Interpretation
(1) In this Part, unless the context otherwise requires—
“borrowing company” means a Labuan company that is or will be under a liability, whether or not such liability is present or future, to repay any money received or to be received by it in response to an offer made under section 8 to subscribe for or purchase debentures of the Labuan company;
“guarantor company”, in relation to a borrowing company, means a corporation that has guaranteed, or has agreed to guarantee, the repayment of any money received or to be received by the borrowing company in response to an offer made under section 8 to subscribe for or purchase debentures of the borrowing company;
“promoter”, in relation to a prospectus issued by or in connection with a Labuan company, means a promoter of the company who was a party to the preparation of the prospectus or any relevant portion thereof, but does not include any person by reason only of his acting in a professional or advisory capacity; and
“secured debenture” means—
(a) any debenture which is stated on its face to be a secured debenture; and
(b) any debenture which is issued on terms affording the holder of the debenture rights and powers to vote and demand a poll in respect of the business and undertaking of the company, whether in addition to the rights of members of the company or in substitution for those rights.
Offers or invitations which require the approval of the Authority
(1) Subject to subsections (2) to (6), a person, its officers, directors, agent or any other person on its behalf, shall not make an offer for subscription or purchase, or issue an invitation to subscribe for or purchase securities in or from within Labuan without the prior written approval of the Authority.
(2) No offer or invitation to subscribe for debentures of, or to deposit money with or lend money to, a Labuan company or a foreign Labuan company, shall be made to residents of Malaysia, except by a bank licensee unless otherwise allowed in writing by the Authority.
(3) An applicant shall submit to the Authority such documents and such other information in relation to the offer or invitation in such form and manner and at such times as the Authority may require.
(4) Where an application has been submitted to the Authority under this section, the Authority may—
(a) approve an offer or invitation with or without revisions and subject to such terms and conditions as it thinks fit; or
(b) reject an offer or invitation.
(5) The following offers or invitations of securities are excluded from the requirement to obtain the approval of the Authority under subsection (1):
(a) an offer or invitation of securities, where—
(i) the offer or invitation is addressed to an identifiable category of persons to whom it is directly communicated by the person making the offer or invitation or by his appointed agent; or
(ii) the members of that category to which the offer or invitation is made are the only persons who may accept the offer or invitation and they are in possession of sufficient information to be able to make a reasonable evaluation of the offer or invitation, and the number of persons to whom the offer or invitation is communicated does not exceed fifty;
(b) an offer or invitation of debentures, where—
(i) the first-time investment of each of the initial debenture holders is not less than two hundred and fifty thousand ringgit or the equivalent in any other currency and they are in possession of sufficient information to be able to make a reasonable evaluation of the offer or invitation; or
(ii) the first-time investment of each of the initial debenture holders is less than two hundred and fifty thousand ringgit or the equivalent in any other currency and the number of persons to whom the offer or invitation is communicated does not exceed fifty and they are in possession of sufficient information to be able to make a reasonable evaluation of the offer or invitation;
(c) an offer or invitation of securities in a mutual fund which satisfies the mutual fund requirements under Part III;
(d) an offer or invitation of securities pursuant to a take-over offer which complies with the relevant law applicable to such offer; and
(e) an offer or invitation of securities or such classes or categories of securities as may be specified by the Authority.
(6) Any specification or specifications made under paragraph (5)(e) shall be subject to any condition, restriction or limitation as the Authority may impose.
(7) Any person who makes an offer or invitation of securities in contravention of subsection (1) 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 three years or to both.
(8) A person who is not a bank licensee and makes such an offer or invitation under subsection (2) 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 three years or to both.
False or misleading statements
(1) Where any statement or information is required to be submitted to the Authority in relation to any offer or invitation of securities submitted pursuant to subsection 8(3), an applicant and any of its officers shall not—
(a) submit or cause to be submitted any statement or information that is false or misleading;
(b) submit or cause to be submitted any statement or information from which there is a material omission; or
(c) engage in or aid or abet conduct that he knows to be misleading or deceptive or is likely to mislead or deceive the Authority.
