Issuance and requirement for registration of schemes
(1) No person except a management company may issue or offer to the public for the subscription or purchase of or invite the public to subscribe for or purchase any interest.
(2) No person shall—
(a) issue or cause to be issued any advertisement inviting any person to become participants in a scheme, or offering any person to become participants in a scheme, or containing information calculated to lead directly or indirectly any person to become participants in a scheme, or containing an offer to become participants in a scheme; or
(b) advise or procure any person to become or offer any person to become a participant in the scheme,
unless the scheme is registered and authorized under this Act.
(3) Any person who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or a fine not exceeding fifty million ringgit or to both.
Nature of schemes
(1) A scheme shall be either—
(a) an investment scheme;
(b) a recreational membership scheme;
(c) a time-sharing scheme; or
(d) a combination of such schemes.
(2) A scheme is an investment scheme if the interest holder does not have day-to-day control over the operation of the scheme, whether or not the interest holder has the right to be consulted or to give direction and that—
(a) the interest holder contributes money or money’s worth as a consideration to acquire a right or interest to profits, assets or realisation of any financial or business undertaking of the scheme, whether the right or interest are actual, prospective or contingent and are enforceable or not; or
(b) the contribution by the interest holder is pooled or used in common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property for which the interest holder is led to expect profits, rent or interest from the efforts of the promoter of the enterprise or a third party.
(3) A scheme is a recreational membership scheme if—
(a) in substance and irrespective of the form, the scheme involves the investment of money in or under such circumstances that an interest holder acquires or may acquire an interest or right in respect of property which under or in accordance with the terms of investment will or may, at the option of the investor, be used or employed in common with any other interest or right in respect of property acquired in or under like circumstances and includes an entitlement to a right to use or enjoy any sport, recreational, holiday or other related facilities for a consideration; and
(b) the scheme is to operate for a duration of not less than twelve months whether or not on a recurring basis.
(4) A scheme is a time-sharing scheme if—
(a) an interest holder is or may become entitled to use, occupy or possess for two or more periods during the period for which the scheme, whether in Malaysia or elsewhere is to operate, property to which the scheme relates; and
(b) the scheme is to operate for a period of not less than three years.
(5) A scheme referred to in subsection (2), (3) or (4) may be in the form of a Shariah compliant scheme.
Types of schemes that may be registered
A scheme may be registered as a premium scheme, a small scheme or a foreign scheme.
Registration of premium scheme
(1) An application for the registration of a premium scheme may be made by a management company provided that the management company—
(a) is a public company limited by shares incorporated under the Companies Act 2016 or corresponding previous written law;
(b) specifies in its constitution that the management of interest scheme is one of its main objects; and
(c) meets the minimum amount of paid up capital as determined by the Commission.
(2) The Registrar shall have the power to impose any other conditions as he thinks fit for the purpose of registration of the premium scheme.
Registration of small scheme
(1) An application for the registration of a small scheme may be made by a management company provided that the management company—
(a) is a company limited by shares incorporated under the Companies Act 2016 or corresponding previous written law;
(b) specifies in its constitution that the management of the interest scheme is one of its main objects;
(c) meets the minimum amount of paid up capital as determined by the Commission; and
(d) will not raise fund exceeding the threshold as specified by the Commission.
(2) The Registrar shall have the power to impose any other conditions as he thinks fit for the purpose of registration of the small scheme.
Registration of foreign scheme
(1) An application for the registration of a foreign scheme may be made by a foreign company registered under Division 1 of Part V of the Companies Act 2016 provided that the foreign company—
(a) is a public company limited by shares at its country of origin;
(b) specifies in its constitution that the management of the interest scheme is one of its main objects;
(c) meets the minimum amount of paid up capital as determined by the Commission; and
(d) has been given the recognition or power to offer or proposed to offer interests to the public at its country of origin by the authority responsible for regulating schemes relating to interests.
(2) The Registrar shall have the power to impose any other conditions as he thinks fit for the purpose of registration of the foreign scheme.
Application for registration of a scheme
(1) A management company may apply to the Registrar in the manner as determined by the Registrar for the registration of one or more schemes referred to in section 5.
(2) An application to register a scheme shall be made to the Registrar by providing the following information:
(a) the name of the management company;
(b) the names and addresses of the directors, secretary and auditor of the management company;
(c) if the scheme or part of the scheme is managed by a third party, the names and addresses of the third party;
(d) the names and addresses of the trustees appointed by the management company;
(e) in the case of a foreign scheme, the names and addresses of the foreign company, its directors and agents in Malaysia as referred to in Division 1 of Part V of the Companies Act 2016 and the trustees appointed by the management company;
(f) the amount proposed to be raised by the scheme; and
(g) any other information as the Registrar may require.
