*LOAN (LOCAL) ACT 1959

any licensed bank, licensed merchant bank, licensed finance company, or licensed discount house, as those terms are defined in the Banking and Financial Institutions

Act 1989 [Act 372];

any State Government;

any statutory body; or

any fund, scheme, organization, body corporate or unincorporate, or any other person, as may be specified in writing by the Minister;

―participating investing institution‖ means a financial institution authorized by the Bank under subsection 8A(1);

―primary investing institution‖ means a participating investing institution appointed by the Bank under subsection 8A(2);

―statutory acknowledgement receipt‖ means an acknowledgement receipt in the form in the First Schedule issued under subsection 8B(6);

―statutory body‖ means any body or authority established, appointed or constituted by any written law, and includes any local authority;

―statutory monthly statement‖ means a monthly statement in the form in the Second Schedule issued under subsection 8C(2);

―stock‖ means stock issued pursuant to sections 3 and 6 or a stock held by any person or pursuant to a transfer of it, or of a part of it, under this Act;

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―stock customer‖ means a person who makes or takes a transfer of a stock under subsection 8B(2);

―stock issue‖ means any loan raised under subsection 3(1) by the issue of stock under Part III;

―trustee stock‖ means any of the securities mentioned in section 4

of the Trustee Act 1949 [Act 208];

―the Minister‖ means the Minister for the time being charged with the responsibility for finance;

In relation to Sabah and Sarawak, references in this Act to any written law or to any provisions of it shall—

Where any record or account is required to be maintained under this Act by the Bank or by any participating investing institution, whether acting in its capacity as a primary investing institution or a depository institution or otherwise, it shall be maintained in the manner or the means as the Bank may determine or specify, including its maintenance in writing or by means of any visual recording (of still or moving images), or any sound recording or any electronic, magnetic, mechanical, or other recording whatsoever, on any substance, material, thing or article.

The functions, powers and duties conferred upon the Bank under this Act shall be performed, exercised and discharged by the

Bank on behalf of the Minister.

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Where the loan is raised by the issue of stock, Part III shall apply.

The sums raised under this Act shall not exceed the *sum specified, from time to time, by the Yang di-Pertuan Agong by order published in the Gazette and the order shall, as soon as possible after its publication, be laid by the Minister before the Dewan Rakyat.

Sums charged on and payable out of Consolidated Fund

In this section ―debt charges‖ includes interest, sinking fund charges, the repayment or amortization of debt, and all expenditure in connection with the raising of the loans and the service and redemption of debt created by it.

All expenditure in connection with the purchase, conversion and cancellation of stock made in accordance with this Act are charged upon and payable out of the Consolidated Fund.

*NOTE—Not exceeding ninety thousand million ringgit at any one time–see P.U. (A) 195/1990.

Loan (Local) 11

Application of loan

Any sum raised under this Act may be applied—

The Bank may appoint, in writing, any participating investing institution to be a primary investing institution.

Only a primary investing institution may take up stock from the Bank, and the Bank shall maintain an entry in its records of every such stock.

A participating investing institution shall maintain a single account with the Bank—

The Bank shall—

The Bank shall maintain records of the account of a participating investing institution, and the records shall be the sole and conclusive evidence of the state of the account, and of all the particulars and details of it, and it shall be binding on the Bank, the participating investing institution and on any other person having any interest in it.

Depository institutions

Any person, other than a participating investing institution, desiring either to make or take a transfer of a stock shall do so only through a depository institution.

A depository institution shall maintain with the Bank, in addition to the account maintained by it under subsection 8A(4), a separate single account in respect of all transfers effected through it under subsection (2).

The Bank shall—

A depository institution shall maintain a customer’s account in respect of every transferor and transferee who is a party to any transfer effected through the depository institution under subsection (2), except where a customer’s account in respect of a transferee is maintained by another depository institution, in which case the first mentioned depository institution shall have the stock transferred into the transferee’s account with the second mentioned depository institution.