(2) It shall be a defence to a prosecution or any proceedings for contravention of subsection (1) if it is proved that the defendant, after making enquiries as were reasonable in the circumstances, had reasonable grounds to believe, and did until the time of the making of the statement or provision of the information or engaging in the conduct was of the belief that—
(a) the statement or information was true and not misleading;
(b) the omission was not material;
(c) there was no material omission; or
(d) the conduct in question was not misleading or deceptive.
(3) Any person who contravenes subsection (1) 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 three years or to both.
Advertisements
(1) No advertisement offering, or calling attention to an offer or intended offer of, securities under subsection 8(1), being an offer of securities not excluded under subsection 8(5), shall be published in Labuan until it has been approved by the Authority.
(2) An application for approval of an advertisement shall be lodged with the Authority together with a copy of the advertisement verified in such manner as the Authority directs.
(3) Any person who publishes or causes to be published in Labuan an advertisement without the prior approval of the Authority commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
Registration of prospectus
(1) Subject to subsection (2), a person shall not issue, offer for subscription or purchase, make an invitation to subscribe for or purchase, securities in or from within Labuan unless a prospectus in relation to such offer or invitation has been registered with the Authority.
(2) The requirement under subsection (1) shall not apply if the offer or invitation is made pursuant to or in connection with an offer or invitation excluded under subsection 8(5).
(3) T h e A u t h o r i t y s h a l l n o t r e g i s t e r a c o p y o f a n y prospectus—
(a) if it contains any statement or matter which is in its opinion misleading in the form and context in which it is included; and
(b) unless—
(i) a copy signed by every director and by every person who is named therein as a proposed director of the corporation or operator in the case of a public fund applying for registration under section 31 or by their agents authorised in writing is lodged with the Authority on or before the date of its issue;
(ii) the prospectus appears to comply with the requirements of this Act and the regulations or the Authority is satisfied that any departure from the requirements of this Act or the regulations by such prospectus is justified and is unlikely to mislead a person investing on the faith of its content; and
(iii) there is also lodged with the Authority—
(aa) in the case of a prospectus relating to a public fund—
(i) a certificate from an expert certifying that it complies with the requirements of Part III; and
(ii) where all or any part of the prospectus is not in the national language or English language, a translation into the national language or English language of the prospectus or that part of the prospectus, verified in a manner satisfactory to the Authority;
(bb) in the case of any other prospectus, a copy, verified as specified, of any consent required by section 13 to the issue of the prospectus and any material contract referred to in the prospectus or, in the case of such a contract not reduced into writing, a memorandum giving full particulars thereof, verified as specified.
(4) If a prospectus is issued without a copy thereof having been so registered, the corporation and every person who is knowingly a party to the issue of the prospectus 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 three years or to both.
(5) In relation to a prospectus relating to a public fund, such prospectus shall, in addition—
(a) provide full, true and plain disclosure of all facts and circumstances that would facilitate a reasonable assessment by a prospective investor in determining whether to purchase or subscribe to shares of a public fund;
(b) contain a statement summarising the rights of investors under section 36; and
(c) where the public fund has completed a financial year in operation, be accompanied by or contain reference to the availability of the financial statements of the financial year of the public fund immediately preceding the date of such offer and the auditor’s report thereon.
(6) Where—
(a) any change occurs which materially affects any of the matters required to be disclosed under subsection (5); or
(b) there has been a material change affecting the matters disclosed in the prospectus,
then the fund manager of the public fund or the promoter, as the case may be, shall within thirty days of such occurrence incorporate such change to the prospectus relating to such public fund or offer pursuant to subsection 8(1) and provide a copy thereof to each of its investors and the Authority.
Document containing offer of securities to be made via Labuan trust company or bank licensee and to be deemed prospectus
(1) Where a corporation allots or issues or agrees to allot or issue to a person any securities under subsection 8(1), and where such an offer is not excluded under subsection 8(5), the offer or invitation of securities shall be made through its agent which shall be a Labuan trust company or a bank licensee.
