Act 125

the acceptance of any money on deposit or loan by a person (in this definition referred to as "the borrower") from more than ten persons wherein the borrower is under a liability (whether or not such liability is present or future) to repay the money to these persons; and

of the Federation; or

"deposit liability" means the liability of a licensed borrowing company to repay any money accepted by it on deposit or loan from any person other than from a licensed bank;

"foreign company" means a foreign company as defined in the Companies Act, 1965;

"public company" means a public company as defined in the Companies Act, 1965.

which by reason of any agreement or arrangement entered into between the Central Bank and any other monetary authority of another country, is deemed to be interchangeable with the currency of the Federation;

a public company; and

a licensed borrowing company.

Any person who contravenes the provisions of subsection (1) is guilty of an offence and shall on conviction be liable to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding three years or to both.

accept any money on deposit or loan which is repayable on demand by cheque, draft, order or any other instrument drawn by the depositor on the licensed borrowing company; or

deal in—

gold; or

a certified true copy of its memorandum and articles;

a certified true copy of its certificate of incorporation;

a certified true copy of its latest and duly audited balance sheet; and

such other written information as may be required by the Central Bank, certified by a director or the secretary of the company.

Upon receiving an application under sub-section (1) the Central Bank shall consider the application and make a recommendation to the Minister stating whether or not a licence should be granted to the company and the conditions (if any) to be attached to the licence.

Upon receiving the application and recommendation the Minister may grant a licence to the public company with or without conditions if the paid-up capital in cash of the public company (unimpaired by losses or otherwise) is not less than one million Malaysian dollars.

Notwithstanding anything to the contrary in this section, a public company may carry on borrowing business without a licence if—

carries on its business in a manner which in the opinion of the Central Bank is detrimental to the interests of its depositors;

has insufficient assets to cover its liabilities to its depositors;

carries on business while its paid-up capital (unimpaired by losses or otherwise) is less than one million Malaysian dollars; or

contravenes any provision of this Act or of any regulations made thereunder, the Minister may on the recommendation of the Central Bank revoke or suspend the licence of the licensed borrowing company subject to such conditions and restrictions as the Minister may think fit to impose but before the Minister suspends or revokes the licence he shall inform the borrowing company in writing—

of his intention to do so; and

The decision of the Minister shall be final and shall not be subject to appeal or to review in any court.

When the licence of a borrowing company has been revoked or suspended pursuant to sub-section (1) the borrowing company shall forthwith cease to use or display in any manner the words, "licensed borrowing company".

Any borrowing company which fails to comply with the provisions of sub-section (3) is guilty of an offence and shall on conviction be liable to a fine not exceeding five thousand dollars and to a fine not exceeding five hundred dollars for every day the offence continues.

a licence fee on its being granted a licence and in addition a fee for each office or place of business (other than its principal place of business) when the office or place of business is established;

an annual licence fee for the licensed borrowing company in addition to the fee described in paragraph (a) not later than the 31st day of January; and

an annual fee for each office or place of business (other than its principal place of business) not later than the 31st day of January, according to the rates prescribed in the First Schedule.

The Minister may by notification in the Gazette amend the First Schedule.

it is its wholly-owned subsidiary;

it is incorporated in the Federation; and

the prior written consent of the Central Bank has been obtained.

outside the Federation; or

in the Federation without the prior written consent of the Central Bank.

every year not later than the 31st day of March the names of licensed borrowing companies;

the names of licensed borrowing companies to which licences are granted after the publication of the names pursuant to paragraph (a); and

the names of licensed borrowing companies whose licences are suspended or revoked.

maintain a reserve fund; and

before any dividend is declared, transfer to the reserve fund out of the net profits of each year (after due provision has been made for taxation)—

a sum equal to not less than fifty per centum of such net profits if the reserve fund is less than fifty per centum of its paid-up capital; and

exhibit in a prominent position in every office or place of business—

a copy of its latest and duly audited balance sheet; and

within six months after the close of its financial year forward to the Central Bank two copies of its latest and duly audited balance sheet and profit and loss account; and

publish within fourteen days of the laying of its accounts before the company at its annual general meeting in at least two local daily newspapers one in the National Language and one in English a copy of its latest and duly audited balance sheet.

