Labuan Financial Services and Securities Act 2010 · Updated to 15 Oct 2022 · Part II · Securities
21. Exemptions and indemnifications of trustee from liability
Feedback & supportSubject to this section, a term, provision or covenant of a debenture or a trust deed of a term of contract with holders of debentures secured by a trust deed shall be void insofar as the term, provision or covenant, as the case may be, would have the effect of—
debenture
“debenture” includes debenture stocks, bonds, notes and any other evidence of indebtedness of a corporation for borrowed monies, whether or not constituting a charge on the assets of the corporation, but shall not be construed as applying to any of the following: (a) any instrument acknowledging or creating indebtedness for, or for money borrowed to defray the consideration payable under, a contract for sale or supply of goods, property or services or any contract of hire in the ordinary course of business; (b) a cheque, banker’s draft or any other bill of exchange or a letter of credit; (c) a banknote, guarantee or an insurance policy; (d) a statement, passbook or other document showing any balance in a current, deposit or savings account; (e) any agreement for a loan where the lender and borrower are signatories to the agreement and where the lending of money is in the ordinary course of business of the lender, and any promissory note issued under the terms of such an agreement; (f) any instrument or product or class of instruments or products as the Authority may prescribe;
exempting a trustee from liability for contravention of any provision of this Part or for breach of trust or failure to show the degree of care and diligence required of it as a trustee;
indemnifying a trustee against liability for contravention of any provision of this Part or for breach of trust or for failure to show the degree of care and diligence required of it as a trustee, unless the term, provision or covenant—
releases the trustee from liability for anything done or omitted to be done before the release is given; or
enables a meeting of debenture holders to approve the release of a trustee from liability for anything done or omitted to be done before the release is given.
For the purpose of paragraph (1)(B)—
a release is approved if the debenture holders who vote for the resolution hold seventy-five per centum of the nominal value of the debentures held by all the debenture holders who attend the meeting and vote on the resolution; and
a debenture holder attends the meeting and votes on the resolution if—
such debenture holder attends the meeting in person and votes on the resolution; or
if proxies are permitted, the debenture holder is represented at the meeting by a proxy and the proxy votes on the resolution.
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