LABUAN FINANCIAL SERVICES AND SECURITIES ACT 2010
(1) This Act may be cited as the Labuan Financial Services and Securities Act 2010.
(2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette .
(1) In this Act, unless the context otherwise requires:-
"actuary" means a person, being a Fellow of any of the professional associations listed in the Second Schedule or a person recognised by the Authority as an actuary for the purposes of this Act, who appears on the list of actuaries maintained by the Authority;
"approved auditor" means an approved auditor under section 10 of the Labuan Companies Act 1990 [Act 441] ;
"Authority" means the Labuan Financial Services Authority established under section 3 of the Labuan Financial Services Authority Act 1996 [Act 545] ;
"authorised officer" means an officer duly authorised by the Authority under subsection 3(2);
"bank licensee" means
3 PART I PRELIMINARY-3. Administration of the Act.
(1) The Authority is responsible for the due administration of this Act, subject to the general directions and control of the Minister.
(2) The Authority may authorise any of its members or officers to perform any of its functions, exercise any of its powers or discharge any of its duties under this Act.
(3) Subject to such limitations, if any, as may be prescribed, an authorised officer shall perform all the functions, exercise all the powers and discharge all the duties of the Authority as authorised and every function so performed, power so exercised and duty so discharged shall be deemed to have been duly performed, exercised and discharged for the purposes of this Act.
(4) All courts, judges and persons acting judicially shall take judicial notice of the seal and signature of the Authority.
4 PART I PRELIMINARY-4. Fit and proper person.
(1) Every licensed entity shall ensure that its directors, principal officers and trust officers, where applicable, remain as fit and proper persons throughout their appointment with the licensed entity.
(2) If a director, principal officer or trust officer, where applicable, ceases to be a fit and proper person, the licensed entity and such director, principal officer or trust officer, where applicable, shall as soon as reasonably practicable, notify the Authority in writing of the same, together with details of the change.
(3) In determining whether a person is a fit and proper person under this Act, the Authority may take into consideration the following:-
(a) integrity, competence, soundness of judgment and financial standing of the person;
(b) whether the person has been adjudged a bankrupt, in Malaysia or elsewhere;
(c) whether the person has been convicted of a criminal offence in Malaysia or
5 PART I PRELIMINARY-5. Business in, from or through Labuan.
(1) A person licensed to carry on any of the activities under this Act shall carry on such activities only in, from or through Labuan except that a licensed entity may carry on such business in Malaysia outside Labuan as may be permitted by the Authority from time to time:
Provided that nothing in this section permits a licensed entity from carrying on any regulated activities under the Capital Markets and Services Act 2007 [Act 671] , where such regulated activities are carried on in Malaysia other than Labuan.
(2) Notwithstanding subsection (1), a mutual fund, a fund manager and a fund administrator established, licensed or registered, as the case may be, under Part III shall be deemed to be carrying on business in Labuan notwithstanding that the business is carried on wholly outside Labuan or outside Labuan from a place of business or registered office within Labuan and the expression "carrying on business from Labuan" includ
6 PART I PRELIMINARY-6. Shariah matters.
Any person:-
(a) proposing to make an offer of subscription or purchase, or issue an invitation to subscribe for or purchase, securities in or from within Labuan; or
(b) carrying on any business regulated under Parts III, IV, VI, VII and X,
which is expressly in conformity with Shariah principles shall comply with the relevant provisions of the Labuan Islamic Financial Services and Securities Act 2010 and in so doing, shall be deemed to have complied with all relevant laws in Labuan relating to such matters.
7 PART II SECURITIES DIVISION 1 PRELIMINARY-7. Interpretation.
(1) In this Part, unless the context otherwise requires:-
"borrowing company" means a Labuan company that is or will be under a liability, whether or not such liability is present or future, to repay any money received or to be received by it in response to an offer made under section 8 to subscribe for or purchase debentures of the Labuan company;
"guarantor company" , in relation to a borrowing company, means a corporation that has guaranteed, or has agreed to guarantee, the repayment of any money received or to be received by the borrowing company in response to an offer made under section 8 to subscribe for or purchase debentures of the borrowing company;
"promoter" , in relation to a prospectus issued by or in connection with a Labuan company, means a promoter of the company who was a party to the
8 DIVISION 2 OFFERS-8. Offers or invitations which require the approval of the Authority.
(1) Subject to subsections (2) to (6), a person, its officers, directors, agent or any other person on its behalf, shall not make an offer for subscription or purchase, or issue an invitation to subscribe for or purchase securities in or from within Labuan without the prior written approval of the Authority.
(2) No offer or invitation to subscribe for debentures of, or to deposit money with or lend money to, a Labuan company or a foreign Labuan company, shall be made to residents of Malaysia, except by a bank licensee unless otherwise allowed in writing by the Authority.
(3) An applicant shall submit to the Authority such documents and such other information in relation to the offer or invitation in such form and manner and at such times as the Authority may require.
(4) Where an application has been submitted to the Authority under this section, the Authority may:-
(a) approve an offer or invitation with or
9 DIVISION 2 OFFERS-9. False or misleading statements.
(1) Where any statement or information is required to be submitted to the Authority in relation to any offer or invitation of securities submitted pursuant to subsection 8(3), an applicant and any of its officers shall not:-
(a) submit or cause to be submitted any statement or information that is false or misleading;
(b) submit or cause to be submitted any statement or information from which there is a material omission; or
(c) engage in or aid or abet conduct that he knows to be misleading or deceptive or is likely to mislead or deceive the Authority.
(2) It shall be a defence to a prosecution or any proceedings for contravention of subsection (1) if it is proved that the defendant, after making enquiries as were reasonable in the circumstances, had reasonable grounds to believe, and did until the time of the making of the statement or provision of the information or engaging in the conduct wa
10 DIVISION 2 OFFERS-10. Advertisements.
(1) No advertisement offering, or calling attention to an of fer or intended offer of, securities under subsection 8(1), being an offer of securities not excluded under subsection 8(5), shall be published in Labuan until it has been approved by the Authority.
(2) An application for approval of an advertisement shall be lodged with the Authority together with a copy of the advertisement verified in such manner as the Authority directs.
(3) Any person who publishes or causes to be published in Labuan an advertisement without the prior approval of the Authority commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
11 DIVISION 2 OFFERS-11. Registration of prospectus.
(1) Subject to subsection (2), a person shall not issue, offer for subscription or purchase, make an invitation to subscribe for or purchase, securities in or from within Labuan unless a prospectus in relation to such offer or invitation has been registered with the Authority.
(2) The requirement under subsection (1) shall not apply if the offer or invitation is made pursuant to or in connection with an offer or invitation excluded under subsection 8(5).
(3) The Authority shall not register a copy of any prospectus:-
(a) if it contains any statement or matter which is in its opinion misleading in the form and context in which it is included; and
(b) unless:-
(i) a copy signed by every director and by every person who is named therein as a proposed director of the corporation or operator in the case of a public fund applying for registration under section 31 or by their agents authorised
12 DIVISION 2 OFFERS-12. Document containing offer of securities to be made via Labuan trust company or bank licensee and to be deemed prospectus.
(1) Where a corporation allots or issues or agrees to allot or issue to a person any securities under subsection 8(1), and where such an offer is not excluded under subsection 8(5), the offer or invitation of securities shall be made through its agent which shall be a Labuan trust company or a bank licensee.
