s 5 Power of Minister to approve the establishment of a central depository
(1) The Minister may, in writing, on the recommendation of the Commission, approve an application made under section 4 for the establishment and maintenance of a central depository if he is satisfied— (a) that the applicant is a company incorporated under the Companies Act 1965, and an exchange holding company or a stock exchange is a shareholder of the applicant; (b) that the rules of the applicant make satisfactory provision— (i) with respect to the conditions under which securities may be deposited with, held by, withdrawn from, or transferred within, the central depository; (ii) for the holding of securities deposited with the central depository or its nominee company; (iii) for the processing of dealings in deposited securities; (iv) for facilitating the settlement of deposited securities; (v) for the protection of the interests of depositors and the protection and control of information on deposited securities and dealings therein; (vi) for the monitoring of compliance with, and for the enforcement of, the rules of the central depository; (vii) with respect to the maintenance of a policy or policies of insurance, and the establishment and maintenance of compensation funds, for the purpose of settling claims by depositors against the central depository, its nominee companies and authorized depository agents; and (viii) generally for the carrying on of the business of the central depository with due regard to the interests of the public; and (c) that the establishment and maintenance of the central depository would promote the positive development of the capital market in Malaysia and that the interests of the public dealing with deposited securities (whether or not listed on a stock exchange) will be served by the granting of his approval. (2) The Minister may, in approving any application under subsection (1), impose— (a) requirements with respect to the paid-up or authorized capital of the central depository; (b) conditions relating to the shareholdings of the members of the central depository; and (c) any other requirements or conditions as he considers appropriate. (3) Without limiting the generality of the requirements and conditions specified under subsection (2), the Minister may in writing, on the recommendation of the Commission, amend or revoke any requirement or condition imposed under that subsection or impose new requirements and conditions, if the Minister is satisfied that it is appropriate to do so for the protection of depositors or the public interest or for the proper regulation of the stock market. Withdrawal of approval of a central depository 5 A . (1) The Minister may, on the recommendation of the Commission, by notice published in the Gazette, and by such other means as the Commission considers appropriate— (a) withdraw an approval granted under section 5 to the central depository, with effect from the date specified in the notice; or (b) direct the central depository to cease to provide or operate such facilities, or to cease to provide such services, as are specified in the notice, with effect from the date specified in the notice. (2) The Minister shall not withdraw an approval or issue a direction under subsection (1) unless the Minister, on the recommendation of the Commission, is satisfied that it is appropriate to do so for the protection of depositors or in the public interest or for the proper regulation of the markets in securities, where any one or more of the following circumstances occur: (a) the central depository ceases to operate a system for the central handling of securities; (b) the central depository is being wound up or otherwise dissolved, whether in Malaysia or elsewhere; (c) the central depository has contravened any term or condition of its approval or is charged with any offence under any of the securities laws; (d) the central depository has failed to comply with a condition, requirement or direction given under section 61 B of this Act or section 11L of the Securities Industry Act 1983; (e) any information provided for the purposes of section 4 was false or misleading in a material particular; (f) a judgment debt of the central depository has not been satisfied in whole or in part; (g) a receiver, a receiver and manager, or an equivalent person has been appointed, whether in Malaysia or elsewhere, in relation to or in respect of any property of the central depository; (h) the central depository has, whether in Malaysia or elsewhere, entered into a compromise or scheme of arrangement with its creditors, being a compromise or scheme of arrangement that is still in operation; (i) the central depository on its own accord applies to the Minister to withdraw the approval granted to it under section 5, and the Minister, on the recommendation of the Commission, deems it fit to do so. (3) For the purposes of paragraph (2)(a), a central depository shall be deemed to have ceased to operate a system for the central handling of securities if it has ceased to operate such system for a period of one month unless it has obtained the prior approval of the Minister to do so. (4) Notwithstanding the withdrawal of an approval or the issuance of a direction under subsection (1), the Minister may permit the central depository to continue, on or after the date on which the withdrawal or direction is to take effect, to carry on such activities affected by the withdrawal or direction as the Minister may specify in the notice published under that subsection for the purposes of— (a) closing down the operations of the central depository or ceasing to provide the services specified in the notice; or (b) protecting the depositors or the public interest. (5) Where the Minister has granted permission to a central depository under subsection (4), the central depository shall not, by reason of its carrying on the activities in accordance with the permission, be regarded as having contravened section 3. (6) The Minister shall not take any action under subsection (1) without giving an opportunity to be heard. Effect of withdrawal 5 B. Any withdrawal of approval or direction issued under section 5A shall not operate so as to— (a) avoid or affect any agreement, transaction or arrangement entered into on the computer system operated by the central depository, whether the agreement, transaction or arrangement was entered into before or, where subsection 5 A(4) applies, after the withdrawal of the approval or issuance of the direction under section 5 A; or (b) affect any right, obligation or liability arising under such agreement, transaction or arrangement.