Malaysia legislation
Section 72
of MALAYSIA DEPOSIT INSURANCE CORPORATION (AMENDMENT) ACT 2016
Section 72
New sections 142a, 142b and 142c
The principal Act is amended by inserting after section 142
as deleted the following sections:
“Priority of payments in winding up of takaful operator 142a. (1) 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 292(1)(f) of the Companies Act 1965 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—
(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
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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 292(1) of the
Companies Act 1965 and the debts due and claims owing to the Government under section 10 of the Government
Proceedings Act 1956.
Priority of payments in winding up of insurance company 142b. (1) In the winding up of an insurance company, the assets of an insurance fund shall be applied to meet its liabilities to policy owners and claimants under policies of that fund and these liabilities shall have priority over unsecured liabilities of that fund, other than preferential debts set out in subsection 292(1) of the Companies Act 1965 and debts due and claims owing to the Government under section 10
of the Government Proceedings Act 1956, to the extent that they are apportioned to the insurance fund.
(2)
Subject to subsection (1)—
(a)
the assets of an insurance fund as established under the Financial Services Act 2013 shall first be applied to meet the liabilities of that fund;
(b)
where the assets of an insurance fund, other than a life fund relating to participating life policies, exceed its liabilities, the surplus assets may be applied to meet the liabilities of its other insurance funds which are deficient and if the surplus assets of two or more insurance funds are applied, the surplus assets shall be applied proportionately to the amounts of the surpluses and if the surplus assets are applied to meet the liabilities of two or more insurance funds which are in deficit, the surplus assets shall be applied proportionately to the amounts of the deficiencies;
Malaysia Deposit Insurance Corporation (Amendment)
(c)
any deficiency subsisting after application of the assets of the insurance funds under paragraphs (a)
and (b) shall be met out of the assets of the shareholders’ funds, and unsatisfied liabilities to a policy owner and claimant under a policy shall have priority over other unsecured liabilities other than preferential debts specified under subsection 292(1)
of the Companies Act 1965 and debts due and claims owing to the Government under section 10 of the
Government Proceedings Act 1956; and
(d)
any other assets held by the insurance company, including surplus assets in a life fund relating to participating life policies, shall be used in a manner as may be prescribed by the Corporation.
Valuation of assets and liabilities of a takaful operator or insurance company 142c. (1) In the winding up of a takaful operator, including a former insurer member the membership of which has been cancelled under section 38 or terminated under section 39
and whether its shareholders’ fund or any takaful fund managed by it is insolvent or not, the value of the assets and liabilities of the shareholders’ fund and takaful fund, including liabilities in respect of takaful certificates, shall be ascertained on such basis as the Corporation may determine and the law relating to bankruptcy or insolvency shall not apply to the valuation of the liabilities.
(2)
In the winding up of an insurance company, including a former insurer member the membership of which has been cancelled under section 38 or terminated under section 39
and whether it is insolvent or not, the value of its assets and liabilities, including liabilities in respect of policies, shall be ascertained on such basis as the Corporation may determine and the law relating to bankruptcy or insolvency shall not apply to the valuation of the liabilities.”.
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Amendment of section 144