(2) Any document by which the offer under subsection 8(1) is made shall for all purposes be deemed to be a prospectus issued by the corporation, and all written laws and rules of
law as to the contents of prospectuses and as to liability in respect of advertisements and statements and non-disclosures in prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly as if the securities had been offered under subsection 8(1) and as if persons accepting the offer in respect of any securities were subscribers therefor but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of statements or non-disclosures in the document or otherwise.
(3) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, securities was made by a corporation with a view to the securities being offered under subsection 8(1) if it is shown—
(a) that an offer of securities under subsection 8(1) was made within six months after the allotment or agreement to allot; or
(b) that at the date when the offer of the securities under subsection 8(1) was made, the whole consideration to be received by the corporation in respect of such securities had not been so received.
(4) The requirements of this Part as to prospectuses shall have effect as though the persons making an offer to which this section relates were persons named in a prospectus as directors of a corporation.
(5) In addition to complying with the other requirements of this Part, the document making the offer shall state—
(a) the net amount of the consideration received or to be received by the corporation making the offer in respect of the securities to which the offer relates; and
(b) the place and time at which the contract under which the securities have been or are to be allotted may be inspected.
(6) Where an offer to which this section relates is made by a corporation, it shall be sufficient if the document referred to in subsection (1) is signed on behalf of the corporation by two directors of the corporation and any such director may authorise his agent in writing to sign on his behalf.
Expert’s consent to issue of prospectus containing statement by him
(1) A prospectus inviting subscription for or purchase of securities of a corporation and including a statement purporting to be made by an expert or to be based on a statement made by an expert shall not be issued unless there appears in the prospectus a statement that he has given and has not withdrawn his consent.
(2) If any prospectus is issued by a corporation in contravention of this section, the corporation and every person who is knowingly a party to the issue thereof 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 three years or to both.
Civil liability for mis-statement in prospectus
(1) Subject to this section, each of the following persons shall be liable to pay compensation to all persons who subscribe for or purchase any securities on the faith of a prospectus for any loss or damage sustained by reason of an untrue statement therein, or by reason of the wilful non-disclosure therein of any matter of which he had knowledge and which he knew to be material, that is to say every person who—
(a) is a director at the time of issue of the prospectus;
(b) authorised or caused himself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;
(c) is a promoter of the corporation; or
(d) authorised or caused the issue of the prospectus.
(2) Notwithstanding anything in subsection (1), where the consent of an expert is required to the issue of a prospectus and he has given that consent, he shall not by reason only thereof be liable as a person who has authorised or caused the issue of the prospectus except in respect of an untrue statement purporting to be made by him as an expert, and the inclusion in the prospectus
of a name of a person as a trustee for debenture-holders, auditor, banker, barrister, advocate or solicitor or stock or share broker shall not for that reason alone be construed as an authorisation by such person for the issue of the prospectus.
(3) No person shall be liable under subsection (1) if he proves—
(a) that, having consented to become a director of the corporation, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent;
(b) that the prospectus was issued without his knowledge or consent and he gave reasonable public notice thereof forthwith after he became aware of its issue;
(c) that after the issue of the prospectus and before allotment or sale thereunder he, on becoming aware of any untrue statement therein, withdrew his consent and gave reasonable public notice of the withdrawal and of the reason therefor; or
(d) that—
(i) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment, issue or sale of the securities believe, that the statement was true;
(ii) as regards every untrue statement purporting to be a statement made by an expert or to be based on a statement made by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of an extract from the report or valuation, and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe, that the expert making the statement was competent to make it and that that expert had given the consent required by section 13 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the person’s knowledge, before any allotment, issue or sale thereunder; and
(iii) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document.
(4) Subsection (3) shall not apply in the case of a person liable, by reason of his having given a consent required of him by section 13 as a person who has authorised or caused the issue of the prospectus in respect of an untrue statement purporting to have been made by him as an expert.
