Islamic Financial Services Act 2013 · Updated to 2 Jan 2025 · Part I · Preliminary
2. Interpretation
Official textFrom Laws of Malaysia Online, unchanged
In this Act, unless the context otherwise requires—
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“adjuster” has the same meaning assigned to it under subsection 2(1)
of the Financial Services Act 2013 [Act 758];
“advertisement” means the disseminating or conveying of information, invitation or solicitation by any means or in any form including oral and written communication by means of print, electronic and any other media;
“agreement” means an agreement whether formal or informal, oral or written, express or implied;
“annuity” means the right to a series of periodical payments from the takaful fund at intervals of one year or less under a takaful certificate entered into by a takaful participant with a family takaful operator;
“annuity certain” means an annuity where the duration of periodic payments is pre-determined and does not depend on the death or survival of the takaful participant;
“applicant” means—
in Part III and Schedule 5, the person who submits, on its own behalf or through an advocate, a secretarial firm or other duly authorized representative, the application for authorization under section 9;
in Part VII and Schedule 6, the person who submits, on its own behalf or through an advocate, a secretarial firm or other duly authorized representative, the application for approval under that Part; or
in Part VIII, the person who submits the application to be a financial holding company or proposes another company to be a financial holding company;
“appointed actuary” means an actuary appointed by a licensed takaful operator under subsection 83(1) or by the Bank under section 84;
“appointed date” in respect of any provision under this Act, means the date appointed by the Minister under subsection 1(2)
as the date for the coming into operation of that provision;
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“approved business” means any business set out in Part 1 of
Schedule 1;
“approved Islamic financial adviser” means a person approved under section 11 to carry on Islamic financial advisory business;
“approved issuer of a designated Islamic payment instrument”
means a person approved under section 11 to issue a designated
Islamic payment instrument;
“approved operator of a payment system” means a person approved under section 11 to operate a payment system set out in paragraph 1 of Part 1 of Schedule 1;
“approved person” means a person approved under section 11
to carry on an approved business;
“approved representative office” means a representative office in Malaysia of a foreign institution approved by the Bank under subsection 17(4);
“approved takaful broker” means a person approved under section 11 to carry on takaful broking business;
“arrangement” means an arrangement whether formal or informal, oral or written, express or implied;
“associate corporation” means a corporation in which not less than twenty per cent but not more than fifty per cent of the voting shares of that corporation are held by another corporation, where the first-mentioned corporation is an associate corporation of the other corporation;
“authorization” means the grant of a licence under section 10
or the grant of an approval under section 11;
“authorized business” means a licensed business or an approved business;
“authorized person” means a person licensed under section 10 or approved under section 11 to carry on an authorized business;
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“Bank” has the same meaning as defined in subsection 2(1) of the Central Bank of Malaysia Act 2009 [Act 701];
“books” has the same meaning assigned to it in subsection 4(1)
of the *Companies Act 1965 [Act 125];
“bridge institution” means a body corporate established or acquired by the Bank, and designated as a bridge institution under subsection 188(1);
“business transfer scheme” means a scheme of transfer for
Islamic banking business, takaful business, international Islamic banking business or international takaful business;
“chief executive officer” in relation to—
a body corporate or unincorporate, means an individual, however styled, who, either individually or jointly with one or more other persons, is responsible under the authority of the directors, for the conduct of the business and the administration of such body; or
an authorized person which is established as a branch in Malaysia, means an officer principally responsible for the business of the branch in Malaysia;
“child” includes a step-child and a child adopted under any written law of Malaysia or of any place outside Malaysia, or under a custom recognized by a class, category or description of persons in or outside Malaysia;
“company” has the same meaning assigned to it in subsection 4(1)
of the *Companies Act 1965;
“computer” has the same meaning assigned to it in section 3
of the Evidence Act 1950 [Act 56];
*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.