(2) Any document by which the offer under subsection 8(1) is made shall for all purposes be deemed to be a prospectus issued by the corporation, and all written laws and rules of law as to the contents of prospectuses and as to liability in respect of advertisements and statements and non-disclosures in prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly as if the securities had been offered under subsection 8(1) and as if persons accepting the offer in respect of any securities were subscribers therefor but without prejudice to the liability, if any, of the persons by whom the offer is made in respe
13 DIVISION 2 OFFERS-13. Expert's consent to issue of prospectus containing statement by him.
(1) A prospectus inviting subscription for or purchase of securities of a corporation and including a statement purporting to be made by an expert or to be based on a statement made by an expert shall not be issued unless there appears in the prospectus a statement that he has given and has not withdrawn his consent.
(2) If any prospectus is issued by a corporation in contravention of this section, the corporation and every person who is knowingly a party to the issue thereof commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
14 DIVISION 2 OFFERS-14. Civil liability for mis-statement in prospectus.
(1) Subject to this section, each of the following persons shall be liable to pay compensation to all persons who subscribe for or purchase any securities on the faith of a prospectus for any loss or damage sustained by reason of an untrue statement therein, or by reason of the wilful non-disclosure therein of any matter of which he had knowledge and which he knew to be material, that is to say every person who:-
(a) is a director at the time of issue of the prospectus;
(b) authorised or caused himself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;
(c) is a promoter of the corporation; or
(d) authorised or caused the issue of the prospectus.
(2) Notwithstanding anything in subsection (1), where the consent of an expert is required to the issue of a prospectus and he has given that consent
15 DIVISION 2 OFFERS-15. Criminal liability for mis-statement in prospectus.
(1) Where in any prospectus, or in any advertisement of the kind referred to in section 10, there is an untrue statement or wilful non-disclosure, any person who authorised or caused the issue of the prospectus or advertisement commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both unless he proves that the statement or non-disclosure was immaterial or that he had reasonable ground for believing and did, up to the time of the issue of the prospectus, believe that the statement was true or that the non-disclosure was immaterial.
(2) A person shall not be deemed to have authorised or caused the issue of a prospectus by reason only of his having given the consent required by this Division to the inclusion therein of a statement purporting to be made by him as an expert.
16 DIVISION 2 OFFERS-16. Labuan trust company or bank licensee as agent in offer.
(1) No allotment or issue shall be made of any securities of a corporation offered under subsection 8(1), being an offer of securities not excluded under subsection 8(5), unless the securities have been offered through a Labuan trust company or a bank licensee.
(2) For the avoidance of doubt, a Labuan trust company or a bank licensee shall be the agent of a corporation which has offered securities under subsection 8(1) through the Labuan trust company or bank licensee to receive applications for the issue of securities and shall be so described in the prospectus.
(3) All monies payable on application for the securities in a corporation shall be paid to the Labuan trust company or bank licensee acting as an agent for the corporation, and pending receipt by the Labuan trust company or bank licensee of the amount of the minimum subscription, it shall hold all monies received by it upon trust for the applicant, and if the amount of the mini
17 DIVISION 2 OFFERS-17. Prohibition of allotment unless minimum subscription received.
(1) No allotment or issue shall be made of any securities of a corporation offered under subsection 8(1), being an offer of securities not excluded under subsection 8(5), unless:-
(a) the minimum subscription has been subscribed; and
(b) the sum payable on application for the securities so subscribed has been received by the corporation,
but if a cheque for the sum payable has been received by the corporation, the sum shall be deemed not to have been received by the corporation until the cheque is paid by the bank on which it is drawn.
(2) The minimum subscription shall be:-
(a) calculated based on the price at which the security is or will be offered; and
(b) reckoned exclusively of any amount payable otherwise than in cash.
(3) The amount payable on application on each security offered shall not be less than five per centum of the price at wh
18 DIVISION 2 OFFERS-18. Application monies to be held in trust until issuance or allotment.
(1) Subject to subsections 16(3) and (4) and subsection 17(1), all applications and other monies paid prior to issuance or allotment by any applicant on account of securities offered under subsection 8(1) by a corporation shall, until the issuance or allotment of such securities, be held upon trust for the applicant and such monies shall be paid into and kept in a separate trust account, pending issuance or allotment.
(2) If there is non-compliance with this section, every officer of the corporation who is in default and who knowingly and wilfully authorises or permits the default commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
19 DIVISION 3 DEBENTURES-19. Power to issue debentures.
(1) Subject to this Division and to the terms and conditions of its memorandum and articles, a Labuan company shall have the power to issue debentures on such terms and conditions as it thinks fit and in particular, but without limiting the generality of the foregoing, may issue debentures:-
(a) constituting a charge on any or all of the assets of the company;
(b) convertible from debentures into shares in the company; or
(c) as secured debentures.
(2) The debt payable under any debenture, whether sealed or signed on behalf of the company, shall be a specialty debt of the company, and where the debenture is issued by a branch of a company, shall be located at that branch.
(3) The Minister may make regulations:-
(a) restricting the right of a Labuan company or any particular class of Labuan companies to issue debentures which may be converted into shares; and
20 DIVISION 3 DEBENTURES-20. Trustee for debenture holders.
(1) Every Labuan company which offers debentures under subsection 8(1), being an offer of debentures not excluded under subsection 8(5), shall make provision in those debentures, or in a trust deed relating to those debentures, for the appointment of a Labuan trust company as a trustee for the holders of the debentures.
(2) A borrowing company shall not allot any debentures until such time as a Labuan trust company has been appointed as a trustee for the holders of those debentures.
(3) The Authority may approve any other person to act as a trustee together with the Labuan trust company for the holders of the debentures.
(4) If default is made by a borrowing company in complying with this section, the borrowing company and every officer of the borrowing company who is in default commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three yea
21 DIVISION 3 DEBENTURES-21. Exemptions and indemnifications of trustee from liability.
(1) Subject 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:-
(a) 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;
(b) 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:-
(A) releases the trustee from liability for anything done or omitted to be done before the release is given; or
(B) enables a meeting of debenture holders to approve the release of a tr
22 DIVISION 3 DEBENTURES-22. Duties of trustee.
(1) A trustee for the holders of debentures:-
(a) shall exercise reasonable diligence to ascertain whether or not the assets of the borrowing company and each of its guarantor companies, which are or may be available by way of securities or otherwise, are sufficient, or are likely to be or become sufficient, to discharge the principal debt as and when it becomes due;
(b) shall satisfy itself that each prospectus relating to the debentures does not contain any matter which is inconsistent with the terms of the debentures or with the relevant trust deed;
(c) shall exercise reasonable diligence to ascertain whether or not the borrowing company and each of its guarantor companies have committed any breach of the terms, provisions or covenants of the debentures or the trust deed;
(d) except where it is satisfied that a breach of the terms, provisions or covenants of the debentures or the trust deed would not mate
23 DIVISION 3 DEBENTURES-23. Obligations of directors of borrowing company.
(1) The directors of the borrowing company shall:-
(a) at the end of a period not exceeding three months ending on a day, such day being the later of the date of the relevant prospectus, if applicable, or the date on which the debenture is issued pursuant to the trust deed, which the trustee for the holders of debentures of the borrowing company is required to notify to the borrowing company in writing; and
(b) at the end of each succeeding period thereafter, being a period of three months or such shorter time as the trustee may, in any special circumstances, allow,
prepare a report that relates to that period and complies with the requirements of subsection (2) and, within thirty days after the end of each such period, lodge a copy of the report relating to that period with the Authority and with the trustee.