(5) A person who apart from this subsection would under subsection (1) be liable, by reason of his having given a consent required of him by section 13, as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert shall not be so liable if he proves—
(a) that, having given his consent under section 13 to the issue of the prospectus, he withdrew it in writing before a copy of the prospectus was lodged with the Authority;
(b) that, after a copy of the prospectus was lodged with the Authority and before issue or sale thereunder, he on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and the reasons therefor; or
(c) that he was competent to make the statement and that he had reasonable ground to believe and did up to the time of the issue or sale of the securities believe that the statement was true.
(6) Where—
(a) a prospectus contains the name of a person as a director of a corporation, or as having agreed to become a director, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to the issue thereof; or
(b) the consent of a person is required under section 13 to the issue of the prospectus and he either has not given that consent or has withdrawn it before the issue of the prospectus,
the directors of the company except any without whose knowledge or consent the prospectus was issued, and any other person who authorised or caused the issue of the prospectus, shall be liable to indemnify the person so named or whose consent was so required against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, or in defending himself against any action or legal proceedings brought against him in respect thereof.
Criminal liability for mis-statement in prospectus
(1) Where in any prospectus, or in any advertisement of the kind referred to in section 10, there is an untrue statement or wilful non-disclosure, any person who authorised or caused the issue of the prospectus or advertisement 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 three years or to both unless he proves that the statement or non-disclosure was immaterial or that he had reasonable ground for believing and did, up to the time of the issue of the prospectus, believe that the statement was true or that the non-disclosure was immaterial.
(2) A person shall not be deemed to have authorised or caused the issue of a prospectus by reason only of his having given the consent required by this Division to the inclusion therein of a statement purporting to be made by him as an expert.
Labuan trust company or bank licensee as agent in offer
(1) No allotment or issue shall be made of any securities of a corporation offered under subsection 8(1), being an offer of securities not excluded under subsection 8(5), unless the securities have been offered through a Labuan trust company or a bank licensee.
(2) For the avoidance of doubt, a Labuan trust company or a bank licensee shall be the agent of a corporation which has offered securities under subsection 8(1) through the Labuan trust company or bank licensee to receive applications for the issue of securities and shall be so described in the prospectus.
(3) All monies payable on application for the securities in a corporation shall be paid to the Labuan trust company or bank licensee acting as an agent for the corporation, and pending receipt by the Labuan trust company or bank licensee of the amount of the minimum subscription, it shall hold all monies received by it upon trust for the applicant, and if the amount of the minimum subscription is not received by the Labuan trust company or bank licensee within the time stated in the prospectus, the Labuan trust company or bank licensee shall, subject to any right under the terms of the prospectus to deduct any costs and charges owing to it or to the Authority in connection with the prospectus or the offer or his acting as a broker in the matter, return the application monies or such proportion thereof as remains after making deductions, if any, in accordance with the terms of the prospectus to the applicants pro rata based on the respective amounts paid by them.
(4) Upon receipt by a Labuan trust company or a bank licensee acting as agent for a corporation of the amount of the minimum subscription on behalf of the corporation, the Labuan trust company or bank licensee shall, subject to its right to deduct from such monies its proper remuneration and disbursement, hold such monies and any further application monies as agent for the corporation.
Prohibition of allotment unless minimum subscription received
(1) No allotment or issue shall be made of any securities of a corporation offered under subsection 8(1), being an offer of securities not excluded under subsection 8(5), unless—
(a) the minimum subscription has been subscribed; and
(b) the sum payable on application for the securities so subscribed has been received by the corporation,
but if a cheque for the sum payable has been received by the corporation, the sum shall be deemed not to have been received by the corporation until the cheque is paid by the bank on which it is drawn.
(2) The minimum subscription shall be—
(a) calculated based on the price at which the security is or will be offered; and
(b) reckoned exclusively of any amount payable otherwise than in cash.