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“computer output” means a statement or representation, whether in written, printed, pictorial, film, graphical, acoustic or other form—
produced by a computer;
displayed on the screen of a computer; or
accurately translated from a statement or representation so produced;
“constituent document” has the same meaning assigned to it in subsection 2(1) of the Central Bank of Malaysia Act 2009;
“corporate group” means a group of corporations which are related to each other;
“corporation” has the same meaning assigned to it in subsection 4(1)
of the *Companies Act 1965;
“co-operative society” has the same meaning assigned to it in section 2 of the Co-operative Societies Act 1993 [Act 502];
“depositor” means a person entitled to the repayment of an
Islamic deposit, whether the Islamic deposit was made by him or any other person;
“designated Islamic payment instrument” means an Islamic payment instrument prescribed as a designated Islamic payment instrument under section 41;
“designated payment system” means a payment system prescribed as a designated payment system under subsection 39(1);
“director” includes any person who occupies the position of a director, however styled, of a body corporate or unincorporate, and includes—
*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
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a person in accordance with whose directions or instructions the directors or officers of the body are accustomed to act;
an alternate or substitute director; or
in particular, without limiting the foregoing, in the case of—
a corporation, has the same meaning assigned to it in subsection 4(1) of the *Companies Act 1965;
a co-operative society, means a member of the board, or other governing body howsoever called, of the co-operative society;
a statutory body, means a member of the board, committee, council or other governing body howsoever called, of the statutory body;
a partnership, means a partner;
a sole proprietorship, means the sole proprietor;
and
any other body, association or group of persons, whether corporate or unincorporate, means any person having the direction and control of the management of its affairs or business;
“document” has the same meaning assigned to it in section 3
of the Evidence Act 1950 and includes books;
“electronic money” means any Islamic payment instrument, whether tangible or intangible, that—
*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.
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stores funds electronically in exchange of funds paid to the issuer; and
is able to be used as a means of making payment to any person other than the issuer;
“electronic terminal” means an electronic device, operated by or on behalf of an authorized person, through which a person may initiate an electronic fund transfer, and includes a point-of-sale terminal, automated teller machine or cash or cheque deposit machine;
“family takaful business” means the business relating to the administration, management and operation of a takaful arrangement under a family takaful certificate;
“family takaful certificate” means a takaful certificate by which takaful benefits are payable on death or survival, including those takaful benefits payable in respect of personal accidents, disease or sickness, and includes an annuity but excludes a personal accident takaful certificate;
“financing facility” means—
the giving of any advance or other facility in whatever form or by whatever name called;
the giving of a guarantee; or
any other dealing or transaction as prescribed under section 4;
made in accordance with Shariah which shall include, and may be in the form of, any sale or purchase arrangement, joint venture arrangement, deferred payment sale, return sharing arrangement or other financing arrangement;
“financial group” means a financial holding company and a group of related corporations under such financial holding company primarily engaged in financial services or in other services in connection with or for the purposes of such financial services which includes at least one licensed person;
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“financial holding company” means a company which—
holds an aggregate of more than fifty per cent of interest in shares of a licensed person, or has an aggregate interest in shares of fifty per cent or less but has control over a licensed person; and
has obtained the approval of the Bank pursuant to subsection 124(3) to be a financial holding company of such licensed person;
“financial year” has the same meaning assigned to it in subsection 4(1) of the *Companies Act 1965;
“foreign company” has the same meaning assigned to it in subsection 4(1) of the *Companies Act 1965;
“foreign currency” means any currency other than ringgit;
“foreign institution” means a foreign company, not being an authorized person, which carries on any business outside Malaysia which corresponds, or is similar, to the business of any authorized person, whether or not such person has an approved representative office;
“Governor” and “Deputy Governor” have the same meaning assigned to them in subsection 2(1) of the Central Bank of
Malaysia Act 2009;
“holding company” has the same meaning assigned to it in section 5 of the *Companies Act 1965;
“individual” means a natural person;
“interest in shares” shall be construed as set out in Schedule 3;
“international Islamic banking business” means Islamic banking business in currencies other than ringgit or such other business as prescribed under section 3;
*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.
