In forceUpdated to 6 Oct 2023Read it in Bahasa Malaysia

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Development Financial Institutions Act 2002 · Updated to 6 Oct 2023 · Part III · Restrictions on Business

28. Prohibition of financing facilities

(1)

No prescribed institution shall grant to any person any financing facility, whether from its own funds or any trust fund it manages under section 43, except for such purposes or on such collateral as the Bank may specify.

(2)

(Deleted by Act A1502).

(3)

Unless otherwise specified by the Bank, no prescribed institution shall grant any financing facility to—

(a)

any of its *members, directors or officers or any other person receiving remuneration from it (other than any person receiving remuneration from it in respect of his professional services);

(b)

any body corporate or unincorporate, or any sole proprietorship, in which any of its *members, directors or officers is a director or manager, or for which any of its

*members, directors or officers is a guarantor or an agent**; and***

(c)

(Deleted by Act A1502).

(d)

any person for whom any of its *members, directors or officers has given any guarantee or other undertaking involving financial liability.

(3A)

No prescribed institution shall grant any financing facility to any corporation in the shares of which any of its †members, directors or officers has any interest which, in aggregate, is of an amount that is in excess of such percentage as the Bank may specify.

*NOTE—For application to Bank Kerjasama Rakyat Malaysia Berhad–see paragraph 2 of the

Development Financial Institutions (Modification) Order 2002 [P.U. (A) 412/2002] which comes into operation on 15 February 2002.

**NOTE—For application to Bank Industri dan Teknologi Malaysia Berhad–see subparagraph 2(a) of the

Development Financial Institutions (Bank Industri dan Teknologi Malaysia Berhad) (Modification) Order 2004 [P.U. (A) 148/2004] which comes into operation on 15 February 2002 and Bank Pembangunan dan

Infrastruktur Malaysia Berhad–see subparagraph 2(a) of the Development Financial Institutions (Bank

Pembangunan dan Infrastruktur Malaysia Berhad) (Modification) Order 2004 [P.U. (A) 149/2004] which comes into operation on 15 February 2002.

***NOTE—For application to Bank Industri dan Teknologi Malaysia Berhad–see subparagraph 2(b) of the Development Financial Institutions (Bank Industri dan Teknologi Malaysia Berhad) (Modification)

Order 2004 [P.U. (A) 148/2004] which comes into operation on 15 February 2002 and Bank Pembangunan dan Infrastruktur Malaysia Berhad–see subparagraph 2(b) of the Development Financial Institutions

(Bank

Pembangunan dan

Infrastruktur

Malaysia

Berhad)

(Modification)

Order 2004

[P.U. (A) 149/2004] which comes into operation on 15 February 2002.

†NOTE—For application to Bank Kerjasama Rakyat Malaysia Berhad—see subparagraph 3(b) of the

Development Financial Institutions (Bank Kerjasama Rakyat Malaysia Berhad) (Modification) Order 2016 [P.U. (A) 15/2016] which comes into operation on 31 January 2016.

Development Financial Institutions 47

(4)

Notwithstanding subsection (3), a prescribed institution may, subject to such terms and conditions as it may impose, grant to any of its officers or its executive director—

(a)

any financing facility which is provided for under his scheme of service; or

(b)

where there is no such provision and the prescribed institution is satisfied that special or compassionate circumstances exist, a loan not exceeding such period as may be specified by the Bank.

(5)

For the purposes of this section, “director” or “officer” includes a spouse, child or parent of a director or officer, or any other person as may be specified by the Bank.

Terms defined in s 3

Bank
Defined · s 3
“Bank” means the Central Bank of Malaysia established under the *Central Bank of Malaysia Act 2009;
Open s 3
child
Defined · s 3
“child” includes an illegitimate child, a step-child and a child adopted under any written law of Malaysia or of any place outside Malaysia, or under any custom recognised by a class of persons in or outside Malaysia;
Open s 3
collateral
Defined · s 3
“collateral” includes a mortgage or charge (whether legal or equitable), debenture, bill of exchange, promissory note, guarantee, lien or pledge (whether actual or constructive), hypothecation, indemnity, undertaking or other means of securing payment or discharge of a debt or liability (whether present or future, or whether vested or contingent);
Open s 3
corporation
Defined · s 3
“corporation” has the same meaning as in the *Companies Act 1965;
Open s 3
development
Defined · s 3
“development” includes the commencement of any new industrial, agricultural, commercial or other economic venture or the expansion or improvement of any such existing venture;
Open s 3
director
Defined · s 3
“director” includes any person who occupies the position of a director, and includes a person in accordance with whose directions and instructions the directors or officers are accustomed to act and an Development Financial Institutions 19 alternate or substitute director, and without prejudice to the foregoing, in the case of— (a) a co-operative society, means a member of the board, or other governing body, of the co-operative society; (b) a statutory body, means a member of the board, committee, council or other governing body of the statutory body; (c) a partnership, means a partner; (d) a sole proprietorship, means the sole proprietor; and (e) any other body, association or group of persons, whether corporate or unincorporate, means a person having the direction and control of the management of its business or affairs;
Open s 3
financing facility
Defined · s 3
“financing facility” means— *NOTE—The Companies Act 1965 has been repealed by the Companies Act 2016 which comes into operation on 31 January 2017–see subsection 620(1)…
Open s 3
modification
Defined · s 3
“modification” includes amendment, adaptation, alteration, variation, addition, division, substitution or exclusion;
Open s 3
officer
Defined · s 3
“officer”, in relation to an institution, means any of its employees and includes its Chief Executive Officer;
Open s 3
person
Defined · s 3
“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;
Open s 3
prescribed institution
Defined · s 3
“prescribed institution” means a development financial institution which is prescribed by the Minister under subsection 2(1);
Open s 3
specify
Defined · s 3
“specify” means specify in writing by way of standards or any other forms;
Open s 3
trust fund
Defined · s 3
“trust fund” means any fund established under section 43;
Open s 3

Report

Read on from s 29

Part IV

Obligations and Sourcing of Funds

Read on from Part IV

Part V

Dealings with Government Funds

Read on from Part V

Part VI

Control of Defaulter

Read on from Part VI

Part VII

Auditor and Accounts

Read on from Part VII

Part VIII

Examination and Investigation

Read on from Part VIII

Part IX

Miscellaneous

Read on from Part IX