(3) The amount payable on application on each security offered shall not be less than five per centum of the price at which the security is or will be offered.
(4) Any condition requiring or binding any applicant for securities to waive compliance with any requirement of this section shall be void.
(5) No corporation shall issue or allot, and no officer or promoter of a corporation shall authorise or permit to be issued or allotted, securities under subsection 8(1) on the basis of a prospectus after the expiration of six months from the issue of the prospectus.
(6) Any person who contravenes this section 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 three years or to both.
Application monies to be held in trust until issuance or allotment
(1) Subject to subsections 16(3) and (4) and subsection 17(1), all applications and other monies paid prior to issuance or allotment by any applicant on account of securities offered under subsection 8(1) by a corporation shall, until the issuance or allotment of such securities, be held upon trust for the applicant and such monies shall be paid into and kept in a separate trust account, pending issuance or allotment.
(2) If there is non-compliance with this section, every officer of the corporation who is in default and who knowingly and wilfully authorises or permits the default 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 three years or to both.
Power to issue debentures
(1) Subject to this Division and to the terms and conditions of its memorandum and articles, a Labuan company shall have the power to issue debentures on such terms and conditions as it thinks fit and in particular, but without limiting the generality of the foregoing, may issue debentures—
(a) constituting a charge on any or all of the assets of the company;
(b) convertible from debentures into shares in the company; or
(c) as secured debentures.
(2) The debt payable under any debenture, whether sealed or signed on behalf of the company, shall be a specialty debt of the company, and where the debenture is issued by a branch of a company, shall be located at that branch.
(3) The Minister may make regulations—
(a) restricting the right of a Labuan company or any particular class of Labuan companies to issue debentures which may be converted into shares; and
(b) prescribing the terms and conditions or the event or events upon which conversion shall or may take place.
Trustee for debenture holders
(1) Every Labuan company which offers debentures under subsection 8(1), being an offer of debentures not excluded under subsection 8(5), shall make provision in those debentures, or in
a trust deed relating to those debentures, for the appointment of a Labuan trust company as a trustee for the holders of the debentures.
(2) A borrowing company shall not allot any debentures until such time as a Labuan trust company has been appointed as a trustee for the holders of those debentures.
(3) The Authority may approve any other person to act as a trustee together with the Labuan trust company for the holders of the debentures.
(4) If default is made by a borrowing company in complying with this section, the borrowing company and every officer of the borrowing company who is in default 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 three years or to both.
Exemptions and indemnifications of trustee from liability
(1) Subject to this section, a term, provision or covenant of a debenture or a trust deed of a term of contract with holders of debentures secured by a trust deed shall be void insofar as the term, provision or covenant, as the case may be, would have the effect of—
(a) exempting a trustee from liability for contravention of any provision of this Part or for breach of trust or failure to show the degree of care and diligence required of it as a trustee;
(b) indemnifying a trustee against liability for contravention of any provision of this Part or for breach of trust or for failure to show the degree of care and diligence required of it as a trustee,
unless the term, provision or covenant—
(A) releases the trustee from liability for anything done or omitted to be done before the release is given; or
(B) enables a meeting of debenture holders to approve the release of a trustee from liability for anything done or omitted to be done before the release is given.
(2) For the purpose of paragraph (1)(B)—
(a) a release is approved if the debenture holders who vote for the resolution hold seventy-five per centum of the nominal value of the debentures held by all the debenture holders who attend the meeting and vote on the resolution; and
(b) a debenture holder attends the meeting and votes on the resolution if—
(i) such debenture holder attends the meeting in person and votes on the resolution; or
(ii) if proxies are permitted, the debenture holder is represented at the meeting by a proxy and the proxy votes on the resolution.