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“international takaful business” means takaful business in currencies other than ringgit;
“investment account” means an account under which money is paid and accepted for the purposes of investment, including for the provision of finance, in accordance with Shariah on terms that there is no express or implied obligation to repay the money in full and—
either only the profits, or both the profits or losses, thereon shall be shared between the person paying the money and the person accepting the money; or
with or without any return;
“investment company” has the same meaning assigned to it in subsection 319(1) of the *Companies Act 1965;
“investment-linked takaful certificate” means a takaful certificate in respect of a contract of family takaful or an annuity where the takaful benefits are, wholly or partly, to be determined by reference to units, the value of which is related to—
the income from property of any description; or
the market value of such property;
“Islamic banking business” means the business of—
accepting Islamic deposits on current account, deposit account, savings account or other similar accounts, with or without the business of paying or collecting cheques drawn by or paid in by customers; or
accepting money under an investment account; and
provision of finance; and
such other business as prescribed under section 3;
*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.
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“Islamic deposit” means a sum of money accepted or paid in accordance with Shariah—
on terms under which it will be repaid in full, with or without any gains, return or any other consideration in money or money’s worth, either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and person accepting it; or
under an arrangement, on terms whereby the proceeds under the arrangement to be paid to the person paying the sum of money shall not be less than such sum of money, but excludes money paid bona fide—
by way of an advance or a part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services are not in fact sold, hired or otherwise provided;
by way of security for the performance of a contract or by way of security in respect of any loss which may result from the non-performance of a contract;
without limiting paragraph (ii), by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise; and
in such other circumstances, or to or by such other person, as set out in Schedule 2;
“Islamic derivative” means any agreement, including an option, a swap, futures or forward contract, made in accordance with Shariah, whose market price, value, delivery or payment obligations is derived from, referenced to or based on, but not limited to, Islamic securities, commodities, assets, rates
(including profit rates or exchange rates) or indices;
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“Islamic factoring business” means—
the business of acquiring debts or other financial obligations due to any person arising from any transaction which is in accordance with Shariah; and
such other business as prescribed under section 3;
“Islamic financial adviser’s representative” means an individual, however styled, in the direct employment of, acting for or by arrangement with an approved Islamic financial adviser, who performs for the Islamic financial adviser any services relating to Islamic financial advisory business;
“Islamic financial advisory business” means any of the following:
analyzing the financial planning needs of a person relating to a takaful product;
recommending an appropriate takaful product to a person;
sourcing a takaful product from a licensed takaful operator for a person;
arranging of a contract in respect of a takaful product for a person; or
such other business, service or activity in relation to a financial service as prescribed under section 3;
“Islamic foreign exchange market” means a foreign exchange market where the transactions, instruments or operations are not contrary to Shariah;
“Islamic leasing business” means—
the business of letting or sub-letting movable property on hire in accordance with Shariah for the purpose of the use of such property by the hirer or any other person in any business, trade, profession or occupation or in any
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commercial, industrial, agricultural or other economic enterprise whatsoever and, where the lessor is the owner of the property, regardless whether the letting is with or without an option to purchase the property, and for the purpose of this definition, “movable property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth or fastened or to be fastened, permanently or otherwise, to anything attached to the earth;
and
such other business as prescribed under section 3;
“Islamic payment instrument” means any instrument, whether tangible or intangible, which does not involve any element which is contrary to Shariah, that enables a person to obtain money, goods or services or to make any payment;
“Islamic securities” means securities which are in accordance with Shariah;
“issuer” means any person, acting alone or under an arrangement with another person, who undertakes to be responsible for the payment obligation in respect of an Islamic payment instrument resulting from a user being issued with or using the Islamic payment instrument;
“liabilities” includes debts or obligations of every kind, whether present or future, or whether vested or contingent;
“licence” means a licence granted under section 10;
“licensed business” means Islamic banking business, takaful business, international Islamic banking business or international takaful business;
“licensed international Islamic bank” means a person licensed under section 10 to carry on international Islamic banking business;
“licensed international takaful operator” means a person licensed under section 10 to carry on international takaful business;
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“licensed Islamic bank” means a person licensed under section 10
to carry on Islamic banking business and includes a licensed international Islamic bank;
“licensed person” means a person licensed under section 10 to carry on licensed business;
“licensed takaful operator” means a person licensed under section 10 to carry on takaful business and includes a licensed international takaful operator;
“Malaysia Deposit Insurance Corporation” means the Malaysia