(2) The report referred to in subsection (1) shall be signed by not less than two of
24 DIVISION 3 DEBENTURES-24. Obligation of guarantor company to furnish information.
(1) For the purpose of the preparation of a report which, by this Act, is required to be signed by or on behalf of the directors of a borrowing company or any of them, that borrowing company may, by notice in writing, require any of its guarantor companies to furnish it with any information relating to that guarantor company which, by this Act, is required to be contained in that report, and that guarantor company shall furnish the borrowing company with that information before such date, being a date not later than fourteen days after the notice is given, as may be specified in that behalf in the notice.
(2) A guarantor company which fails to comply with the requirement contained in a notice given under subsection (1) and every officer of that company who is in default commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
(3) This section shall not apply to an offer or invitation of securi
25 DIVISION 3 DEBENTURES-25. Loan and deposits to be immediately repayable on certain events.
(1) Where in any prospectus issued in connection with an offer or invitation under subsection 8(1) to subscribe for or to purchase debentures of a Labuan company there is a statement as to any particular purpose or project for which the monies received by the borrowing company in response to the offer or invitation are to be applied, the borrowing company shall from time to time make reports to the trustee for the holders of debentures of the borrowing company as to the progress that has been made towards achieving such purpose or completing such project.
(2) Where it appears to a trustee to which a report is furnished by a borrowing company that such purpose or project has not been achieved or completed within the time stated in the prospectus within which the purpose or project is to be achieved or completed or, where no such time was stated, then within a reasonable time, the trustee may, and, if in its opinion it is necessary for the protec
26 DIVISION 3 DEBENTURES-26. Retention of over-subscriptions in debenture issues.
(1) A borrowing company shall not accept or retain subscriptions to a debenture issue in excess of the amount of the issue as disclosed in the prospectus unless the borrowing company has specified in the prospectus:-
(a) that it expressly reserves the right to accept or retain over-subscriptions; and
(b) a limit on the amount of the over-subscription that may be accepted or retained.
(2) Subject to any regulations, where a borrowing company specifies in a prospectus relating to a debenture issue that it expressly reserves the right to accept or retain over-subscriptions:-
(a) the borrowing company shall not make, authorise or permit any statement or reference as to the asset-backing for the issue to be made or contained in any prospectus relating to the issue, other than a statement or reference to the total assets and the total liabilities of the borrowing company and of its guara
27 PART III MUTUAL FUNDS DIVISION 1 PRELIMINARY-27. Interpretation.
(1) In this Part, unless the context otherwise requires:-
"investor" means a person, including a custodian and an underwriter, who is the owner of securities issued by a mutual fund but does not include a person who only takes the initiative in forming or organising the business of the mutual fund and does not have any ownership in the fund;
"operator" , in respect of a mutual fund, means:-
(a) where the mutual fund is a corporation, a director of that corporation;
(b) where the mutual fund is a limited partnership, a general partner in that limited partnership;
(c) where the mutual fund is a limited liability partnership, the designated partner in that limited liability partnership; or
(d) where the mutual fund is a unit trust, a trustee of that trust;
28 DIVISION 2 MUTUAL FUNDS SUBDIVISION 1 PRIVATE FUNDS-28. Notification by private funds.
A private fund shall be entitled to carry on business or arrange or administer its affairs by giving notice in writing to the Authority setting out the details of the scope and nature of its business.
29 DIVISION 2 MUTUAL FUNDS SUBDIVISION 1 PRIVATE FUNDS-29. Private fund to lodge an information memorandum or such other offering document.
(1) A private fund shall lodge the information memorandum or such other offering document relating to the private fund purporting to describe the business and affairs of the private fund with the Authority.
(2) The information memorandum or such other offering document referred to in subsection (1) shall be lodged by a private fund through a licensed entity which shall be reasonably satisfied that:-
(a) the information memorandum or such other offering document being lodged refers to a private fund as defined under this Part; and
(b) there is no element of fraud involved in the establishment of the private fund.
(3) An information memorandum or such other offering document lodged by a private fund shall be deemed to be a prospectus in so far as it relates to the liability of that private fund for any statement or information that is false or misleading or from which there is a material omission
30 DIVISION 2 MUTUAL FUNDS SUBDIVISION 1 PRIVATE FUNDS-30. Exclusion of liability for errors or omission in the information memorandum or such other offering document.
Where an information memorandum or such other offering document is lodged by the private fund with the Authority under section 29, neither the Authority nor any of its officers or employees shall be liable for any loss or damage suffered by any person or persons by reason of any error, mis-statement or omission of whatever nature appearing therein.
31 SUBDIVISION 2 PUBLIC FUNDS-31. Public funds shall be registered.
(1) No public fund shall carry on business or arrange or administer its affairs unless it has been granted registration under paragraph 33(1)(a).
(2) Subject to subsection (3), no proposed public fund shall carry on business or arrange or administer its affairs unless it has been granted provisional acceptance under paragraph 33(1)(b).
(3) A proposed public fund to which a provisional acceptance has been granted under paragraph 33(1)(b) shall not carry on business or arrange or administer its affairs without the prior written consent of the Authority.
32 SUBDIVISION 2 PUBLIC FUNDS-32. Application by public funds.
(1) An application to the Authority under subsection 31(1) or subsection 31(2) shall be accompanied by the following:
(a) a statement setting out the scope and nature of the business to be carried on by the applicant in or from within Labuan;
(b) the instrument by which the applicant is constituted or such other proof as the Authority may require to be satisfied that the applicant is lawfully constituted under the laws of Malaysia relating to Labuan or under the laws of any recognised country or jurisdiction;
(c) a statement on the following:
(i) the address of the applicant's place of business and its address for service relating to Labuan;
(ii) the name and address of a person in Labuan who is authorised to represent the applicant and to accept service on its behalf;
(iii) the address of the applicant's place of business outside Labuan; and
(iv) the names, addresses and
33 SUBDIVISION 2 PUBLIC FUNDS-33. Power to grant or refuse registration of public funds.
(1) The Authority may grant or refuse to grant:-
(a) registration of a public fund; or
(b) provisional acceptance of a proposed public fund.
(2) A grant under subsection (1) may be made subject to any terms, conditions, limitations or restrictions.
(3) A provisional acceptance granted under paragraph (1)(b) shall be valid and effective for a period not exceeding six months from the date on which it is granted.
(4) A provisional acceptance may be renewed for a period not exceeding three months upon application being made to the Authority and accompanied by such documents or information as the Authority may require.
(5) Notwithstanding the grant of a provisional acceptance under paragraph (1)(b) to a proposed public fund, the Authority may grant registration to such a proposed public fund as a public fund under paragraph (1)(a).
34 SUBDIVISION 2 PUBLIC FUNDS-34. Registration procedure.
(1) Where the Authority grants registration of a public fund under paragraph 33(1)(a), it shall:-
(a) register the public fund in the register maintained under Division 5 of this Part; and
(b) issue a certificate of registration to the public fund.
(2) Where the Authority grants a provisional acceptance under paragraph 33(1)(b), the promoter of the proposed public fund shall, before the expiry of the provisional acceptance period or renewed provisional acceptance period deliver to the Authority:-
(a) the provisional acceptance of the Authority;
(b) proof satisfactory to the Authority that the proposed public fund is lawfully constituted in Labuan or any recognised country or jurisdiction; and
(c) the information referred to in subsection 32(1).
(3) If the Authority is satisfied that the proposed public fund referred to in subsection (2) has com
35 SUBDIVISION 2 PUBLIC FUNDS-35. Prospectus relating to public fund.
(1) No registered public fund shall, in or outside Labuan, make an offer of securities unless prior to such offer it has lodged a prospectus with the Authority in accordance with the prospectus requirements under section 11.
(2) For the avoidance of doubt, the civil and criminal liabilities for mis-statements in prospectuses provided for under Part II shall equally apply to a prospectus lodged under this section.