Where a transfer of stock is made by any person under subsection (2), the following procedure shall be complied with by the respective depository institutions:

A statutory acknowledgement receipt shall not be capable of being negotiated or dealt with in any manner whatsoever, and shall be used solely between the depository institution which issued it and the

Where the amount in the account maintained by a depository institution with the Bank under subsection (3) is affected by a transfer effected through it under subsection (2), the depository institution shall communicate immediately to the Bank information of any change in the amount caused by the transfer.

Duties and obligations of depository institutions in relation to transfers effected under subsection 8B(2)

A depository institution shall issue to each of its stock customers a statutory monthly statement in the form in the Second

Schedule in respect of his stock on or before the tenth day of the month succeeding the month in respect of which the statutory monthly statement is issued.

A statutory monthly statement shall be the sole evidence of the stock held by a stock customer at the close of the month in respect of which it is issued.

A depository institution shall—

The stock dealt with by a depository institution in respect of any transfer effected through it under subsection 8B(2) shall be dealt

16 Laws of Malaysia ACT 637

with solely and exclusively in the manner, and for the purpose, provided under section 8B, and shall not be dealt with or utilized by the depository institution in any other manner, or for any other purpose whatsoever.

A depository institution shall furnish to the Bank the returns, details, particulars or information in relation to the accounts maintained by it under subsection (1) in respect of each stock customer, or its stock customers generally, as may be specified by the

Bank, or as the Bank may, from time to time, require in writing.

The Bank may, through any of its officers authorized in writing by the Governor or the Deputy Governor of the Bank, inspect and take copies of accounts maintained by a depository institution under this section, including the accounts in respect of any particular stock customer or any other record or account relating to or affecting any stock under this Act, and the depository institution, and every director, officer, employee, servant or agent of the depository institution shall furnish to the officer of the Bank all such books, records, correspondence, or any other document as may be required by the officer, and shall provide him all the assistance as he may require.

The account of a stock customer maintained by a depository institution under subsection (1) shall be secret as between the institution and the stock customer and shall not be disclosed to any person by the depository institution except to the Bank, including the officers of the Bank referred to in subsection (7), unless such disclosure is authorized in writing by the stock customer.

A depository institution shall be absolutely and wholly responsible and liable to its stock customer in respect of all transfers taken or made by the stock customer through it under subsection 8B(2).

A depository institution shall not require a stock customer to pay any charge, fee, or any other payment in respect of any matter dealt with by it in relation to a stock customer under this Act, except as may be provided by rules made under section 20.

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Bank’s power to require information, inspect and take copies

The Bank may, through any of its officers authorized in writing by the Governor or Deputy Governor of the Bank, inspect or take copies of any account, record, book, or any other document maintained by a participating investing institution under this Act.

Maintenance of secrecy by the Bank

The Minister shall in each half-yearly period ending with the day on which interest on stock issued under this Act falls due, appropriate out of the Consolidated Fund a sum equal to one half-year’s interest on the whole of the stock so issued in order that the interest for the half-year may be paid from it.

*NOTE—The Central Bank of Malaysia Act 1958 [Act 519] has since been repealed by the Central Bank of Malaysia Act 2009 [Act 701]–see section 3 of Act 701.

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Authorization of Bank

The Minister may fix the fee as he considers reasonable to be charged on the Consolidated Fund for the performance by the Bank of any duties under this Act.

on such dates as may be specified in the prospectus; or

where the prospectus provides that the stock is redeemable at the election of the Minister, on the earlier of the following dates:

the date of maturity; or

Notwithstanding subsections 8A(5), 8B(4) and 11(1), where stock is redeemable at the election of the Minister and a call for redemption is made for only part of the stock, only such part of the stock as has been called for redemption shall be redeemable on the date of the call.

Power to purchase and cancel stock

The Bank may, with the approval of the Minister, cancel any stock purchased in accordance with subsection (1) upon such terms as may be allowed by the Minister.

Power to convert stock

The Bank may, with the approval of the Minister, cancel any stock it has obtained under subsection (1) upon such terms as may be allowed by the Minister.

Sinking fund

If at any time the Minister is satisfied that the value of the sinking fund will be sufficient with further accumulations of interest but without further payment of the contribution to enable the loan to be redeemed out of the proceeds of the sinking fund when the same falls due to be redeemed, the Minister may suspend further payments of the contributions to the sinking fund:

Provided that the Minister may at any time recommence payment of the contribution if he considers this to be necessary.