Deposit Insurance Corporation referred to in the Malaysia Deposit
Insurance Corporation Act 2011 [Act 720];
“Malaysian takaful certificate” means a takaful certificate which is issued in Malaysia by a licensed takaful operator and is—
a family takaful certificate where the takaful participant’s address, as specified in the takaful certificate or any other address subsequently notified in writing by the takaful participant to the licensed takaful operator, is or was an address in Malaysia;
a general takaful certificate which relates to risks arising in
Malaysia, or where the takaful participant is a resident of, or a permanent establishment in, Malaysia within the meaning of the Income Tax Act 1967 [Act 53]; or
a retakaful contract with another licensed takaful operator;
“market participant” means any person who—
issues, sells, purchases, repurchases, borrows, lends, finances or otherwise deals with currencies or other Islamic financial instruments traded in the Islamic money market or
Islamic foreign exchange market including over-the-counter Islamic derivatives whose price, value or payment obligations are derived from, referenced to or based on profit rates or exchange rates; or
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arranges transactions in the Islamic money market or
Islamic foreign exchange market as an intermediary, whether acting as a principal or an agent, and includes any other persons as prescribed under section 4;
“member” in relation to a body corporate or unincorporate which is—
a corporation, means a shareholder;
a co-operative society, means a member of the co-operative society;
a partnership, means a partner;
any other body corporate having a membership, means a member of the body; and
a society registered under the *Societies Act 1966
[Act 335], means a member of the society;
“Minister” means the Minister for the time being charged with the responsibility for finance;
“office” refers to a place where or at which any business of any person is carried out, including the head office in Malaysia, or any other office, a branch, an agency (except for a takaful agency in the case of a licensed takaful operator), a mobile place of business, a place of business set up and maintained for a limited period only or an electronic terminal;
“officer” in relation to a body corporate or unincorporate, includes any employee or the chief executive officer of the body corporate or unincorporate;
“operator” means any person, acting alone or under an arrangement with another person, responsible for the rules, procedures and operations of a payment system;
*NOTE—Societies Act 1966 [Act 335] has since been revised and named as Societies Act 1966 [Act 832]
which comes into operation on 1 December 2021.
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“operator of a designated payment system” means any person who operates a designated payment system;
“participant” means any person who is permitted by the rules governing a payment system to send payment instructions or settlement instructions to the payment system and who is bound by the rules governing the payment system;
“payment instruction” or “settlement instruction” in relation to a payment system, includes an instruction to transfer, clear or settle transactions in funds or securities, as the case may be;
“payment system” means any system or arrangement for the transfer, clearing or settlement of funds or securities where the operational arrangements of the payment system or business conduct of the operator of such payment system are in accordance with Shariah;
“person” includes an individual, any corporation, statutory body, local authority, society, trade union, co-operative society, partnership and any other body, organization, association or group of persons, whether corporate or unincorporate;
“person covered” means a takaful participant or other person in respect of whom the takaful participant enters the contract of takaful and in respect of whom takaful benefits are payable to the takaful participant or his beneficiaries on the occurrence of pre-agreed events under the contract of takaful;
“personal accident takaful certificate” means a takaful certificate providing fixed pecuniary benefits or benefits in the nature of indemnity, or both, against risks of the person covered sustaining injury or dying as the result of an accident or becoming incapacitated in consequence of disease;
“premises” includes any land, building, structure or place;
“prescribe” means to prescribe by an order published in the
Gazette, and a power to prescribe includes the power to prescribe differently for different persons, payment systems or Islamic payment instruments or different classes, categories or descriptions of persons, payment systems or Islamic payment instruments;
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“private company” has the same meaning assigned to it in subsection 4(1) of the * Companies Act 1965;
“professional retakaful operator” means a retakaful operator which is licensed to carry on solely retakaful business;
“proper claimant” means a person who claims to be entitled to the whole or part of the takaful benefits under a takaful certificate as executor of the deceased takaful participant, parent or guardian of an incompetent nominee or an assignee or who claims to be otherwise entitled to the takaful benefits under the relevant law;
“property” means any movable or immovable property, whether tangible or intangible and includes—
any right, interest, title, claim, chose in action, power or privilege, whether present or future, or whether vested or contingent, in relation to any property, or which is otherwise of value;
any conveyance executed for conveying, assigning, appointing, surrendering, or otherwise transferring or disposing of immovable property of which the person executing the conveyance is the proprietor or has possession or in which he is entitled to a contingent right, either for the whole interest or for any less interest;
any security, including any stock, share, and fund;
any negotiable instrument, including any bank note, bearer note, Treasury bill, dividend warrant, bill of exchange, cheque and negotiable certificate of deposit;
or
any mortgage or charge, whether legal or equitable, guarantee, lien or pledge, whether actual or constructive, letter of hypothecation, trust receipt, indemnity, undertaking or other means of securing payment or
*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.
