under its constituent documents, or exercisable by the operator of a designated payment system or its board of directors under any written law regardless whether such powers are exercisable by resolution. (4) For the avoidance of doubt, it is hereby declared that a directive under section 37 or an order under paragraph 38(1)(a) shall not have the effect of conferring on, or vesting in, the Bank or the person appointed by the Bank any title to, or any beneficial interest in, any property of the operator of a designated payment system to which the directive or order relates. Power to reduce share capital and to cancel shares constiuent doehsendi of an thingtor of a desigented paymthe system, the Bank or the person appointed by the Bank may apply to the High Court for an order to reduce the share capital of such operator 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 an operator of a designated payment system, the Court may— (a) on an application by the Bank, or the person appointed by the Bank; and (b) if, on the expiry of thirty days from the date of any call made by the operator of a designated payment system on its members to pay on their respective shares, payment on any such shares has not been made, also order that such shares for which payment has not been made be cancelled accordingly. (3) Where the share capital of an operator of a designated payment system is reduced pursuant to subsection (1), or any of its shares is cancelled pursuant to subsection (2), the Bank or the person appointed by the Bank may cause the constituent documents of the operator of a designated payment system to be altered accordingly. (4) The powers conferred under subsections (1), (2) and (3) on the Bank and the person appointed by the Bank 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)— (a) 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 referred to therein; and (b) subsections 64(9) and (10) of the Companies Act 1965 shall apply in relation thereto.