Islamic Financial Services Act 2013 · s 217

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217.
Priority of payments in winding up of licensed Islamic bank
(1) In the winding up of a licensed Islamic bank in or outside
Malaysia—

*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016
[Act 777] which comes into operation on 31 January 2017–see subsection 620(1) of Act 777.

188
(a) the assets of the licensed Islamic bank, subject to paragraph
(b), shall be available to meet all liabilities of that licensed
Islamic bank in respect of its Islamic deposits in Malaysia in priority to all other unsecured liabilities of that licensed
Islamic bank other than the preferential debts set out in subsection 292(1) of the *Companies Act 1965 in the order set out in that subsection and the debts due and claims owing to the Government under section 10 of the
Government Proceedings Act 1956 [Act 359]; and
(b) notwithstanding subsection 292(1) of the *Companies Act 1965, but subject to any costs and expenses of the winding up set out in paragraph 292(1)(a) of the *Companies Act 1965 directly incurred in realising the assets of the investment accounts and any tax set out in paragraph 292(1)(f) of the *Companies Act 1965 which is attributable to the investment accounts, the assets of the investment accounts managed by the licensed Islamic bank in
Malaysia, shall be available, in the order set out as follows:
(i) to pay outstanding costs or expenses of the investment accounts;
(ii) to pay any profit, fees, gains or other remuneration due to the licensed Islamic bank; and
(iii) to meet the liabilities to the investment account holders.
(2) For purposes of paragraph (1)(a), regulations may be made under section 271 to prescribe the order of priority for payments of different categories of Islamic deposits.
(3) Without limiting the generality of subsection (1), in the winding up of a licensed international Islamic bank which is a foreign institution, the assets of such licensed international Islamic bank generated from the funds received by its office in Malaysia—

*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016
[Act 777] which comes into operation on 31 January 2017–see subsection 620(1) of Act 777.

Islamic Financial Services                              189
(a) shall be available to meet all liabilities of the licensed international Islamic bank in Malaysia; and
(b) with effect from the date of the winding up of the licensed international Islamic bank, shall not be sold, removed, dissipated, alienated, transferred, assigned, encumbered, distributed or otherwise dealt with in any manner whatsoever without the prior written approval of the Bank.
(4) Notwithstanding anything to the contrary in section 340 of the
*Companies Act 1965 or the winding up order for a licensed international Islamic bank which is a foreign institution, the provisions of this section shall prevail and have full force and effect.
(5) Any person who contravenes paragraph (3)(b) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding fifty million ringgit or to both.

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s 217Priority of payments in winding up of licensed Islamic bank

(1)

In the winding up of a licensed Islamic bank in or outside

Malaysia—

*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016

[Act 777] which comes into operation on 31 January 2017–see subsection 620(1) of Act 777.

188

(a)

the assets of the licensed Islamic bank, subject to paragraph

(b)

, shall be available to meet all liabilities of that licensed

Islamic bank in respect of its Islamic deposits in Malaysia in priority to all other unsecured liabilities of that licensed

Islamic bank other than the preferential debts set out in subsection 292(1) of the *Companies Act 1965 in the order set out in that subsection and the debts due and claims owing to the Government under section 10 of the

Government Proceedings Act 1956 [Act 359]; and

(b)

notwithstanding subsection 292(1) of the *Companies Act 1965, but subject to any costs and expenses of the winding up set out in paragraph 292(1)(a) of the *Companies Act 1965 directly incurred in realising the assets of the investment accounts and any tax set out in paragraph 292(1)(f) of the *Companies Act 1965 which is attributable to the investment accounts, the assets of the investment accounts managed by the licensed Islamic bank in

Malaysia, shall be available, in the order set out as follows:

(i)

to pay outstanding costs or expenses of the investment accounts;

(ii)

to pay any profit, fees, gains or other remuneration due to the licensed Islamic bank; and

(iii)

to meet the liabilities to the investment account holders.

(2)

For purposes of paragraph (1)(a), regulations may be made under section 271 to prescribe the order of priority for payments of different categories of Islamic deposits.

(3)

Without limiting the generality of subsection (1), in the winding up of a licensed international Islamic bank which is a foreign institution, the assets of such licensed international Islamic bank generated from the funds received by its office in Malaysia—

*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016

[Act 777] which comes into operation on 31 January 2017–see subsection 620(1) of Act 777.

Islamic Financial Services 189

(a)

shall be available to meet all liabilities of the licensed international Islamic bank in Malaysia; and

(b)

with effect from the date of the winding up of the licensed international Islamic bank, shall not be sold, removed, dissipated, alienated, transferred, assigned, encumbered, distributed or otherwise dealt with in any manner whatsoever without the prior written approval of the Bank.

(4)

Notwithstanding anything to the contrary in section 340 of the

*Companies Act 1965 or the winding up order for a licensed international Islamic bank which is a foreign institution, the provisions of this section shall prevail and have full force and effect.

(5)

Any person who contravenes paragraph (3)(b) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding fifty million ringgit or to both.