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discharge of a debt or liability, whether present or future, or whether vested or contingent;
“provision of finance” means entering into, or making an arrangement for another person to enter into, the businesses or activities which are in accordance with Shariah including—
equity or partnership financing, including musyarakah, musyarakah mutanaqisah and mudarabah;
lease based financing, including al-ijarah, al-ijarah muntahia bi al-tamlik and al-ijarah thumma al-bai`;
sale based financing, including istisna`, bai` bithaman ajil, bai` salam, murabahah and musawamah;
currency exchange contracts;
fee based activity, including wakalah;
purchase of bills of exchange, certificates of Islamic deposit or other negotiable instruments; and
the acceptance or guarantee of any liability, obligation or duty of any person;
“public company” has the same meaning assigned to it in subsection 4(1) of the *Companies Act 1965;
“related” in relation to a corporation, means related within the meaning of section 6 of the *Companies Act 1965;
“relative” in relation to an individual, subject to subsection (2), means—
the spouse of the individual;
the brother or sister of the individual, or of the spouse of the individual;
*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.
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any lineal ascendant or descendant of the individual, or of the spouse of the individual;
the spouse of any individual referred to in paragraph (b) or (c);
any lineal descendant of an individual referred to in paragraph (b) or (d);
any uncle, aunt or cousin of the individual, or of the spouse of the individual; or
any spouse, or any lineal ascendant or descendant, of an individual referred to in paragraph (f);
“repealed Acts” means the Islamic Banking Act 1983 [Act 276]
and the Takaful Act 1984 [Act 312];
“retakaful” means takaful cover arranged by a takaful operator with a second takaful operator on the risks of the takaful fund it administers, wholly or partly, and includes any similar arrangement by a branch of the takaful operator in Malaysia with its branch outside Malaysia (the head office of the takaful operator being, for this purpose, treated as a branch);
“return” in relation to the definitions of “financing facility”,
“investment account” and “Islamic deposit”, and “Islamic securities”
as defined in subsection 224(1), includes any form of rental, profit, dividend or benefit, and any fee or gift, payable or to be given;
“risk to financial stability” has the same meaning assigned to it in section 29 of the Central Bank of Malaysia Act 2009;
“senior officer” means a person, other than the chief executive officer or a director, having authority and responsibility for planning, directing or controlling the activities of an authorized person, operator of a designated payment system or a financial holding company including the chief operating officer, members of decision-making committees and other persons performing key functions such as risk management, compliance, internal audit or other functions as may be specified by the Bank under section 57, but shall not include a member of a Shariah committee;
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“share” in relation to a corporation, means an issued share of the corporation and includes stock except where a distinction between stock and share is expressed or implied;
“Shariah Advisory Council” means the Shariah Advisory Council on Islamic finance established under section 51 of the Central
Bank of Malaysia Act 2009;
“Shariah committee” means the Shariah committee of an institution established pursuant to section 30;
“specify” means to specify in writing by way of standards or any other forms, and a power to specify includes the power to specify differently for different persons, payment systems or
Islamic payment instruments or different classes, categories or descriptions of persons, payment systems or Islamic payment instruments;
“standards” includes any obligation or requirement as specified by the Bank under this Act and such standards may contain any interpretative, incidental, supplemental, consequential and transitional provisions as the Bank considers appropriate;
“statutory body” means any authority or body, whether corporate or unincorporate, established, appointed or constituted by any written law, but excludes any local authority;
“subsidiary” has the same meaning assigned to it in section 5
of the *Companies Act 1965;
“systemic risk” in relation to a designated payment system, means—
a risk that the failure of a participant or operator to meet his payment or settlement obligations will cause another participant to be unable to meet his payment or settlement obligations when due; or
a risk that the failure of a participant or operator to meet his payment or settlement obligations may cause
*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.