36 SUBDIVISION 2 PUBLIC FUNDS-36. Investors' rights.
(1) If a registered public fund publishes a prospectus or any amendment thereto that contains any misrepresentation relating to any of the matters required to be disclosed under subsection 11(5), a person who purchased any securities pursuant to such prospectus or amendment thereto is deemed to have relied upon the misrepresentation and shall have the rights provided in subsection (2).
(2) A person referred to in subsection (1) may elect to exercise a right of action:-
(a) for the rescission of the purchase; or
(b) for damages,
jointly and severally against the fund and every person who, while aware of the misrepresentation, signed the prospectus or amendment thereto and consented to its publication and lodgement or caused it to be signed or published and filed.
(3) For the purposes of this section, "misrepresentation" means:-
(a) any u
37 SUBDIVISION 2 PUBLIC FUNDS-37. Limitation.
Notwithstanding any other written law to the contrary, an action under subsection 36(2) may not be commenced after:-
(a) one hundred and eighty days from the day on which the aggrieved party first had knowledge of the misrepresentation; or
(b) one year from the date of the purchase transaction that gave rise to the cause of action,
whichever is earlier.
38 SUBDIVISION 2 PUBLIC FUNDS-38. Certificate of compliance.
Every registered public fund which carries on business outside Labuan under the laws of any recognised country or jurisdiction shall, every year, within ninety days of the end of its financial year, lodge with the Authority a certificate of compliance or an equivalent document by whatever named called from the competent authority that is responsible for the regulation and supervision of the conduct of its business in that recognised country or jurisdiction.
39 SUBDIVISION 2 PUBLIC FUNDS-39. Foreign public fund may be managed or administered in Labuan.
A public fund lawfully registered under the laws of any recognised country or jurisdiction need not be registered as a public fund under section 33 so long as the public fund is administered or managed in Labuan by a fund administrator, a custodian, a trustee or a fund manager, who is licensed, registered or eligible under this Part.
40 DIVISION 3 LICENSING SUBDIVISION 1 FUND MANAGERS AND FUND ADMINISTRATORS-40. Licensing of fund managers.
(1) No person shall carry on business as a fund manager of a public fund unless that person is a Labuan company who has been granted a licence to act as a fund manager under this section.
(2) Notwithstanding subsection (1), the following persons may carry on business as a fund manager of a public fund:-
(a) a person who is and continues to be a qualified and authorised manager of mutual funds under the laws of any recognised country or jurisdiction and has received written permission from the Authority to carry on business as manager of public funds; or
(b) a bank licensee.
(3) A fund manager who is carrying on fund management activities in relation to a private fund only is not required to be licensed under this Part.
41 DIVISION 3 LICENSING SUBDIVISION 1 FUND MANAGERS AND FUND ADMINISTRATORS-41. Licensing of fund administrators.
(1) No person shall carry on business as a fund administrator of a public fund unless that person is a Labuan company or Labuan trust company and has been granted a licence to act as a fund administrator under this Act.
(2) Notwithstanding subsection (1), the following persons may carry on business as a fund administrator of a public fund:-
(a) a bank licensee;
(b) a Labuan trust company;
(c) a securities licensee under Part IV;
(d) a management company licensed under Part VIII; or
(e) a person who is and continues to be a qualified and authorised fund administrator of mutual funds under the laws of any recognised country or jurisdiction and has received written permission from the Authority to carry on business as a fund administrator of public funds.
(3) A fund administrator who is carrying on fund administration activities in relation to a private fund only is not req
42 DIVISION 3 LICENSING SUBDIVISION 1 FUND MANAGERS AND FUND ADMINISTRATORS-42. Application for fund manager's licence.
An application for a licence to carry on business as a fund manager of a public fund shall be:-
(a) made in such form as may be specified by the Authority; and
(b) accompanied by:-
(i) particulars of the financial and human resources and administrative facilities available to the applicant for the competent and efficient conduct of its business;
(ii) a statement on the following:-
(aa) the address of the applicant's place of business and its address for service relating to Labuan;
(bb) the name and address of a person in Labuan who is authorised to represent the applicant and to accept service on its behalf; and
(cc) the address of the applicant's place of business outside Labuan; and
(iii) such information or documents as the Authority may require for the purpose of determining the application.
43 DIVISION 3 LICENSING SUBDIVISION 1 FUND MANAGERS AND FUND ADMINISTRATORS-43. Application for fund administrator's licence.
An application for a licence to carry on business as a fund administrator of public funds shall be:-
(a) made in such form as may be specified by the Authority; and
(b) accompanied by such information or documents as the Authority may require for the purpose of determining the application.
44 DIVISION 3 LICENSING SUBDIVISION 1 FUND MANAGERS AND FUND ADMINISTRATORS-44. Power to grant or refuse licence.
(1) Upon receiving an application, the Authority may grant or refuse to grant a licence.
(2) The grant of a licence may be made subject to any terms, conditions, limitations or restrictions.
(3) Except with the written consent of the Authority no change shall be made in respect of the identity, residence, domicile, ownership or shareholding of the fund manager or fund administrator during the period of operation of the licence.
(4) The Authority shall not grant:-
(a) a licence to a fund manager of a public fund; or
(b) a licence to a fund administrator of a public fund,
unless it is satisfied that the applicant is a fit and proper person to engage in the business of fund management or fund administration of mutual funds.
45 SUBDIVISION 2 TRUSTEES OR CUSTODIANS-45. Eligibility of trustees or custodians of public funds.
(1) No person shall carry on business as a trustee of a public fund unless that person is a Labuan trust company.
(2) No person shall carry on business as a custodian of a public fund unless it is a bank licensee or a Labuan trust company.
(3) This section does not apply to a person who is and continues to be a qualified and authorised trustee or custodian of public funds under the laws of any recognised country or jurisdiction and has received written permission from the Authority to carry on business as a trustee or custodian of a public fund.
46 SUBDIVISION 3 GRANT OF LICENCE OR REGISTRATION-46. Licence or registration.
A licence or registration granted under this Part shall:-
(a) be in such form as may be specified;
(b) remain in force until it is revoked; and
(c) be admissible in all courts as prima facie evidence of the facts stated in it.
47 DIVISION 4 DUTIES-47. Duties of fund managers and fund administrators of public funds.
The fund manager or the fund administrator of a public fund and its officers shall, in exercising their powers and duties:-
(a) act honestly;
(b) exercise the degree of care and diligence that would be reasonably expected of a person in that position;
(c) act in the best interests of the investors in the public fund and, where there is a conflict between the interest of the investors and their own interests, give priority to the investors' interests;
(d) treat the investors who hold interests of the same class equally and participants who hold interests of different classes fairly;
(e) not make use of information acquired through being a fund manager or fund administrator or its officer to:-
(i) gain an improper advantage for themselves or another person; or
(ii) cause detriment to the investors in the public fund;
(f) ensure that all payments out of
48 DIVISION 4 DUTIES-48. Duties of fund managers, fund administrators, trustees or custodians and directors under applicable law.
The duties of the fund manager, fund administrator, trustee or custodian and their directors imposed on them under this Division are in addition to and not in derogation from the duties which are otherwise imposed on them by any applicable law.