Duties of trustee
(1) A trustee for the holders of debentures—
(a) shall exercise reasonable diligence to ascertain whether or not the assets of the borrowing company and each of its guarantor companies, which are or may be available by way of securities or otherwise, are sufficient, or are likely to be or become sufficient, to discharge the principal debt as and when it becomes due;
(b) shall satisfy itself that each prospectus relating to the debentures does not contain any matter which is inconsistent with the terms of the debentures or with the relevant trust deed;
(c) shall exercise reasonable diligence to ascertain whether or not the borrowing company and each of its guarantor companies have committed any breach of the terms, provisions or covenants of the debentures or the trust deed;
(d) except where it is satisfied that a breach of the terms, provisions or covenants of the debentures or the trust deed would not materially prejudice the security, if any, for the debentures or the interests of the holders of the debentures, shall take all steps and do all such
things as it is empowered to do to cause the borrowing company and any of its guarantor companies to remedy any breach of those terms, provisions or covenants;
(e) where the borrowing company or any of its guarantor companies fails, when so required by the trustee, to remedy any breach of the terms, provisions or covenants of the debentures or the trust deed, shall place the matter before a meeting of holders of the debentures, submit such proposal for the protection of their invest ment as the trustee considers necessary and appropriate and obtain the directions of the holders in relation thereto; and
(f) where the borrowing company submits to those holders a compromise or arrangement, shall give them a statement explaining the effect of the compromise or arrangement and, if it thinks fit, recommend to them an appropriate course of action to be taken by them in relation thereto.
(2) Where, after due enquiry, a trustee for the holders of debentures at any time is of the opinion that the assets of a borrowing company and of any of its guarantor companies which are or should be available, whether by way of security or otherwise, are insufficient or likely to become insufficient to discharge the principal debt as and when it becomes due, the trustee may lodge an application in the specified form with the Authority for a direction under this subsection and the Authority may, on such application, after giving the borrowing company an opportunity for making representations in relation to the application, by direction in writing served on the borrowing company at its registered office in Labuan, impose such restrictions on the activities of the borrowing company, including restrictions on advertising for deposit or loans and on borrowing by the borrowing company, as the Authority thinks necessary for the protection of the interests of the holders of the debentures, or the Authority may, and if the borrowing company so requires shall, direct the trustee to lodge an application with the Court for an order under subsection (4) and the trustee shall apply accordingly.
(3) Where—
(a) after due enquiry, a trustee for the holders of debentures at any time is of the opinion that the assets of the borrowing company and of any of its guarantor companies which
are or should be available are insufficient, or likely to become insufficient, to discharge the principal debt as and when it becomes due; or
(b) the borrowing company has contravened or failed to comply with a direction by the Authority under subsection (2),
the trustee may, and where the borrowing company has requested the trustee to do so, the trustee shall, apply to the Court for an order under subsection (4).
(4) Where an application is lodged by a trustee with the Court under subsection (2) or (3), the Court, after giving the borrowing company an opportunity of being heard, may, by order, do all or any of the following things, namely—
(a) direct the trustee to convene a meeting of the holders of the debentures for the purpose of placing before them such information relating to their interests as the trustee considers necessary or appropriate and for the purpose of obtaining their directions in relation thereto, and give such directions in relation to the conduct of the meeting as the Court thinks fit;
(b) stay all or any actions or proceedings before any Court by or against the borrowing company;
(c) restrain the payment of any monies by the borrowing company to the holders of debentures of the borrowing company or to any class of such holders;
(d) appoint a receiver of such of the property as constitutes the security, if any, for debentures or any part thereof; or
(e) give such further directions from time to time as may be necessary to protect the interests of the holders of debentures, the members of the borrowing company or any of its guarantor companies or the public, but in making any such order the Court shall have regard to the rights of all creditors of the borrowing company.
(5) The Court may vary or rescind any order made under subsection (4) as it thinks fit.
(6) A trustee in making any application to the Authority or the Court shall have regard to the nature and kind of the security given when the debentures were offered under subsection 8(1), and, if no security was given, shall have regard to the position of the holders of the debentures as unsecured creditors of the borrowing company.
(7) A trustee may rely upon any certificate or report given or statement made by any advocate, auditor or officer of the borrowing company or guarantor company if it has reasonable grounds for believing that such advocate, auditor or officer was competent to give or make the certificate, report or statement.