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significant liquidity or credit problems that might threaten the stability of the financial system;
“takaful” means an arrangement based on mutual assistance under which takaful participants agree to contribute to a common fund providing for mutual financial benefits payable to the takaful participants or their beneficiaries on the occurrence of pre-agreed events;
“takaful agent” means a person who does all or any of the following:
solicits or obtains a proposal for takaful certificate on behalf of a takaful operator;
offers or assumes to act on behalf of a takaful operator in negotiating a takaful certificate; or
does any other act on behalf of a takaful operator in relation to the issuance, renewal, or continuance, of a takaful certificate;
“takaful benefits” includes any benefit, whether pecuniary or not, which is payable under a takaful certificate;
“takaful broker” means a person who, as an independent contractor, carries on takaful broking business and includes a retakaful broker;
“takaful broking business” means the business of soliciting, negotiating or procuring a takaful certificate with a takaful operator, or the renewal or continuance of the takaful certificate by a person, for a takaful participant other than for himself and includes retakaful broking for a takaful operator;
“takaful business” means the business relating to the administration, management and operation of a takaful fund for its takaful participants which may involve elements of investment and savings and includes retakaful business and a reference to carrying on takaful business may include all or any of the activities set out in paragraph 5(4)(a);
“takaful certificate” includes a takaful cover note or any contract of takaful for family takaful business or general takaful business
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whether or not embodied in or evidenced by an instrument in the form of a takaful certificate, and references to—
issuing a takaful certificate shall be construed as entering into a contract of takaful, whether or not a formal contract has been issued; and
a takaful certificate of a takaful operator includes a takaful certificate in respect of which the takaful operator is under any liability, whether the takaful certificate was issued by the takaful operator or the liability was transferred to the takaful operator from another takaful operator;
“takaful claim” means a demand for payment of an amount due under a takaful certificate;
“takaful contribution” means the amount payable by a takaful participant to a takaful operator under a takaful certificate and includes any remuneration for the functions and duties assumed by the takaful operator;
“takaful fund” means a takaful fund established and maintained under section 90 and in respect of takaful business referred to in sections 8 and 26, means any fund established and maintained for the purposes of such takaful business;
“takaful operator” includes a professional retakaful operator;
“takaful participant” means the person who has legal title to a takaful certificate and includes—
where a takaful certificate has been assigned, the assignee;
where a personal representative of a deceased takaful participant is entitled as against the takaful operator to the benefit of a takaful certificate, the personal representative;
in relation to a takaful certificate providing for the payment of annuity, an annuitant; and
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where under a takaful certificate, moneys are due or payable, whether periodically or otherwise, the person to whom the moneys are due or payable;
“user” means any person to whom a designated Islamic payment instrument has been issued or any person who uses a designated
Islamic payment instrument to obtain money, goods or services or to make any payment;
“voting share” has the same meaning assigned to it in subsection 4(1)
of the *Companies Act 1965.
Relative
For the purpose of the definition of “relative” in subsection (1)—
the adoption of any person by another under any written law of Malaysia or any country, territory or place outside
Malaysia, or under any custom recognized by any class of persons in Malaysia or in any country, territory or place outside Malaysia, shall be treated as creating between the adopter and the adopted person the same natural relationship as the adoptive relationship, and other relationships in relation to it shall be determined accordingly; and
references therein to a relationship include, where relevant, a relationship by half-blood.