Any licensed borrowing company which fails to comply with the provisions of this section is guilty of an offence and shall on conviction be liable to a fine not exceeding five thousand dollars.

The minimum amount of liquid assets shall be expressed as a percentage of the deposit liabilities of every licensed borrowing company and such percentage may be varied by the Central Bank from time to time by notice in writing to every licensed borrowing company.

When the Central Bank issues a notice under subsection (1) each licensed borrowing company shall be allowed a period of not less than one week (as may be specified in such notice) within which to comply with the requirements of the notice.

Where a licensed borrowing company fails to comply with the requirements of the notice it shall not lend any money to any person unless it obtains the written approval of the Central Bank.

For the purposes of this section liquid assets shall be—

For the purposes of this section, "risk assets" means assets other than liquid assets and the reserve held with the Central Bank pursuant to section 37 (c).

8u5.AA635

In sub-section (1), the expression "unsecured advance, loan or credit facility" means—

All the directors of a licensed borrowing company shall be liable jointly and severally to indemnify the licensed borrowing company against any loss arising from the making of an unsecured advance, loan or credit facility in contravention of sub-section (1).

Subs. Act 330

For the purposes of this section and section 23 a "director" shall be deemed to include the wife, husband, father, mother, son or daughter of a director.

shares of any corporation;

immovable property; or

any beneficial interest in any firm.

Sub-section (1) shall not apply in respect of any share, immovable property or beneficial interest acquired by the licensed borrowing company in the course of satisfaction of debts due to it.

Any shares, immovable property or beneficial interest acquired pursuant to sub-section (2) shall be disposed of as soon as practicable but not later than one year or such longer period as the Central Bank may allow in any particular case, commencing on the date the shares, immovable property or beneficial interest were acquired.

any of its directors as defined in section 21 and subject to that section;

any firm in which it or any of its directors (as defined in section 21), is interested as partner, manager or agent or any individual or firm of whom or of which any of its directors is a guarantor;

any of its subsidiaries or related companies;

any of its officers or employees;

any private or public corporation in which it or any of its directors (as defined in section 21), officers or employees is interested as a director, manager, agent or guarantor;

any individual in whom or any firm or corporation in which any of its directors is interested directly or indirectly other than such advances, loans and credit facilities, particulars of which have already been supplied pursuant to paragraphs (a) to (e).

If on examination of the particulars supplied by a licensed borrowing company under sub-section (1) it appears to the Central Bank that any advances, loans or credit facilities are being granted to the detriment of the interests of the depositors of the licensed borrowing company the Central Bank may by order in writing to the licensed borrowing company prohibit the licensed borrowing company from granting any further advances, loans or credit facilities or impose such restrictions on the grant thereof as the Central Bank thinks fit and may further order the licensed borrowing company to secure repayment of any loans within such time and to such extent as may be specified in the order.

Any licensed borrowing company which fails to comply with any of the provisions of this section is guilty of an offence and shall on conviction be liable to a fine not exceeding one thousand dollars for every day the offence continues.

who is an approved company auditor pursuant to section 8 of the Companies Act, 1965; and

who in addition to being an approved company auditor pursuant to paragraph (a) is again approved by the Minister for the purposes of this Act.

Sections 30, 31 and 32 shall apply to an auditor appointed under this section as if for references to the Central Bank there were substituted references to the auditor.

arrangement for the sale of its shares or its business;

If any book, account or document or information is not supplied in accordance with sub-section (1), the person is guilty of an offence and shall on conviction be liable to a fine not exceeding one thousand dollars in respect of every day the offence continues.

For the purposes of an investigation under this Part, all officers and employees of the Central Bank shall be deemed to be public servants within the meaning of the Penal Code.

a licensed borrowing company informs the Central Bank—

that it considers that it is likely to become unable to meet its obligations; or

a licensed borrowing company becomes unable to meet its obligations or suspends payment; or

after an investigation is made under this Part the Central Bank is of the opinion that a licensed borrowing company—

is likely to become unable to meet its obligations or is about to suspend payment; or

require the licensed borrowing company forthwith to take such steps as the Central Bank may consider necessary or expedient;

the deposit liabilities of the licensed borrowing company have been repaid or the Central Bank is satisfied that suitable provision has been made for their repayment; or

in the opinion of the Central Bank it is no longer necessary or expedient for the Central Bank to remain in control of the business of the licensed borrowing company.

