Section 142A
Priority of payments in winding up of takaful operator
of Malaysia Deposit Insurance Corporation Act 2011
In the winding up of a takaful operator, the assets of a takaful fund for any class or description of takaful business established under the Islamic Financial Services Act 2013 shall be applied to meet the liabilities to certificate owners or proper claimants in respect of that takaful fund and such liabilities shall have priority over all unsecured liabilities of that takaful fund including any qard or other forms of financial support referred to in the Islamic Financial Services
Act 2013, other than any tax set out in paragraph 527(1)(f) of the
Companies Act 2016 which is attributable to the takaful fund.
(2)
In the winding up of a takaful operator—
(a)
where the assets of a takaful fund managed by a takaful operator are in surplus, after payment has been made to meet its liabilities under subsection (1), such surplus assets of the takaful fund shall be applied in the following order:
(i)
first, to meet the liabilities of other takaful funds managed by the takaful operator which are deficient and if for this purpose there are two or more takaful funds—
(A)
which are in surplus, such surpluses shall be applied in proportion to the surplus in each takaful fund to meet the liabilities of the takaful fund which is deficient; or
(B)
which are in deficit, the surplus shall be applied in proportion to the amounts of the deficiencies to meet the liabilities of the takaful funds which are deficient; and
(ii)
second, any other purposes as may be prescribed by the Corporation;
(b)
any deficiency in the assets of a takaful fund to meet its liabilities under subsection (1) will be met—
Malaysia Deposit Insurance Corporation 153
(i)
first, as provided in paragraph (a), by the surplus assets of other takaful funds; and
(ii)
if such surplus assets are insufficient to meet those liabilities then the balance of such liabilities shall be met by the surplus assets of the shareholders’ fund after payment has been made to meet the shareholders’ fund’s liabilities under subsection (3);
or
(c)
pursuant to subparagraph (b)(ii), where the assets of the shareholders’ fund are in surplus, the surplus assets shall be applied to meet the liabilities of any takaful fund which is in deficit, and if the surplus assets are applied to meet the liabilities of two or more takaful funds the assets of which are in deficit, such surplus assets shall be applied proportionately to the amounts of the deficiencies.
(3)
In the winding up of a takaful operator, the assets of its shareholders’ fund shall be applied to meet the liabilities to certificate owners to the extent that it is attributable to the shareholders’ fund and such liabilities shall have priority over all unsecured liabilities of that takaful operator, other than preferential debts set out in subsection 527(1) of the Companies Act 2016 and the debts due and claims owing to the Government under section 10 of the Government
Proceedings Act 1956.