(3) The application shall be accompanied with a prescribed fee and the following documents:
(a) in the case of a premium scheme—
(i) a copy of the constitution of the management company;
(ii) a prospectus; and
(iii) a trust deed;
(b) in the case of a small scheme—
(i) a copy of the constitution of the management company;
(ii) a product disclosure statement; and
(iii) a contractual agreement; or
(c) in the case of a foreign scheme—
(i) a copy of certificate of incorporation of the foreign company at its country of origin or such other equivalent document;
(ii) a copy of the constitution of the management company;
(iii) a copy of the approval or registration by the relevant authority at its country of origin authorising the foreign company to offer interests under a scheme;
(iv) a copy of a prospectus and an approved trust deed, or such other similar document in the country of origin;
(v) a prospectus; and
(vi) a trust deed.
(4) In considering the application made under subsection (3), the Registrar may direct the management company to furnish other document or further information or clarification.
(5) In relation to an application made under this section, the Registrar may—
(a) require the management company to appear before the Registrar for personal representation;
(b) direct the management company to compensate any person who have purchased any interest in the scheme prior to the application; or
(c) restrain the management company from carrying on the following activities, including, but not limited to, activities which were carried on prior to the application:
(i) promoting any interest relating to a scheme to members of the public;
(ii) dealing or generating interest in its products or offering of products;
(iii) printing, publishing or distributing or causing to be printed, published or distributed, written materials promoting interest schemes;
(iv) making any recommendation or offering advice, whether orally or in writing, to any person in relation to a product or a decision by a person regarding whether or not to invest in a product; or
(v) inducing, soliciting, collecting or receiving money from a person in relation to the scheme.
(6) The Registrar may approve or refuse the application if he is not satisfied with the particulars or other information furnished under the provisions of this Act.
Certificate of authorization
(1) Upon approval of the application under section 9, the Registrar shall enter the particulars of the scheme in the register and—
(a) issue a certificate of authorization; and
(b) allocate an authorization number,
to the management company in respect of the scheme.
(2) In issuing a certificate of authorization, the Registrar shall have the power to impose any terms and conditions as he thinks fit.
(3) The certificate of authorization issued under this section shall be conclusive evidence that the requirements of this Act in respect of registration have been complied with and that the scheme is registered under this Act.
Power of Registrar to suspend certificate of authorization
(1) The Registrar shall have the power to suspend the certificate of authorization issued under section 10 if there is an action against the person to determine—
(a) whether there is a contravention of any provision under this Act or the Companies Act 2016; or
(b) whether there is a contravention of any condition or restriction imposed in relation to the approval.
(2) Upon the determination of the matters as specified in paragraph
(1)(a) or (b) being made, the Registrar shall have the power to further suspend the certificate of authorization if the Registrar is satisfied that there is a case against the management company.
Revocation of certificate of authorization
(1) The Registrar may revoke the certificate of authorization issued under section 10 if—
(a) the management company has contravened any provision of this Act;
(b) the management company has contravened any provision of the Companies Act 2016;
(c) the management company has failed to comply with any conditions imposed by the Registrar under subsection 10(2);
(d) it is desirable in the interest of interest holders or potential interest holders to do so; or
(e) the scheme is used for unlawful purposes or for purposes prejudicial to public peace, welfare or good order or contrary to the national security or interest.
(2) Before revoking the certificate of authorization, the Registrar may serve on the management company a notice requiring the management company to show cause within thirty days from the date of the notice as to why the certificate of authorization should not be revoked.
(3) The Registrar shall revoke the certificate of authorization and shall cause the particulars relating to the scheme to be removed from the register, if—
(a) the reply to the show cause notice issued under subsection (2) is not received within thirty days from the date of the notice; or
(b) after considering the reply to the show cause notice issued under subsection (2), the Registrar is not satisfied with the cause shown.
(4) Upon revocation of a certificate of authorization under subsection (3), the Registrar shall have the power to direct the management company to—
(a) compensate any person who have purchased any interest in the scheme;
(b) restrain the management company from carrying on the activities under paragraph 9(5)(c); or
(c) comply with any other direction that the Registrar thinks fit.
Appeal to the Minister on revocation
(1) A management company which is aggrieved by the decision of the Registrar under section 12 may appeal to the Minister in writing within thirty days after being notified of the decision.
