Section 172 — LABUAN FINANCIAL SERVICES AND SECURITIES ACT 2010

(2)

The whole or any part of the business of a transferor may be transferred to the transferee if the transfer is effected by a scheme under this section.

(3)

A scheme under this section shall not provide for the business of the transferor to be transferred to a person who is not yet licensed to carry out such business under this Act or who is not yet in existence except when it is expressly provided in the scheme that such scheme shall only come into operation upon such person being licensed.

(4)

A scheme under this section may include provisions for matters incidental to the transfer thereby effected and provisions for giving effect to that transfer, and in particular may include provision for—

(a)

any property, rights or liabilities of the transfer including the assets comprising the insurance fund (in the case of a transfer of an insurance business), to vest, by virtue of the scheme and without further assurance, in the transferee;

(b)

in the case of a transfer of an insurance business, the registration by the transferee of policies transferred, for the amounts to be included in respect of those policies in the transferee’s insurance fund and for other matters arising under this Act out of the transfer;

(c)

the continuation by or against the transferee of any legal proceedings pending or against the transferor;

(d)

the dissolution without the winding-up, of the transferor;

or

(e)

such incidental, consequential and supplementary matters as are necessary to secure that the scheme shall be fully and effectively carried out.

(5)

A scheme under this section shall be of no effect unless it is first approved by the Authority and subsequently confirmed by the Court.

Act 704

(6)

The following provisions shall apply in respect of every scheme:

(a)

the transferor shall submit to the Authority a copy of the scheme together with copies of reports, if any, setting out the terms of the scheme;

(b)

each of the parties to the scheme shall, not later than one month after a copy of the scheme is submitted to the

Authority, cause to be published in not less than two daily newspapers approved by the Authority a notice, containing such particulars as may be specified, of the intention to make an application to the Court for confirmation of the scheme; and

(c)

each of the parties to the scheme shall, for a period of fifteen days after the publication of the notice mentioned in paragraph (b), keep of a copy of that scheme at its office in Labuan and such copy shall be open to inspection by all of its members and policy owners who are affected by the scheme.

(7)

In addition to subsection (6), in respect of a scheme for the transfer of an insurance business, the following provisions shall apply:

(a)

actuarial reports, if any, shall be submitted together with copies of the scheme;

(b)

the transferor shall submit to the Authority a report sufficient to indicate the opinion of the actuary on the likely effects of the scheme on policy owners of the parties to the scheme in respect of any transfer of life insurance business;

(c)

each of the parties to the scheme shall furnish a copy of and the report mentioned in paragraph (b) to any person who asks for such copy at any time before the Court confirms the scheme; and

(d)

the Authority may cause a report on a scheme to be made by an actuary independent of the parties to the scheme and, if it does so, shall cause a copy of the report to be sent to each of such parties.

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(8)

Copies of any scheme and any such report as are mentioned in subsections (6) and (7), or summaries thereof approved by the Authority, shall, except so far as the Court upon application made in that behalf otherwise directs, be transmitted by each of the parties to the scheme to each of its policy owners affected by the scheme.

(9)

The parties to a scheme shall be jointly and severally liable to reimburse to the Authority any costs or expenses incurred by the Authority under this section in connection with the scheme;

and the scheme shall include provisions as to how the liability is to be borne as between such parties:

Provided that where the Court has made any order as to costs, the costs to be reimbursed to the Authority shall not exceed the amount specified in such order.

(10)

The Authority may approve or reject a scheme.

(11)

After a scheme has been approved by the Authority under subsection (10), an application may be jointly made to the Court by way of ex parte originating summons by the parties to the scheme for such order of the Court to confirm such approved scheme and to facilitate or enable the scheme being given effect to.

(12)

An application to the Court with respect to any matter connected with a scheme may, at any time before confirmation of the scheme by the Court, be made by the Authority or by any person who in the opinion of the Court is likely to be affected by the scheme.

(13)

The Court may confirm a scheme with or without modifications or may refuse to confirm the scheme.

(14)

A scheme which has been confirmed by the Court under subsection (13) shall have effect according to its tenor notwithstanding anything in the preceding sections and shall be binding on any person thereby affected.

(15)

On confirmation of the scheme, each of the parties to the scheme shall, unless it is an unincorporated company file a copy of the scheme with the Authority and with the regulatory authorities in its country of establishment or origin.

Act 704

(16)

The transferee shall, within one month after the scheme takes effect, lodge with the Authority—

(a)

statements of the assets and liabilities of each of the parties to the scheme, as at the time immediately before the transfer, signed on behalf of such party;

(b)

a copy of the scheme as confirmed by the Court and a sealed copy of the order of the Court confirming the scheme; and

(c)

a declaration made by the chairman of the board of directors of the transferee, or by its principal officer in Labuan, fully setting out every payment made or to be made to any person on account of the transfer, and stating that, to the best of his belief, no other payment beyond those so set out has been, or is to be, made on account thereof by or with the knowledge of the parties to the scheme.

(17)

The transferor shall lodge, within thirty days of the making of the order of the Court under subsection (11), an authenticated copy of such order together with an authenticated copy of the scheme approved by the Authority under subsection (10), with the appropriate authority, if any, concerned with the registration or recording of dealings in any movable property or an interest in movable property transferred pursuant to the order.

(18)

Where an order of the Court under subsection (11) vests any alienated land, or any share or interest in any alienated land, in the transferee—

(a)

the Court shall, where such alienated land is in West

Malaysia, pursuant to subsection 420(2) of the *National

Land Code [Act 56 of 1965], cause a copy of the order to be served on the Registrar of Titles or the Land

Administrator, as the case may be, immediately after the making of the order so that the Registrar of Titles or the Land Administrator, as the case may be, gives effect to the provisions of the subsections 420(2), (3)

and (4);

*NOTE—National Land Code [Act 56 of 1965] has been revised and named as National Land

Code [Act 828] which comes into operation on 15 October 2022.

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(b)

where such alienated land is in Sabah, the transferee shall, as soon as practicable after the order has been made, produce an authenticated copy of such order to the Registrar for the registration of the vesting of the alienated land or of the share or interest in alienated land in the transferee as provided under the Land Ordinance of Sabah [Sabah Cap. 68]; or

(c)

where such alienated land is in Sarawak, the transferee shall, as soon as practicable after the order has been made, produce an authenticated copy of such order to the Registrar for the registration of the vesting of the alienated land or of the share or interest in alienated land, in the transferee, as provided under the Land Code of Sarawak [Sarawak Cap. 81].

(19)

An order of the Court under subsection (11) may relate to any property or business of the transferor outside Malaysia and, if it so relates, effect may be given to it either in accordance with any reciprocal arrangements relating to enforcement of judgements that may exist between Malaysia and the country, territory or place outside Malaysia in which such property or business is, or where there are no such arrangements, in accordance with the law applicable in such country, territory or place.

(20)

In this section, “parties to the scheme” means the transferor and the transferee, and “parties to a scheme” shall be construed accordingly.

Internal audit