The Minister may, at any time, apply all or any part of the moneys in the sinking fund created under this section to the purchase of trustee stock or stock issued under this Act which matures not later than the stock in relation to which the sinking fund was formed.

The Accountant General shall, in each year, pay into the sinking fund created under this section a sum equivalent to the annual interest which would have been payable on any stock purchased under subsection (3) if the stock had not been purchased as mentioned above.

Application of sinking fund

firstly, for the payment of all expenses of, or incidental to, the management of the sinking fund and the redemption, purchase or conversion of the stock issued under this Act;

secondly, for the repayment of principal moneys represented by the stock; and

finally, for any purchase or conversion of stock under sections 11A and 11B.

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Procedure if sinking fund insufficient

Advance deposits shall be applied to the purchase of stock of the first loan issued by Malaysia after the date on which the deposits were received either by the Treasury or the Bank:

Provided that the advance deposits may be applied for any of the purposes referred to in section 5:

Provided further a depositor may give notice in writing within seven days after the date of issue of the loan that he wishes the advance deposits or part of it made by him to be repaid.

Whenever a depositor gives notice that he wishes the whole or part of the advance deposits made by him to be repaid, the deposits or part of it made by the depositor shall be repaid immediately, but no interest shall be payable on it.

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Advance deposits which are applied to the purchase of stock in accordance with subsection (2) shall carry interest at the rate applicable to the stock calculated from the date the deposit was received by the Treasury or the Bank and the interest shall be charged on the Consolidated Fund.

Any power to invest conferred on a primary investing institution by any instrument or written law shall include the power to make advance deposits in accordance with this section.

False entries, etc., in books, documents, etc.

make or cause to be made a false entry;

omit to make, or cause to be omitted, any entry; or

alter, abstract, conceal or destroy, or cause to be altered, abstracted, concealed or destroyed, any entry, in any book or record, or in any report, slip, statement or other document whatsoever, relating to the business, affairs, transactions, conditions, property, assets, liabilities or accounts, of any participating investing institution, or any primary investing institution, or any depository institution, or of the Bank.

Contravention of Act, penalty and criminal liability of institutions, directors, etc.

ten million ringgit; or

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where an amount of money is the subject matter of the offence, ten times the amount, whichever is the greater, or to imprisonment for a term not exceeding fifteen years or both:

Provided that where the person found guilty of the offence is a body corporate, the above-mentioned punishment of imprisonment shall not apply to it.

Where any offence against any provision of this Act has been committed by any institution mentioned in subsection (1), any person who at the time of the commission of the offence was a director, officer, or controller of the institution or was purporting to act in any such capacity, or was in any manner or to any extent responsible for the management of any of the affairs of the institution, or was assisting in the management, shall be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.

Where any person (in this subsection referred to as the

―principal―) would be liable under this Act to any punishment or penalty for any act, omission, neglect or default, he shall be liable to the same punishment or penalty for every such act, omission, neglect or default of any clerk, servant or agent of his, or of the clerk or servant of the agent:

Provided that the act, omission, neglect or default was committed by the principal’s clerk or servant in the course of his employment, or by the agent when acting on behalf of the principal, or by the clerk or servant of the agent in the course of his employment by the agent or otherwise on behalf of the agent.

Without prejudice to subsection (2), where an institution referred to in subsection (1) is a financial institution under paragraph (b) or (c) of the definition of ―financial institution‖ under subsection 2(1), it shall not be liable to be prosecuted for any offence

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committed by it under subsection (1), or be liable under subsection (3).

Nothing in this Act contained shall be deemed to prevent the prosecution, conviction and punishment of any person according to the provisions of any other written law; but so that no person shall be punished more than once for the same offence.

For the purposes of this section, ―director‖, ―officer‖ and

―controller‖ shall have the meaning respectively assigned to it under subsection 2(1) of the Banking and Financial Institutions Act 1989.

Civil liability not affected by prosecution or nonprosecution, etc.

Without prejudice to the generality of subsection (1), rules may be made to provide for—

For the purposes of subsection (1), ―default‖ includes—