Any licensed borrowing company which fails to comply with sub-section (1) or with any requirement of the Central Bank pursuant to that sub-section is guilty of an offence and shall on conviction, be liable to a fine not exceeding one thousand dollars for every day the offence continues.

the policy to be followed by licensed borrowing companies in relation to the granting of advances and the extension of credit facilities including the purposes for which advances may be made or credit facilities extended;

the rates of interest payable to or by licensed borrowing companies, the rates of discount chargeable by licensed borrowing companies or the rates of commission and other charges payable to licensed borrowing companies;

a reserve to be held by each licensed borrowing company at the Central Bank against its deposit liabilities in the Federation.

For the purposes of this section the Governor and the Deputy Governor of the Central Bank and any director or employee thereof and any person holding any office therein or appointed by the Central Bank under paragraph (ii) of section 33 shall be deemed to be an officer of the Central Bank.

he commits an act of bankruptcy pursuant to section 3 of the Bankruptcy Act, 1967; or

he is convicted of—

any offence in connection with the promotion formation or management of a corporation;

No person who has been a director of or directly concerned in the management of a licensed borrowing company which has been wound up by the Court pursuant to section 218 of the Companies Act, 1965, shall without the express authority of the Minister act or continue to act as a director or be indirectly concerned in the management of any licensed borrowing company.

Any person acting in contravention of sub-section (1) or (2) is guilty of an offence and shall, on conviction, be liable to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding three years or to both.

fails to take reasonable steps to secure compliance by the licensed borrowing company with the requirements of this Act; or

fails to take reasonable steps to ensure the veracity of any statement submitted under the provisions of this Act, is guilty of an offence and shall on conviction, be liable to a fine not exceeding/five thousand dollars or to imprisonment for a term not exceeding three years or to both.

In any proceedings against a person under sub-section (1) it shall be a defence to prove that he had reasonable grounds to believe that—

the act or omission complained of was within the ordinary scope of the employment of the agent or servant; or

the principal authorized or subsequently ratified the act or omission complained of notwithstanding that the act or omission was not within the ordinary scope of the employment of the agent or servant.

In this section the expression "Sessions Court" includes the Court of a Magistrate of the First Class in relation to Sabah and Sarawak.

any bank;

any post office savings bank established under the provisions of any written law in force in the Federation relating to post office savings banks;

any co-operative society registered under any written law in force in the Federation relating to co-operative societies;

any pawnbroking business carried on by any person licensed under any written law in force in the Federation relating to pawnbrokers; or

any person which or who is authorized under any written law in force in the Federation to carry on borrowing business.

for a period not exceeding six months; or

for such further period or periods as may be prescribed by the Minister by notice in writing to the person.

Where any corporation or firm is authorized to carry on the business of a borrowing company under sub-section (1) it shall—

Where pursuant to sub-section (2) a corporation or firm fails to comply with the requirements of that subsection it shall repay its deposit liabilities within one month of their being repayable and shall render a monthly account of the repayment to the Central Bank.

For the purposes of this section and section 48 "firm" includes a natural and individual person registered under any written law in force in the Federation relating to the registration of business names.

the name of the corporation or firm;

the addresses of the registered office and other offices or places of business of the corporation and the addresses of the principal office and other offices or places of business of the firm and where the firm has only one office the address of that office;

the names and addresses of the directors of the corporation or the partners of the firm;

the paid up capital of the corporation or the capital which the partners contribute to the partnership from time to time, and

the amount of the deposit liabilities of the corporation or the firm.

Licence fee on granting of licence

Annual licence fee

Fee on establishment of each office or place of business other than the principal place of business 200

Annual fee for each office or place of business other than the principal place of business ... 200

SECOND SCHEDULE

COMPANIES ACT, 1965

Section of Act

Extent of Amendment

217 (1) (f) ... Substitute the words, "Central Bank" for the words, "Minister charged with the responsibility for finance".

217 (1)

... Insert the following new paragraph—

Act 6. " (g) in the case of a borrowing company licensed under the Borrowing Companies Act, 1969, the Central Bank;".