*BANK KERJASAMA RAKYAT MALAYSIA BERHAD (SPECIAL PROVISIONS) ACT 1978

This Act shall come into operation on a date to be appointed by the Minister by notification in the Gazette.

Interpretation

Words and expressions appearing in this Act, other than those defined in subsection (1), shall, unless the context otherwise requires, bear the meanings assigned to them in the Co-operative Societies Act 1993.

Consequences upon commencement of Act

the previous Board shall cease to exercise its powers and discharge its duties and responsibilities in relation to the

Bank and shall stand dissolved;

the provisions of this Act shall apply in relation to the

Bank;

notwithstanding anything contained in the Co-operative

Societies Act 1993, the rules made thereunder, or the by-laws of the Bank, the right of members or shareholders of the Bank to elect or remove directors of the Bank shall cease to be exercisable;

the directors of the Bank holding office immediately before that commencement shall cease to hold any office in the Bank or in any of its subsidiaries;

the executive committee of the Bank appointed under the by-laws of the Bank shall cease to exercise the powers conferred by the by-laws and shall stand dissolved;

in exercising any power in relation to the Bank under any written law, or under the by-laws of the Bank, the

Commission shall be subject to the direction and control of the Minister and shall comply with and give effect to any direction given by the Minister;

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notwithstanding paragraph (f), the Minister may exercise any function or power conferred on the Commission under any written law, or under the by-laws of the Bank, if he deems it necessary or expedient to do so;

the Minister may, in his absolute discretion, from time to time direct that any function, power, or duty exercisable by the general meeting of the Bank shall not be exercised by the general meeting, or that it shall be exercised subject to such directions as the Minister may, with the concurrence of the Minister of Finance, give, or that it shall instead be exercised, with the concurrence of the

Minister of Finance, by himself or by such other person or authority as he may specify;

the Bank, in addition to being subject to this Act, shall continue to be subject to the provisions the Co-operative

Societies Act 1993, the rules made thereunder, and the by-laws of the Bank, but where there is any conflict or inconsistency between the provisions of this Act and the provisions of the Co-operative Societies Act 1993, the rules made thereunder, or any other written law, or the by-laws of the Bank, the provisions of this Act shall prevail.

The Board shall be responsible for carrying out the functions and powers, and the general administration of the affairs and business, of the Bank.

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 11

The First Schedule

The Minister may from time to time by order published in the Gazette amend the First Schedule with regard to—

Subject to this Act, all powers, rights, privileges, duties, liabilities and obligation that, immediately before the commencement of this Act, were those of the previous Board shall, as from that commencement, devolve on the Board.

Steps for the efficient management of the Bank

the assets of the Bank;

the debts and liabilities of the Bank;

the debts and liabilities owing to the Bank;

the creditors and debtors of the Bank.

Any previous director who, without reasonable excuse—

No director shall be personally liable for any costs or expenses incurred in connection with any proceedings instituted by virtue of this section.

Subsection (1) shall be without prejudice to any other right of the Bank to institute proceedings for any purpose.

Termination of service of officers and employees of the Bank

Subsection (1) shall be without prejudice to any other right of the Board to terminate the services of the officers and employees of the Bank.

Wilful destruction of, or failure to deliver, books, registers, and documents of the Bank

make loans to, and stand guarantee for any loan of money to, any person, whether or not a member of the Bank;

grant and issue letters of credit to any person, whether or not a member of the Bank;

acquire, hold, issue on commission, underwrite, and deal with stock, bonds, funds, obligations, securities and investments of all kinds;

transact all manner of agency business;

acquire and undertake the whole or any part of the business of any person or company carrying on any business of the same nature as the Bank may lawfully carry on, or possessed of property suitable for the purposes of the Bank;

maintain accounts with other banks in Malaysia;

carry on any other business expressly authorized by the

Minister with the concurrence of the Minister of Finance.

In exercising its powers and carrying out its functions, the

Bank shall give paramount consideration to its primary objective of raising the economic status of its members.

The Minister may, with the concurrence of the Minister of

Finance, by order published in the Gazette exempt the Bank from any provisions of the Co-operative Societies Act 1993 or direct that any of the provisions of the Co-operative Societies Act 1993 shall apply to the Bank with such modifications as may be specified in the order.

No investment exceeding the amount determined by the

Minister with the concurrence of the Minister of Finance shall be made by the Board in exercise of its powers under section 54 of the

Co-operative Societies Act 1993 or under subsection (1), unless prior written approval of the Minister, given with the concurrence of the

Minister of Finance, has been obtained.

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Restrictions on payment of dividends and grant of advances and loans to directors

pay any dividend on its shares until all its capitalized expenditure, including preliminary expenses, organization expenses, share-selling commission, brokerage, amounts of losses incurred, and other items of expenditure not represented by tangible assets, has been completely written off;

grant unsecured advances or unsecured loans in excess of, in the aggregate and outstanding at any one time, ten thousand ringgit to—

any of its directors; or any firm or corporation in which any of the directors of the Bank is interested as a partner, director, manager, or agent; or any subsidiary of the Bank; or any individual, firm, or corporation of whom or of which any of the directors of the Bank is a guarantor;

grant to any of its officers or employees unsecured advances or unsecured loans in excess of, in the aggregate and outstanding at any one time, six months’

remuneration of the officer or employee.