49 DIVISION 4 DUTIES-49. Specific duties of fund managers of public funds.
(1) The fund manager of a public fund shall:-
(a) ensure that a written agreement is entered into with each client before transactions are carried out on behalf of a client;
(b) understand each client's investment objectives, instructions, risk profile and investment restrictions, where applicable, which shall be reassessed and updated at least annually;
(c) exercise diligence and thoroughness in, and have reasonable and adequate basis for, preparing the investment policy or investment recommendation;
(d) obtain each client's approval for the investment policy or investment recommendation prior to its implementation;
(e) provide each client with full and accurate information in order to make an informed investment decision when approving the investment policy or investment recommendation;
(f) avoid any misrepresentation in any investment policy or investment recommendation; and
(g) en
50 DIVISION 4 DUTIES-50. Duty to segregate client's assets.
(1) A fund manager of public funds shall ensure that each client's assets are deposited into a trust account and maintained by a custodian or a trustee or any other person as may be permitted by the Authority, as the case may be, not later than the next bank business day or such other day as may be specified by the Authority, following the day on which the fund manager receives the client's assets.
(2) Where client's assets that are required by this section to be deposited into a trust account are received by a fund manager in a place outside Malaysia, the fund manager may deposit such assets into a trust account maintained by it in that place.
(3) The trust account referred to in subsections (1) and (2) shall always be kept separate from those of the fund manager, and shall be so marked in the books of the fund manager relating to each client's account, so that at no time shall such monies, property or other valuable consideration form
51 DIVISION 4 DUTIES-51. Duty of fund manager and custodian or trustee to be independent of each other.
(1) The fund manager and the custodian or trustee of a public fund shall:-
(a) be different persons and act independently of each other;
(b) not be a related corporation of the other; and
(c) not have executive directors or other officers in common.
(2) Any person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit or to imprisonment for a term not exceeding five years or to both.
52 DIVISION 5 REGISTERS AND ACCOUNTING-52. Registers.
(1) The Authority may keep separate registers for:-
(a) private funds;
(b) public funds; and
(c) fund managers and fund administrators of public funds.
(2) The registers referred to in subsection (1) may contain:-
(a) the information required under sections 29, 32, 42 and 43 in respect of each person who has been granted a licence or registration or who has received written permission under this Act;
(b) the date of such licence, registration or written permission, as the case may be; and
(c) the date on which such licence or registration or written permission was revoked.
(3) The registers kept under this section shall be in such form as the Authority may determine.
(4) The Authority may issue to any person, upon request by the person, a certificate of compliance in such form, upon payment of such fee, as may be prescribed.
53 DIVISION 5 REGISTERS AND ACCOUNTING-53. Accounts and audit.
(1) Every registered public fund shall:-
(a) keep or cause to be kept accounts and records and shall, after the end of each financial year cause to be prepared a statement of accounts for that financial year which shall include a balance sheet and an account of income and expenditure in accordance with generally accepted accounting principles applicable in Malaysia or in any recognised country or jurisdiction;
(b) keep such accounting records and financial statements or true copies thereof at its place of business in Labuan and make them available for inspection by the Authority or any person authorised in writing by the Authority;
(c) keep at its place of business in Labuan and make available to the Authority or any person authorised in writing by the Authority such other records, statements, documents or information as the Authority may prescribe in writing;
(d) within three months of the end of each finan
54 PART IV MARKET INTERMEDIARIES DIVISION 1 PRELIMINARY-54. Interpretation.
In this Part, unless the context otherwise requires "securities licensee" means a person, who for valuable consideration, provides investment advice or administrative services in respect of securities for the purposes of investment, including dealing in securities or such other activity as may be specified by the Authority.
55 DIVISION 2 SECURITIES LICENSEE-55. Securities licensee.
(1) No person shall carry on business as a securities licensee unless that person is a Labuan company who has been granted a licence to act as a securities licensee under this section.
(2) Notwithstanding subsection (1), the following persons may carry on business as a securities licensee:
(a) a fund manager referred to in subsections 40(1) and (2); and
(b) a bank licensee.
56 DIVISION 2 SECURITIES LICENSEE-56. Application for licence.
(1) An application to the Authority under subsection 55(1) to be licensed as a securities licensee under this Part shall be made in writing by or on behalf of the applicant to the Authority.
(2) An application for a licence to carry on business as a securities licensee shall be:-
(a) made in such form as may be specified by the Authority;and
(b) accompanied by:-
(i) such application fee as may be prescribed by regulations;
(ii) particulars of the financial and human resources and administrative facilities available to the applicant for the competent and efficient conduct of its business;
(iii) a statement on the following:-
(aa) the address of the applicant's place of business and its address for service relating to Labuan;
(bb) the name and address of a person in Labuan who is authorised to represent the applicant and to accept service on its behalf;
57 DIVISION 2 SECURITIES LICENSEE-57. Power to grant or refuse licence.
(1) Upon receiving an application under section 56, the Authority may grant or refuse the application.
(2) The grant of a licence under this Part may be made subject to any terms, conditions, limitations or restrictions.
(3) Except with the written consent of the Authority, no change shall be made in respect of the identity, residence, domicile, ownership or shareholding of the securities licensee during the period of operation of the licence.
58 DIVISION 3 GRANT OF LICENCE-58. Licence.
A licence granted under this Part shall:-
(a) be in such form as may be specified;
(b) specify any terms, conditions, restrictions or limitations;
(c) remain in force until it is revoked; and
(d) be admissible in all courts as prima facie evidence of the facts stated in it.
59 PART V LABUAN TRUST COMPANIES DIVISION 1 PRELIMINARY-59. Interpretation.
In this Part, unless the context otherwise requires:-
"estate" means any property, whether real or personal, which is committed to the administration or management of a Labuan trust company as executor, administrator, trustee, receiver, committee, guardian or agent;
"Labuan managed trust company" means a person carrying on trust company business where such business is managed by another Labuan trust company pursuant to the provisions of Division 3 of this Part;
"settlor" means:-
(a) a person who provides trust property or makes a testamentary disposition on trust or to a trust, but does not include a person who contributes to a unit trust and described as such within a trust instrument; and
(b) if there is more than one settlor named in the trust instrument, the named set
60 PART V LABUAN TRUST COMPANIES DIVISION 1 PRELIMINARY-60. Licence required to carry on trust company business in Labuan.
No person shall carry on or transact or hold himself out as carrying on or transacting any trust company business unless:-
(a) the person is incorporated or registered under the Labuan Companies Act 1990 and such person is licensed to do so under this Act; or
(b) the person is licensed as a Labuan managed trust company.
61 PART V LABUAN TRUST COMPANIES DIVISION 1 PRELIMINARY-61. Licensing of trust companies.
(1) Subject to section 60, a person incorporated or registered under the Labuan Companies Act 1990 may apply to the Authority, in the specified form, for a licence to carry on trust company business in Labuan.
(2) An applicant may apply to the Authority for a licence under subsection (1) by meeting the following criteria:-
(a) the applicant has contributed at least the equivalent in any foreign currency of one hundred and fifty thousand ringgit to the capital or working funds of the Labuan company or foreign Labuan company;
(b) the applicant either:-
(i) has obtained, or will obtain a professional indemnity insurance policy with a coverage of not less than one million ringgit or its equivalent in any foreign currency or such other amount or denomination as may be determined by the Authority; or
(ii) has deposited with the Authority security to the value of one hundred thousand ringgit or
62 PART V LABUAN TRUST COMPANIES DIVISION 1 PRELIMINARY-62. Terms and conditions of licence.
(1) The Authority may approve the application for a licence as a Labuan trust company subject to such terms and conditions, if any, as it may deem fit.
(2) Every Labuan trust company shall lodge a notice in the specified form with the Authority of:-
(a) any change to its place of business in Labuan; and
(b) any change to its trust officers,
within seven days from the effective date of change specified.
(3) Every Labuan trust company shall remain indemnified under a professional indemnity insurance policy with a coverage of not less than one million ringgit or its equivalent in any foreign currency or such other amount as may be determined by the Authority throughout its operation as a Labuan trust company.