(8) This section shall not apply to an offer or invitation of securities under subsection 8(5).
Obligations of directors of borrowing company
(1) The directors of the borrowing company shall—
(a) at the end of a period not exceeding three months ending on a day, such day being the later of the date of the relevant prospectus, if applicable, or the date on which the debenture is issued pursuant to the trust deed, which the trustee for the holders of debentures of the borrowing company is required to notify to the borrowing company in writing; and
(b) at the end of each succeeding period thereafter, being a period of three months or such shorter time as the trustee may, in any special circumstances, allow,
prepare a report that relates to that period and complies with the requirements of subsection (2) and, within thirty days after the end of each such period, lodge a copy of the report relating to that period with the Authority and with the trustee.
(2) The report referred to in subsection (1) shall be signed by not less than two of the directors on behalf of all of them and shall set out in detail any matter adversely affecting the security or the interests of the holders of the debentures and, without affecting the generality of the foregoing, shall state—
(a) whether or not the limitations on the amount that the borrowing company may borrow have been exceeded;
(b) whether or not the borrowing company and each of its guarantor companies have observed and performed all the provisions and covenants binding upon them respectively by or pursuant to the debentures or any trust deed;
(c) whether or not any event has happened which has caused or could cause the debentures or any provisions of the relevant trust deed to become enforceable and, if so, particulars of that event;
(d) whether or not any circumstances affecting the borrowing company, its subsidiaries or its guarantor companies or any of them have occurred which materially affect any security or charge created by the debentures or any trust deed and, if so, particulars of those circumstances;
(e) whether or not there has been any substantial change in the nature of the business of the borrowing company or any of its subsidiaries or any of its guarantor companies since the debentures were first issued under subsection 8(1) which has not previously been reported upon as required by this section and, if so, particulars of that change; and
(f) where the borrowing company has deposited money with, or lent money to, or assumed any liability of, a corporation which pursuant to section 4 of the Labuan Companies 1990 is deemed to be related to the borrowing company, particulars of—
(i) the total amount so deposited or lent and the extent of any liabilities so assumed during the period covered by the report; and
(ii) the total amount owing to the borrowing company in respect of money so deposited or lent and the extent of any liabilities so assumed as at the end of the period covered by the report,
distinguishing between deposits, loans and assumptions of liability which are secured and those which are unsecured, but not including any deposit with or loan to or any liability assumed on behalf of a corporation if that corporation has guaranteed the repayment of the debentures of the borrowing company and has secured the guarantee by a charge over its assets in favour of the trustee for the holders of the debentures of the borrowing company.
(3) Where there is a trustee for the holders of any debentures issued by a borrowing company, the borrowing company and each guarantor company which has guaranteed the repayment of the monies raised by the issue of those debentures shall, within twenty-one days after the creation of the charge, furnish the trustee on behalf of the holders of the debentures, whether or not any demand therefor by it has been made, with particulars in writing of any charge created by the corporation or the guarantor company, as the case may require, and when the amount to be advanced upon the security of the charge is indeterminate within seven days after the advance with particulars of the amount or amounts in fact advanced, but where any such advances are merged in a current account with bankers or trade creditors, it shall be sufficient for particulars of the net amount outstanding in respect of any such advances to be furnished every three months.
(4) The directors of every borrowing company which has issued debentures under subsection 8(1), not including those excluded under subsection 8(5), and of every guarantor company which has guaranteed the repayment of the monies raised by the issue of such debentures shall, at some date not later than nine months after the expiration of each financial year of the borrowing company or the guarantor company, cause to be made out and lodged with the Authority and with the trustee a profit and loss account together with a detailed statement of outstanding liability under such debentures for the period from the end of that financial year until the expiration of six months after the end of that financial year and a balance sheet as at the end of the period to which the profit and loss account relates.