Control
For the purposes of this Act, a person shall be presumed to have control over a licensed person or corporation if such person—
has an interest of more than fifty per cent of the shares in the licensed person or corporation; or
unless proven otherwise—
*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.
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has the power to elect, appoint, remove or prevent from election, appointment or removal, or cause to be elected, appointed, removed or prevented from being elected, appointed or removed, a majority of the directors of the licensed person or corporation;
has the power to make or cause to be made decisions in respect of the business or administration of the licensed person or corporation, and to give effect to such decisions or cause them to be given effect to;
or
is a person in accordance with whose directions, instructions or wishes the directors, chief executive officer or senior officers of the licensed person or corporation are accustomed or under obligation, whether formal or informal, to act, and the phrase “controlled” or “controller” shall be construed accordingly.
Acting in concert
For the purposes of this Act—
“persons acting in concert” means persons who, pursuant to an agreement, arrangement or understanding, co-operate to—
acquire jointly or severally interests in the shares of a corporation for the purpose of obtaining or consolidating control of that corporation; or
act jointly for the purpose of exercising control over a corporation; and
without limiting the generality of paragraph (a), the following persons shall be presumed to be persons acting in concert, unless proven otherwise:
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a corporation and its related and associate corporations;
a corporation and any of its directors, or the parent, child, brother or sister of any of its directors, or the spouse of any such director or of any such relative, or any related trusts;
a corporation and any pension fund established by it;
a person and any investment company, unit trust fund or any other fund whose investments such person manages on a discretionary basis;
a person and his client which is a corporation, where the person manages on a discretionary basis the client’s funds and has ten per cent or more interest in shares of the client; or
a person who owns or controls twenty per cent or more of the voting shares of a corporation falling within subparagraph (i) and any parent, child, brother or sister of such person, or the spouse of such person or any such relative, or any related trusts together with one or more persons falling within subparagraph (i).
Qualified financial agreements
For the purposes of this Act—
“qualified financial agreement” means—
a master agreement in respect of one or more qualified financial transactions under which if certain events specified by the parties to the agreement occur—
the transactions referred to in the agreement terminate or may be terminated;
Islamic Financial Services 45
the termination values of the transactions under subparagraph (i) are calculated or may be calculated; and
the termination values of the transactions under subparagraph (i) are netted or may be netted, so that a net amount is payable, and where an agreement is also in respect of one or more transactions that are not qualified financial transactions, the agreement shall be deemed to be a qualified financial agreement only with respect to the transactions that are qualified financial transactions and any permitted enforcement by the parties of their rights under such agreement;
an agreement relating to financial collateral, including a title transfer credit support agreement, with respect to one or more qualified financial transactions under a master agreement referred to in subparagraph (i); or
any other agreement as prescribed under section 4;
“qualified financial transaction” means—
an Islamic derivative, whether to be settled by payment or delivery; or
a repurchase, reverse repurchase or buy-sell back agreement with respect to Islamic securities;
“financial collateral” means any of the following that is subject to an interest or a right that secures payment or performance of an obligation in respect of a qualified financial agreement or that is subject to a title transfer credit support agreement:
46
cash or cash equivalents, including negotiable instruments and demand deposits;
Islamic security, an Islamic securities account or a right to acquire Islamic securities; or
futures agreement or futures account;
“title transfer credit support agreement” means an agreement under which title to property has been provided for the purpose of securing the payment or performance of an obligation in respect of a qualified financial agreement.
Any reference in this
Act to
“this
Act”, the
“Financial Services Act 2013” or the “Central Bank of Malaysia
Act 2009” shall, unless otherwise expressly stated, be deemed to include a reference to any rule, regulation, order, notification or other subsidiary legislation made under this Act, the Financial
Services Act 2013 or the Central Bank of Malaysia Act 2009, as the case may be.
Part II
Regulatory Objecti Ves and Powers and Functi Ons of Bank
Part III
Authorization
Part IV
Shariah Requirements
Part V
Payment Systems
Part VI
Prudential Requirements
Part VII
Ownership, Control and Transfer of Business
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