(4) No Labuan trust company shall open any office or acquire or establish any subsidiary outside Labuan without the prior written consent of the Authority.
(5) Any per
63 PART V LABUAN TRUST COMPANIES DIVISION 1 PRELIMINARY-63. Temporary continuation for winding-up.
Notwithstanding any provision to the contrary, the Authority may authorise in writing the Labuan trust company to carry on business to such extent and for such duration as he may specify in the authorisation for the purpose only of enabling the Labuan trust company to wind-up its affairs consequent upon the revocation of its licence.
64 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-64. Disclosure of interests in relation to Labuan trust company.
Every Labuan trust company who is in any way, whether directly or indirectly, interested in a contract or proposed contract or in the counterparty to a transaction where it is acting in a fiduciary position whether as a trustee or otherwise, shall, as soon as reasonably practicable, furnish details of its interest to the client concerned and the Authority.
65 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-65. Labuan trust company's power to act as executor.
Where a Labuan trust company is appointed either alone or jointly with any other person as executor in the last will of a testator or in a codicil thereto, regardless of when the will or codicil was made, the Labuan trust company may act as executor and may apply for probate of such will and any codicil thereto, and may do and discharge all the acts and duties of an executor as fully and effectively as any other executor.
66 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-66. Labuan trust company's power to act as administrator.
(1) In any case in which a person may apply for a grant of letters of administration of the estate of a deceased person, whether with or without the will annexed, that person may:-
(a) join with a Labuan trust company in an application for a grant of letters of administration of the estate to himself and the Labuan trust company jointly; or
(b) authorise a Labuan trust company to apply for a grant of letters of administration of the estate.
(2) Where administration of an estate, whether with or without the will annexed, is granted to a Labuan trust company either alone or jointly with any other person, the Labuan trust company may do and discharge all acts and duties which belong to the office of an administrator or joint administrator, as the case may be, notwithstanding its incorporation.
67 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-67. Additional powers of a Labuan trust company.
A Labuan trust company may be appointed as agent or trustee under any settlement or other instrument creating a trust, or to perform any trust or duty which it is authorised, by this Act or by its memorandum or articles of association or by any instrument under which the Labuan trust company was incorporated, to undertake, and may be so appointed, regardless of when the settlement or instrument creating the trust or imposing the duty was made, and whether as an original trustee, a new trustee or an additional trustee, and may do and discharge all the acts and duties of a trustee as fully and effectively as any other trustee.
68 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-68. Labuan trust company's power to act as sole trustee.
(1) A Labuan trust company may be appointed or continue to act as sole trustee notwithstanding that it is provided by the terms of the instrument creating the trust or any power or otherwise that there shall be more than one trustee to perform the trust.
(2) Notwithstanding subsection (1), a Labuan trust company shall not be appointed or be entitled to act as sole trustee in any case in which the instrument creating the trust or power expressly:-
(a) forbids the appointment of a Labuan trust company;
(b) provides that there shall be another trustee in addition to a Labuan trust company; or
(c) provides that a Labuan trust company shall not be appointed to act as sole trustee.
69 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-69. Labuan trust company's power to act as joint trustee with another.
(1) A Labuan trust company may act as trustee, executor or agent together with another Labuan trust company or person if:-
(a) the instrument under which it acts so provides;
(b) it is authorised or required to do so by law; or
(c) the Court so orders.
(2) A Labuan trust company shall not be liable for breach of trust or loss resulting from any act or omission of a joint trustee, executor or agent with whom it is acting, unless the Labuan trust company has itself actively participated in, or assented to, such breach of trust.
70 DIVISION 2 POWERS OF LABUAN TRUST COMPANIES-70. Delegation to Labuan trust company.
(1) It shall be lawful for any executor, administrator, trustee or agent to delegate by deed or in writing to a Labuan trust company either alone or together with any other company or person, as his attorney, all such trusts and powers as may be lawfully delegated by him.
(2) All acts done by the Labuan trust company as such delegatee shall, as against any person dealing with the Labuan trust company without notice of the revocation of such authority by such executor, administrator, trustee or agent, be valid and effectual notwithstanding such revocation.
71 DIVISION 3 LABUAN MANAGED TRUST COMPANIES-71. Licensing of Labuan managed trust companies.
(1) No person may be licensed as a Labuan managed trust company unless it is:-
(a) a Labuan company or a foreign Labuan company; or
(b) a foreign company licensed, registered or approved to carry out trust company business in other jurisdictions.
(2) The Authority may grant or refuse to grant a licence to such person as a Labuan managed trust company and impose any terms and conditions on such licence as it deems necessary.
(3) An application for a licence under this Part shall be accompanied by:-
(a) submission of a proposed detailed management agreement between the applicant and the Labuan trust company;
(b) submission of a certified copy of the certificate of incorporation or constituent document of the applicant; and
(c) submission of a letter of good standing or such other document of this nature from the relevant authority of the applicant's home count
72 DIVISION 3 LABUAN MANAGED TRUST COMPANIES-72. Terms and conditions of licence as Labuan managed trust company.
(1) Prior to commencing business as a Labuan managed trust company, every Labuan managed trust company shall appoint a Labuan trust company as its Labuan managed trust manager to give effect to its trust company business.
(2) Every Labuan managed trust company shall at all times, ensure that the Labuan trust company is and continues to be licensed as a Labuan trust company under this Act.
(3) For the avoidance of doubt, save for sections 61 and 62 and Division 4 of this Part, all the provisions that apply to a Labuan trust company under this Act shall similarly apply to a Labuan managed trust company.
(4) If, subsequent to its appointment as the Labuan managed trust manager of a Labuan managed trust company, the licence of such managed trust manager is revoked under section 168, the managed trust company shall appoint a new managed trust manager within the period of four weeks following the date on which the licence of the manag
73 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-73. Meaning of "connected persons".
For the purposes of Division 4:-
(a) a "private trust" means a trust where each beneficiary of the trust is a connected person in relation to the settlor of the trust;
(b) a person is a connected person in respect of any of the following relationships:
(i) his spouse;
(ii) his descendants and their spouses;
(ii) his parents, including step-parents;
(iv) his grandparents and his spouse's grandparents;
(v) his parents-in-law, including step-parents-in-law;
(vi) his brother, step-brother, sister, step-sister and their spouses;
(vii) his spouse's brother, step-brother, sister, step-sister and their spouses and children;
(viii) his parent's brother, step-brother, sister, step-sister and their spouses;
(ix) children of the brother, step-brother, sister or stepsister of his parents, both present and futu
74 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-74. Registration as Labuan private trust company.
(1) No person may be registered as a Labuan private trust company unless it is:-
(a) a Labuan company; or
(b) a foreign Labuan company.
(2) An applicant may apply to the Authority, in the specified form for registration as a Labuan private trust company in Labuan by meeting the following criteria :
(a) it satisfies the Authority that it shall provide the services of a trust company only for a private trust or private trusts created or to be created by or at the direction of a settlor or an individual or individuals who are connected persons to the settlor described in the trust instrument;
(b) submission of a certified copy of the executed trust instrument and any subsequently executed trust instrument;
(c) submission of a letter of undertaking that it shall not carry out any trust company business other than with respect to the private trust or private trusts; and<
75 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-75. Terms and conditions of registration as a Labuan private trust company.
(1) A Labuan private trust company shall, at all times, ensure that:-
(a) it complies with paragraph 74(2)(a); and
(b) its agent is a Labuan trust company licensed under this Part.
