Islamic Financial Services Act 2013 · Updated to 2 Jan 2025 · Part VII · Ownership, Control and Transfer of Business
106. Order against defaulting persons
Official textFrom Laws of Malaysia Online, unchanged
Where the Bank is satisfied that any person (in this section referred to as “the defaulting person”)—
has breached section 99, 100, 101 or 104;
has failed to comply with any condition imposed pursuant to the approval of the Bank or the Minister, as the case may be, under section 99, 100, 101 or 104;
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has failed to comply with any standards as may be specified by the Bank under subsection 103(1); or
has failed to comply with an undertaking provided to the
Bank under subsection 104(2), the Bank may exercise its powers under subsection (2) as may be applicable or appropriate in the circumstances of the breach or non-compliance.
Subject to section 273, where any of the circumstances described in subsection (1) exists, the Bank may make the following order:
in respect of any shares which are the subject of the breach or non-compliance—
prohibit the transfer of, or the carrying out of the agreement to transfer, such shares, or, in the case of unissued shares, prohibit the transfer of, or the carrying out of the agreement to transfer, the right to be issued with such unissued shares;
prohibit the exercise of any voting rights in respect of such shares;
prohibit the issue of any further shares in right of such shares or in pursuance of any offer made to their holder;
except in a liquidation, prohibit the payment of any sum due from the licensed person on such shares, whether in respect of capital or otherwise; or
direct the defaulting person to surrender the shares to the Bank within a certain period as may be specified by the Bank; or
in respect of a breach of section 100, direct the defaulting person to take such necessary actions as may be specified
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by the Bank in order to cease exercising or to relinquish its control over a licensed person.
An order made under subsection (2) shall be served on the defaulting person as soon as is practicable, and may be published by the Bank in such manner as the Bank deems fit.
Where a defaulting person has been served with an order under subsection (2), he shall notify any person for the time being holding any shares to which such order applies, any other person specified in the order or any person to whom the order is directed.
An order under subsection (2) shall be binding on the defaulting person, any person for the time being holding any shares to which such order applies and any other person specified in the order or any person to whom the order is directed, notwithstanding—
anything contained in any constituent documents of the licensed person; or
anything contained in any contract entered into by such persons affecting the shares relating to the licensed person.
The Bank may give such instructions or directions to the directors or officers of the licensed person as may be necessary or requisite to give effect to any order of the Bank under this section, or as may be incidental, ancillary or consequential to such order.
Any transaction entered into by the defaulting person, including any agreement or arrangement in relation to any shares, interest in shares, or security, which is in contravention of any order under subsection (2) or of any instructions or directions given by the Bank under subsection (6), shall be void and of no effect.
agreement
“agreement” means an agreement whether formal or informal, oral or written, express or implied;
The satisfaction of the Bank under subsection (1) that a person has breached or failed to comply with section 99, 100, 101 or 104 or standards specified by the Bank under subsection 103(1), may be arrived at regardless that there has been no exercise of any action in respect of such breach or non-compliance.
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A person who fails to comply with an order issued under subsection (2) or contravenes subsection (4) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding eight years or to a fine not exceeding twenty-five million ringgit or to both.
Terms defined in s 2
agreement
Defined · s 2“agreement” means an agreement whether formal or informal, oral or written, express or implied;
Part VIII
Financial Groups
Part VI
Part VI—
Part IX
Business Conduct and Consumer Protection
Part X
Islamic Money Market and Islamic Foreign Exchange Market
Part XI
Submission of Document or Information
Part XII
Examination
Part XIII
Directions of Compliance
Part XIV
Intervention and Remedial Action
Part XV
Other Powers of Bank
Part XVI
Enforcement and Penalties
Part XVII
General Provisions
Part XVIII