(5) Where any guarantor company, being a company which is incorporated in any state or territory nominated for the purposes of this section by the Minister, has lodged with the appropriate authority in any such nominated state or territory a profit and loss account and balance sheet for the relevant period, that shall be sufficient compliance with the requirements of subsection (4) if, with the consent of the trustee, there is lodged with the Authority and the trustee certified copies of the profit and loss account and balance sheet so lodged.
(6) Where the directors of a borrowing company do not lodge with the trustee a report as required under subsection (1), or where the directors of a borrowing company or of its guarantor companies do not lodge with the Authority and the trustee the
profit and loss account, detailed statement and balance sheet as required under subsection (4) within the time specified, the trustee shall, as soon as possible, lodge notice of that fact with the Authority.
(7) Any person who contravenes subsection (1) or (4) commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
(8) This section shall not apply to an offer or invitation of securities under subsection 8(5).
Obligation of guarantor company to furnish information
(1) For the purpose of the preparation of a report which, by this Act, is required to be signed by or on behalf of the directors of a borrowing company or any of them, that borrowing company may, by notice in writing, require any of its guarantor companies to fur nish it with any information relating to that guarantor company which, by this Act, is required to be contained in that report, and that guarantor company shall furnish the borrowing company with that information before such date, being a date not later than fourteen days after the notice is given, as may be specified in that behalf in the notice.
(2) A guarantor company which fails to comply with the requirement contained in a notice given under subsection (1) and every officer of that company who is in default commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
(3) This section shall not apply to an offer or invitation of securities under subsection 8(5).
Loan and deposits to be immediately repayable on certain events
(1) Where in any prospectus issued in connection with an offer or invitation under subsection 8(1) to subscribe for or to purchase debentures of a Labuan company there is a statement as to any particular purpose or project for which the monies received by the borrowing company in response to the offer or invitation
are to be applied, the borrowing company shall from time to time make reports to the trustee for the holders of debentures of the borrowing company as to the progress that has been made towards achieving such purpose or completing such project.
(2) Where it appears to a trustee to which a report is furnished by a borrowing company that such purpose or project has not been achieved or completed within the time stated in the prospectus within which the purpose or project is to be achieved or completed or, where no such time was stated, then within a reasonable time, the trustee may, and, if in its opinion it is necessary for the protection of the interests of the holders of the debentures, the trustee shall give notice in writing to the borrowing company requiring it to repay the monies so received and, within one month after such notice is given, lodge with the Authority a copy of such notice.
(3) A trustee shall not give a notice under subsection (2) if it is satisfied—
(a) that the purpose or project has been substantially achieved or completed;
(b) that the interests of the holders of the debentures have not been materially prejudiced by the failure to achieve or complete the purpose or project within the time stated in the prospectus or within a reasonable time; or
(c) that the failure to achieve or complete the purpose or project was due to circumstances, other than shortage of funds, beyond the control of the borrowing company that could not reasonably have been foreseen by that borrowing company at the time that the prospectus was issued.
(4) This section shall not apply to an offer or invitation of securities under subsection 8(5).
Retention of over-subscriptions in debenture issues
(1) A borrowing company shall not accept or retain subscriptions to a debenture issue in excess of the amount of the issue as
disclosed in the prospectus unless the borrowing company has specified in the prospectus—
(a) that it expressly reserves the right to accept or retain over-subscriptions; and
(b) a limit on the amount of the over-subscription that may be accepted or retained.
(2) Subject to any regulations, where a borrowing company specifies in a prospectus relating to a debenture issue that it expressly reserves the right to accept or retain over-subscriptions—
(a) the borrowing company shall not make, authorise or permit any statement or reference as to the asset-backing for the issue to be made or contained in any prospectus relating to the issue, other than a statement or reference to the total assets and the total liabilities of the borrowing company and of its guarantor company, if any; and
(b) the prospectus shall contain a statement or reference as to what the total assets and total liabilities of the borrowing company would be if over-subscriptions to the limit specified in the prospectus were accepted or retained.
(3) Any borrowing company who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
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).