(2) Subject to subsection (3), a Labuan private trust company shall not be registered under this Division during any period in which it is in contravention of subsection (1).
(3) If, subsequent to its appointment as the agent of a Labuan private trust company, the licence of the agent is revoked, subsection (2) does not apply and the Labuan private trust company shall continue to be registered for the period of thirty days following the date on which the licence of the agent is revoked.
76 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-76. Duties of agent of Labuan private trust company.
(1) A Labuan trust company shall not act as the agent of a Labuan private trust company unless it has taken all reasonable steps to satisfy itself that the Labuan private trust company:-
(a) complies with paragraph 74(2)(a); or
(b) where the Labuan private trust company is not at that time carrying on private trust business, that the Labuan private trust company will, on commencing its private trust business, comply with paragraph 74(2)(a).
(2) The agent of a Labuan private trust company shall on a periodic basis take all reasonable steps to satisfy itself that the Labuan private trust company continues to comply with paragraph 74(2)(a).
(3) The frequency with which the agent reviews the compliance of a Labuan private trust company with paragraph 74(2)(a) shall be determined by the agent on the basis of its assessment of the risk that the Labuan private trust company may fail to comply with tha
77 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-77. Powers of the Authority.
(1) Notwithstanding anything to the contrary in any trust instrument, where the Authority is satisfied that in the interest of a private trust it is necessary for all or any of the trusts for which the Labuan private trust company is acting as trustee to be transferred to a new trustee for administration by such trustee, the Authority may petition the court for that purpose.
(2) Whenever the Authority takes action pursuant to subsection (1), the court may, after hearing representations from the Authority or any other person appearing to the court to be affected, order the transfer of any such trust to a new trustee, and may make such supplemental or incidental orders or give such directions as the court thinks fit.
(3) Without prejudice to any provision under any written law, the Authority shall have the locus standi or legal right to appear, institute and conduct proceedings pursuant to subsection (1).
(4) The Authority may cla
78 DIVISION 4 LABUAN PRIVATE TRUST COMPANIES-78. Non-application of the provisions of this Part.
The provisions of Divisions 1, 2, 3 and 5 of this Part shall not apply to Labuan private trust companies unless otherwise provided under this Part.
79 DIVISION 5 MISCELLANEOUS-79. Labuan trust company subject to same control as any other executor.
Where a Labuan trust company has been appointed as executor, administrator, trustee, agent or attorney, it shall be subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of the court, in the same manner as any other executor, administrator, trustee, agent or attorney.
80 DIVISION 5 MISCELLANEOUS-80. Affidavit of officer.
In all cases in which a Labuan trust company is required or authorised to make any affidavit, declaration or statement, it may do so by any of its officers appointed for the purpose.
81 DIVISION 5 MISCELLANEOUS-81. Examination of books and accounts of a Labuan trust company.
(1) Any person who:-
(a) satisfies the Court that he has an interest under any trust which is for the time being under the control or management of a Labuan trust company; and
(b) objects to an act or decision of the Labuan trust company on the basis that there was some irregularity or impropriety by the Labuan trust company in doing that act or making that decision,
may apply to the Court to have such entries in the books and accounts of the Labuan trust company as are related to that act or decision examined.
(2) Where the Court receives an application under subsection (1), it may appoint an auditor to examine such entries in the books and accounts of the Labuan trust company and the auditor shall report his findings to the Court.
(3) Where it is established by the findings of the auditor that there has been an irregularity or impropriety by the Labuan trust company, the Court may mak
82 DIVISION 5 MISCELLANEOUS-82. Retention of records.
(1) A Labuan trust company shall maintain any record as may be required to be kept under this Act for a period of not less than six years from the date an account has been closed or the transaction has been completed or terminated.
(2) Any Labuan trust company which contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
83 DIVISION 5 MISCELLANEOUS-83. Money paid to a Labuan trust company to be held in trust.
(1) Any money, property or other valuable consideration paid or given to or held by a Labuan trust company in a fiduciary capacity shall always be kept separate from those of the Labuan trust company, and shall be so marked in the books of the Labuan trust company relating to each particular trust as always to be distinguished from any other in the registers and other books of account kept by the Labuan trust company, so that at no time shall such monies, property or other valuable consideration form part of or be mixed with the general assets of the Labuan trust company, and all investments made by the company as trustee shall be so designated that the trusts to which the investments belong can be readily identified at any time.
(2) Any Labuan trust company which fails to comply with the requirement of subsection (1) and every officer of that Labuan trust company who is in default commits an offence and shall, on conviction, be liable to a fin
84 DIVISION 5 MISCELLANEOUS-84. Commission, fees, charges and expenses levied by a Labuan trust company.
(1) A Labuan trust company shall be entitled:-
(a) where it holds an estate on behalf of any person, to receive out of the estate a commission, in addition to all monies properly expended by the Labuan trust company and fees payable to it and chargeable against the estate; and
(b) in all other cases, to levy fees, charges and expenses in respect of any work performed by the Labuan trust company for or on behalf of any person.
(2) Where the Court is of the opinion that any commission, fees, charges or expenses levied in respect of any estate or in respect of any work performed by the Labuan trust company are excessive, the Court may, on the application of any person, on whose behalf the estate is held, or on whose behalf the work was performed, review that commission, fees, charges or expenses, and may reduce it as it thinks fit.
(3) The commission, fees, charges or expenses which a Labuan trust
85 DIVISION 5 MISCELLANEOUS-85. Translation of accounts and records.
Where any accounts or other records required to be kept under this Act are not kept in the national or English language, the directors of the Labuan trust company shall cause a true translation of such accounts and records to be made from time to time at intervals of not more than seven days and shall cause such translations to be kept with the original accounts and records.
86 PART VI LABUAN BANKING DIVISION 1 PRELIMINARY-86. Interpretation.
In this Part, unless the context otherwise requires:-
"bank licence" means a licence granted pursuant to an application under section 88 or section 89, as the context may require;
"building credit business" means the business of providing any credit facilities to any person for the express purpose of:-
(a) the purchase of immovable property;
(b) the construction, reconstruction or renovation of any building or other structure, for residential, commercial or industrial purposes;
"capital funds" means paid-up capital and reserves;
"commodity derivative instrument" includes, to the extent such instrument is not a derivative financial instrument, commodity futures, commodity forward, commodity swap, commodity option or other commodity instr
87 DIVISION 2 LICENSING-87. Labuan banking business, Labuan investment banking business and Labuan financial business to be carried on only under licence.
(1) No person shall carry on Labuan banking business, Labuan investment banking business or Labuan financial business unless:-
(a) it is a Labuan company or a foreign Labuan company; or
(b) it is a Malaysian bank,
and holds a valid licence to carry on such business.
(2) Any person who contravenes subsection (1) commits and offence and shall, on conviction, be liable to a fine not exceeding ten million ringgit or to imprisonment for a term not exceeding five years or to both, and in the case of a continuing offence, shall, in addition, be liable to a daily fine not exceeding ten thousand ringgit for each day the offence continues to be committed.
88 DIVISION 2 LICENSING-88. Application for licence to carry on Labuan banking business.
(1) An application for a licence to carry on Labuan banking business shall be made in writing by or on behalf of the applicant to the Authority.
