Skip to content
mylaw.myby aturio
In forceUpdated to 1 Dec 2011Read it in Bahasa Malaysia
Contents

Part IV · Trustees of Labuan Trusts

46H. Intervention by trustee in management in prescribed circumstances

(1)

Where, in relation to a trust of designated shares, an interested person has a complaint concerning the conduct of the company’s affairs, and the ground for that complaint is permitted, he may, in writing, call upon the trustee to intervene in the affairs of the company to deal with the complaint.

(2)

A trust instrument may specify one or more permitted grounds for complaint.

(3)

Upon receiving an intervention call, the trustee shall, if satisfied that the complaint is substantiated, take such, if any, action as the trustee considers appropriate to deal with the complaint in the interests of the trust and may include the following:

(a)

making or procuring changes in the directorship of the company in accordance with the provisions of its memorandum and articles and any written law applicable to the company, but otherwise on such terms as the trustee thinks fit, provided that in making, procuring or maintaining any such change, the trustee may disregard paragraph 46G(3)(b) if and in so far as, in the opinion of the trustee, it is expedient to do so for the purposes of dealing with the complaint;

68 Laws of Malaysia ACT 554

(b)

procuring action by the company to recover any losses caused by the conduct that giving rise to the complaint;

or

(c)

seeking such advice on the complaint and the manner of addressing it as the trustee considers appropriate.

(4)

In considering and taking action under subsection (3), the trustee shall—

(a)

have regard to—

(i)

any wishes of the settlor; and

(ii)

the efficient functioning of the company; and

(b)

disregard business risk, except to the extent that—

(i)

the ground for complaint consists of or arises from any disagreement among the directors as to business risk; or

(ii)

any wishes of the settlor require business risk to be considered.

(5)

After acting pursuant to subsection (3), or after deciding not to act, the trustee’s obligation to intervene shall be at an end unless and until another intervention call is made.

(6)

It shall be a ground for declining to act on an intervention call if, apart from any other reason for declining, the call is made on substantially similar ground that has been made previously, and there appears to the trustee to be no reason to alter, or act further on, the decision previously taken by it.

(7)

Where a trust instrument specifies one or more permitted grounds for complaint, the following provisions shall apply:

(a)

an interested person may request the trustee to provide such information concerning the affairs of the company and any connected company as is reasonably required for that person to consider whether an intervention call is

Labuan Trusts 69

necessary, and the trustee shall use all reasonable endeavours to provide that information and may, if considered necessary for this purpose, procure the replacement of any of the directors with the trustee’s own representative;

(b)

where there is an appointed enquirer he shall be under the following duties:

(i)

a duty to make reasonable enquiries as to whether there is a permitted ground for complaint as often as appears appropriate in the circumstances, and not less than once in a period of twelve months; and

(ii)

a duty to make an intervention call under this section, and provide the trustee with evidence of the relevant ground for complaint, whenever it appears to him to be appropriate;

(c)

where there is no appointed enquirer, the trustee shall use all reasonable endeavours to ensure that at all times at least one interested person of full capacity is given the following documents and information concerning the trust, but without prejudice to any right of that person to documents and information apart from this paragraph:

(i)

a copy of the trust instrument and other trust documents;

(ii)

the name and address of the trustee;

(iii)

the name, registered office and principal place of business of the company;

(iv)

the names and addresses of all directors of the company; and

(v)

the nature of the current activities of the company,

70 Laws of Malaysia ACT 554

provided that, where practicable, any person to whom information is given under this paragraph shall be a person who, in the reasonable opinion of the trustee, has acquired, or is likely to acquire, by appointment or otherwise, a substantial equitable interest in some or all of the designated shares or their proceeds or is the parent or legal guardian of such a person.

(8)

All expenses incurred in dealing with an intervention call or considering the complaint on which it is based, including trustee remuneration where applicable, and the cost of any advice, shall be payable out of the trust fund and its income in such proportions as the trustee decides, and if there is any deficiency in liquid funds the trustee may take such steps as are available to the trustee under the memorandum and articles of the company and any written law applicable to the company, to make up the shortfall out of dividends from the company and may, if considered necessary for this purpose, procure the replacement of any of the directors with the trustee’s own representative.

(9)

The trustee shall, where practicable, procure the removal from office of a director appointed for the purpose specified in paragraph

(7)

(a)

or subsection (8) when the purpose for which the director was appointed is achieved, if removal is appropriate for the purpose of any action decided upon by the trustee pursuant to subsection (3) or, subject to such action, for the purpose of compliance with the office of director rules.

Report

Read on from s 46I

Part V

Miscellaneous

Read on from Part V