(2) Where an appeal is made under subsection (1), the decision of the Registrar under section 12 shall not take effect until the appeal is disposed of by the Minister.
(3) On an appeal, the Minister may affirm, vary or set aside the decision of the Registrar or make any decision that the Minister thinks fit.
Power to refuse registration
The Registrar shall refuse to register the application of a proposed scheme if he is satisfied that—
(a) the proposed scheme is likely to be used for unlawful purposes or for purposes prejudicial to public peace, welfare or good order in Malaysia; or
(b) the registration of the proposed scheme would be contrary to the national security or interest.
Provision applicable to foreign schemes on reciprocity arrangement
(1) If, under—
(a) any law of a foreign country; or
(b) any regulatory or supervisory action taken by an authority or body in a foreign country,
a company offering a scheme is suspended, disqualified or restricted from administering a scheme in that country, the Minister may by notice served on a person connected with that country who is administering or intends to administer a scheme in Malaysia, suspend, disqualify or restrict the business of such person in a similar manner.
(2) The notice under subsection (1) may not be served unless—
(a) it is in the national interest; or
(b) the Minister has consulted the person concerned or, if expedient, a body representing the interest of the person to be affected.
(3) The notice shall—
(a) state the grounds on which it is given;
(b) identify the country to which the person is connected;
(c) specify the date on which such notice comes into force; and
(d) provide for a reasonable period to complete the performance of transactions entered into before the date on which the notice comes into force or for the termination of contracts of a continuing nature.
(4) The notice under subsection (1) may provide for the suspension, disqualification, restriction wholly or partly the administration of a scheme by a person and may provide for—
(a) the withdrawal of the registration or approval of a scheme in Malaysia;
(b) the disqualification of a person to register a scheme under this Act; or
(c) the restriction, wholly or partly, of a person in respect of the administration of a scheme.
(5) A notice which partly restricts the administration of a scheme may prohibit a person from—
(a) entering into transactions of a specified kind or entering into transactions in specified circumstances or to a specified extent;
(b) soliciting investments of a specified kind or from a specified person; or
(c) administering a scheme in a specified manner.
(6) For the purposes of this section, a person is connected with a foreign country, if—
(a) in the case of an individual, he is a national of or resident—
(i) in that country and administers a scheme from a principal place of business in that country or Malaysia; or
(ii) in Malaysia and administers a scheme from a principal place of business in that country; or
(b) in the case of a body corporate, it is incorporated or has a principal place of business—
(i) in that country or is controlled by a person connected with that country or Malaysia; or
(ii) in Malaysia or is controlled by a person connected with that country.
Conversion from small scheme to premium scheme
(1) A small scheme may be converted to a premium scheme if its management company fulfils the requirement specified in section 6.
(2) A management company may apply to convert a small scheme to a premium scheme by lodging with the Registrar—
(a) a statement signed by all of its directors in the manner and form as the Registrar may determine containing the information specified in subsection 9(2) and the following particulars:
(i) the name and authorization number of the small scheme;
(ii) the date on which the small scheme was registered and authorized;
(iii) that as at the application date, the management company appears to be able to pay its debts as the debts become due in the normal course of business;
(iv) that as at the application date, all outstanding statutory fees or any amount owing to any government agency has been settled;
(v) that the management company has placed an advertisement in at least one widely circulated newspaper in Malaysia and in the Gazette of its intention to convert to a premium scheme;
(vi) that all of the interest holders relating to the small scheme have agreed with the application to convert to a premium scheme; and
(b) the documents referred to in paragraph 9(3)(a).
(3) The Registrar may, in any particular case, require the statement referred to in subsection (2) to be verified in the manner as the Registrar thinks fit.
Registration of conversion
(1) Upon receiving the statement and documents under section 16 and upon payment of a prescribed fee, the Registrar may, subject to the provisions of this Act, register the scheme as a premium scheme and issue a certificate of authorization in the form as the Registrar may determine stating that the premium scheme is registered under this Act, from the date specified in the notice.
(2) The Registrar may approve or refuse the application if he is not satisfied with the particulars or other information furnished under the provisions of this Act.
Effect of conversion
From the date of registration of conversion—
(a) all properties vested in the small scheme, all interests, rights, privileges, liabilities and obligations relating to the scheme, and the whole of the undertaking of the scheme, as the case may be, shall be transferred to and vest in the premium scheme without further assurance, act or deed; and
(b) the small scheme shall cease.
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).