All the directors of the Bank shall be liable jointly and severally to indemnify the Bank against any loss arising from the making of any unsecured advance or unsecured loan under paragraph (1)(b).

No secured advance or loan in excess of, in the aggregate and outstanding at any one time, ten thousand ringgit shall be granted

In paragraph (1)(b), “director” includes the wife, husband, father, mother, son, or daughter of a director.

In this section, “unsecured advances” and “unsecured loans”

mean respectively advances and loans made without security or, in the case of advances and loans made with security, any portion thereof that at any time exceeds the value of the assets constituting the security.

Where, in construing subsection (5), a dispute arises as to the value of any asset constituting a security, the value shall be taken to be the market value determined on the basis of a valuation approved by the Minister with the concurrence of the Minister of

Finance.

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Any officer, including any past officer, of the Bank or subsidiary who fails to comply with any requirement of an authorized person under subsection (1) shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding five hundred ringgit for every day during which the default continues.

Without prejudice to subsection (1), the Minister may authorize any person in writing to make an investigation, under conditions of secrecy, of the books, accounts, and transactions of the

Bank or any of its subsidiaries, if he has reason to believe that the

Bank or subsidiary is carrying on its business in a manner detrimental

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 19

to the interests of its members or depositors, or does not have sufficient assets to cover its liabilities to the public, or is contravening this Act.

For the purposes of an investigation under subsection (3), the Bank and subsidiary shall afford the authorized person access to its books, accounts, and documents and shall give such information and provide such facilities as he may require to conduct the investigation.

If the Bank or subsidiary fails to comply with subsection (4), it shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding one thousand ringgit for every day during which the default continues.

Information to Minister

any of its directors, as defined in subsection 15(4);

any firm or corporation in which any of the directors of the Bank, as defined in subsection 15(4), is interested as a partner, director, manager, or agent;

any subsidiary of the Bank;

any individual, firm, or corporation of whom or of which any of the directors of the Bank, as defined in subsection 15(4), is a guarantor;

any of its officers or employees in excess of six months’

remuneration of the officer or employee; and

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any corporation, other than a corporation to which paragraph (d) applies, in which any of the directors, officers, or employees of the Bank is interested as a director, manager, agent, or guarantor.

If, on examination of the report and statement submitted by the Bank under subsection (1), it appears to the Minister or to the officer designated by him that any advance or loan granted is to the detriment of the interests of the members or depositors of the Bank, the Minister or, on the direction of the Minister, the designated officer may, with the concurrence of the Minister of Finance, by order in writing prohibit the Bank from granting any further advance or loan or impose such restrictions on further grants as the Minister or the designated officer, with the concurrence of the Minister of

Finance, thinks fit, and may further, with the concurrence of the

Minister of Finance, direct the Bank to secure repayment of any advance or loan within such time and to such extent as may be specified in the order.

Past activities of the Bank

The Minister may, with the concurrence of the Minister of

Finance, approve, either unconditionally or subject to such conditions as he thinks fit to impose, all or any of the activities so undertaken by the Bank or may, with the concurrence of the Minister of Finance, direct that all or any of such activities shall cease.

Notwithstanding anything contained in any other written law to the contrary, the activities approved by the Minister under subsection (2) shall be deemed to have been lawfully carried out by the Bank.

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 21

Subsidiaries of the Bank

Notwithstanding anything contained in any other written law to the contrary, the subsidiaries established by the Bank before the commencement of this Act shall be deemed to have been lawfully established.

The Minister may, with the concurrence of the Minister of

Finance, direct the Bank to wind up any of its subsidiaries established before the commencement of this Act and the directors shall comply with such direction.

Notwithstanding anything contained in any other written law to the contrary, it shall be lawful for the Board to permit in writing any officer or employee of the Bank to hold any executive office in any subsidiary of the Bank.

At the end of each financial year, the net profit of the Bank for that year shall be determined after allowing for the expenses of operation and after provision has been made for bad and doubtful debts, depreciation of assets, and contributions to staff and pension funds.

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The net profit for the financial year, as determined in accordance with subsection (2), shall be dealt with in the following manner:

The Board shall not, unless approved by the Minister with the concurrence of the Minister of Finance, declare and pay out dividends on its shares in excess of ten per centum of the value of the shares.

Audit

The duties of the Auditor General or other auditor shall be to carry out an audit of the accounts of the Bank and to make report on its annual balance-sheet and trading and profit and loss account,

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 23

including its consolidated balance-sheet and consolidated profit and loss account.

Transmission of accounts, balance-sheets and reports to the

Minister and the Minister of Finance

the trading and profit and loss account of the Bank for the financial year;

the balance-sheet of the Bank as at the close of the financial year;

a report signed by or on behalf of the Board with respect to the state of affairs of the Bank and its subsidiaries and stating with appropriate details the matters mentioned in subsection 35A(4) of the Co-operative Societies Act 1993;

and

the auditor’s report referred to in subsection 23(2).

The

Second

Schedule shall apply in relation to subparagraphs (1)(a) and (b).

The accounts, balance-sheets and reports mentioned in subsection (1) shall be published in any local newspaper by the Bank.

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to consider the accounts, balance-sheets, and reports mentioned in subsection 24(1);

to consider any other matter brought by the Board; and

to consider any other matter specified by the Minister.

Public servant and public officer

As soon as possible after a Board of Directors has been constituted under the by-laws of the Bank pursuant to subsection (1), the Minister may by order published in the Gazette declare that this

Act shall cease to remain in force, and such an order may contain

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such consequential or transitional provisions as the Minister may deem necessary or expedient.

Subject to subsection (4), on the date when the order under subsection (2) takes effect, the Board shall be divested of the management and administration of the Bank, and such management and administration shall vest in the Board of Directors constituted under the by-laws of the Bank pursuant to subsection (1).

Notwithstanding subsection (3), until such time as the

Board of Directors constituted under the by-laws of the Bank meets or holds its first meeting, the Board established under subsection 4(1)

may continue to manage and administer the affairs of the Bank on behalf of the said Board of Directors.

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 27

FIRST SCHEDULE

[Section 5]

SUPPLEMENTARY PROVISIONS RELATING TO THE BOARD, THE BANK,

AND THE PRINCIPAL OFFICERS OF THE BANK

Composition of the Board

The Minister may appoint the Chairman and other members of the Board.

Tenure and incidents of office of director

The Minister may at any time revoke any appointment made under subparagraph (1) without assigning any reason therefor.

The Chairman and other directors shall be paid by the Bank such remuneration and allowances as the Minister may, with the concurrence of the

Minister of Finance, determine.

During any absence or inability of the Chairman or any other director for any cause, the Minister may appoint another person to be a temporary Chairman or director, as the case may be.

Without prejudice to subparagraph (2), the Minister shall revoke the appointment of the Chairman or any other director if he—

A person shall be disqualified from being appointed or remaining as a

Chairman or director if he—

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The powers, duties, and responsibilities of the Managing Director and the

General Managers shall, subject to this Act, be as specified by the Board.

The Managing Director and every General Manager shall be full-time employees of the Bank and shall devote themselves entirely to the service of the

Bank and shall be answerable to the Board for their acts and decisions.

Secretary of the Bank

The Secretary shall also serve as secretary to the Board.

Meetings of the Board

The Board shall meet as often as necessary but not less frequently than once a month.

The Secretary shall summon a meeting of the Board whenever directed to do so by the Chairman or whenever he receives a request in writing to do so from at least three directors.

Bank Kerjasama Rakyat Malaysia Berhad (Special Provision) 29

Except as provided in subparagraph (5), the Secretary shall cause notice of each meeting of the Board to be served on all directors present in Malaysia at least three clear days before the date of the meeting.

Where a meeting of the Board has to be summoned urgently, then, notwithstanding subparagraph (4), it shall be sufficient if the earliest possible notice is given either in writing or verbally, including by telephone or telegram.

Four members of the Board present at a meeting, including the person presiding, shall constitute a quorum.

If within half an hour from the time appointed for holding a meeting of the

Board a quorum is not present, the meeting shall stand adjourned to the following day at the same time and place, and if within fifteen minutes from the time appointed for holding the adjourned meeting a quorum is not present, the directors present shall constitute a quorum.

Except where otherwise provided in this Act, all decisions at a meeting of the Board shall be adopted by a simple majority of votes of the directors present and voting, but if on any question the votes are equally divided, the person presiding shall have a casting vote.

Financial year

A disclosure under subparagraph (1) shall be recorded in the minutes of the meeting.

After the disclosure, the director shall not remain present at the meeting, or qualify for the purpose of quorum, while the matter or business in question is being discussed or transacted, nor shall he take part in the discussion or transaction.

A person who contravenes or fails to comply with subparagraph (1) or (3)

shall be guilty of an offence and shall, on conviction, be liable to a fine not

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exceeding five thousand ringgit or to imprisonment for a term not exceeding two years or to both.

No act, proceeding, or decision of the Board shall be rendered invalid on the ground of the contravention by a director of subparagraph (1) or (3).

SECOND SCHEDULE

[Subsection 24(2)]

CONSOLIDATED PROFIT AND LOSS ACCOUNT

AND BALANCE-SHEET

a consolidated profit and loss account of the Bank and its subsidiaries, eliminating all transactions between the Bank and its subsidiaries and between the subsidiaries themselves; and

a separate profit and loss account of each subsidiary of the Bank.

a consolidated balance-sheet of the Bank and its subsidiaries, eliminating all balances between the Bank and its subsidiaries and between the subsidiaries themselves; and

a separate balance-sheet of each subsidiary of the Bank.