(2) An application for a licence to carry on Labuan banking business by a Labuan company shall be accompanied by the following:-
(a) the applicant's constituent documents duly authenticated by an officer of the applicant in such manner as may be acceptable to the Authority; and
(b) a statement on the following:-
(i) the name, place and date of establishment of the applicant;
(ii) the principal business and the principal place of business of the applicant; and
(iii) the names and addresses of the directors of the applicant and the participants who each holds ten per centum or more of the paid-up capital of the applicant;
(c) a statement on the names, addresses, qualifications, working experience and proposed position
89 DIVISION 2 LICENSING-89. Application for licence to carry on Labuan investment banking business.
An application for a licence to carry on Labuan investment banking business shall be made in writing by or on behalf of the applicant to the Authority and the provisions of section 88 relating to Labuan banking business shall apply similarly save that "Labuan banking business" shall be read as "Labuan investment banking business".
90 DIVISION 2 LICENSING-90. Application for licence to carry on Labuan financial business.
An application for a licence to carry on Labuan financial business shall be made in writing by or on behalf of the applicant to the Authority and shall be accompanied by such documents, statements and information as may be specified by the Authority.
91 DIVISION 2 LICENSING-91. Additional information.
The Authority may, at any time after receiving an application under section 88, 89 or 90 and before a determination is made, verbally or in writing require the applicant to provide verbally or in writing such additional information, or to provide such additional documents, as may be considered necessary by the Authority for the purposes of determining the suitability of the applicant for the licence.
92 DIVISION 2 LICENSING-92. Grant of licence by the Authority.
(1) Upon receiving an application for a licence under section 88, 89 or 90 and after being provided with all such information and documents as it may require under those sections, the Authority may approve the application, with or without conditions, or reject the application.
(2) Where the Authority rejects the application, the Authority shall notify the applicant in writing of the rejection.
(3) Where the Authority approves the application for a licence under subsection (1), the Authority shall issue the licence to the applicant upon the applicant's satisfaction of any condition imposed under such application for licence.
(4) A licence granted under this section shall remain in force until it is surrendered or revoked in accordance with this Act.
(5) No applicant shall be granted a bank licence under this section without the written consent of the Authority if its capital funds are less than ten million ringgit or its
93 DIVISION 2 LICENSING-93. Requirement to use, and restriction on use of, the words "licensed Labuan bank", etc.
(1) A bank licensee shall at all times affix or paint, and keep affixed or painted, in a prominent position on the outside of each of its offices and so as to be easily legible, its name, licence number and the words "licensed Labuan bank" or "licensed Labuan investment bank", as the case may be.
(2) A bank licensee shall, in any bill-head, printed form, letter paper, notice, advertisement, or any other document issued from its office and in the course of its business, prominently print its name, licence number and the words "licensed Labuan bank" or "licensed Labuan investment bank", as the case may be.
(3) No person, not being a bank licensee, shall, without the written consent of the Authority, assume or use the words "licensed Labuan bank", "licensed Labuan investment bank" or any derivative of such words in any language capable of being construed as indicating the carrying on of Labuan banking business or Labuan investment banking
94 DIVISION 2 LICENSING-94. Maintenance of capital adequacy ratio.
(1) No bank licensee shall carry on Labuan banking business or Labuan investment banking business if its capital funds are less than the amount specified in writing by the Authority.
(2) Every bank licensee shall maintain at all times, such capital adequacy ratio, as may be specified in writing by the Authority from time to time and no bank licensee shall carry on Labuan banking business or Labuan investment banking business if such specified capital adequacy ratio is not complied with, except with the approval of the Authority.
(3) A bank licensee shall at all times maintain its capital funds to reflect the risk weighted capital ratio as may be specified in writing by the Authority from time to time.
(4) The Authority may direct a bank licensee to take appropriate measures to rectify any deficiencies in such specified ratio in such manner as the Authority deems fit.
95 DIVISION 2 LICENSING-95. Amendment or alteration of constituent documents of bank licensees.
(1) Every bank licensee which is a Labuan company shall, prior to the making of any amendment or alteration to any of its constituent documents, furnish to the Authority particulars in writing as to such proposed amendment or alteration for the approval of the Authority.
(2) Every bank licensee which is a foreign Labuan company or a Malaysian bank shall within three months after the making of any amendment or alteration to its constituent documents, furnish to the Authority particulars in writing of such amendment or alteration duly authenticated in a manner acceptable to the Authority by a director of the bank licensee.
(3) No bank licensee shall make any amendment or alteration that is contrary to any written law to its constituent documents.
(4) No participant of the bank licensee who holds fifteen per centum or more of the paid-up capital of the bank licensee shall be changed without the prior written approval of the Authori
96 DIVISION 2 LICENSING-96. Authority to publish list of Labuan banks and Labuan investment banks.
The Authority shall publish annually not later than 31 March of each year a list of all existing Labuan banks and Labuan investment banks as at 31 December of the preceding year and their licence numbers in the Gazette , and if any licence is issued, revoked or surrendered, subsequent to such publication, the Authority shall cause to be published in the Gazette as soon as practicable a revised list of all existing Labuan banks and Labuan investment banks and their licence numbers.
97 DIVISION 3 DUTIES OF BANK LICENSEES-97. Offices and subsidiaries.
A bank licensee which is a Labuan company may, subject to the prior written consent of the Authority, open any office other than its principal place of business in Labuan, or acquire or establish any subsidiary.
98 DIVISION 3 DUTIES OF BANK LICENSEES-98. Prohibition of certain accounts.
(1) No bank licensee shall accept any money on deposit or loan which is repayable on demand by cheque, draft, order or any other instrument drawn by the depositor on the bank licensee.
(2) Every bank licensee shall conduct proper due diligence enquiries prior to opening any account for a customer.
(3) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding ten million ringgit or to imprisonment for a term not exceeding five years or to both, and in the case of a continuing offence, shall, in addition, be liable to a daily fine not exceeding ten thousand ringgit for each day the offence continues to be committed.
99 DIVISION 3 DUTIES OF BANK LICENSEES-99. Financial statements, statistics and information to be submitted to the Authority.
The bank licensee shall comply with the requirements with respect to financial statements, statistics and information to the Authority as set out in the Third Schedule.
100 DIVISION 4 GENERAL PROVISION-100. Payment from a deceased person's account.
(1) Notwithstanding anything in any written law or rule of law, a bank licensee may, without the production of letters of probate or letters of administration, pay any sum not exceeding the equivalent of five thousand ringgit standing to the credit of a deceased person to any person who produces satisfactory proof of:-
(a) the death of such deceased person; and
(b) his entitlement under the law to the sum standing to the credit of such deceased person.
(2) A bank licensee shall not make any payment under subsection (1) if it has received other claims to any money standing to the credit of the deceased person.
(3) A bank licensee or its directors or officers shall not be liable in respect of any claim by any person in connection with any payment made in accordance with this section but such person may recover any sum lawfully due to him from the person to whom such payment has been made.
101 PART VII LABUAN INSURANCE DIVISION I PRELIMINARY-101. Interpretation.
(1) In this Part, unless the context otherwise requires:-
"domestic insurance business" means insurance business where the subject matter of the contract is:-
(a) property which at the time of the making of the contract is situated in Malaysia or is in transit to or from Malaysia;
(b) a ship or an aircraft registered in Malaysia and all liabilities arising from the operation of such ship or aircraft;
(c) the life or any contingency related to any person who, at the time of the making of the contract, is a resident; or
(d) a risk of any nature in respect of any person who, at the time of the making of the contract, is a resident;
"general insurance business" means insurance business which is not life insurance business but which includes accident, medical, surgical and hospital expenses insuran
102 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-102. Licensing of Labuan insurance business and Labuan insurancerelated activities.
(1) No person shall carry on or transact or hold himself out as carrying on or transacting any Labuan insurance business unless that person is:-
(a) a Labuan company;
(b) a foreign Labuan company; or
(c) a branch of a Malaysian insurer,
and holds a valid insurance licence.
(2) No person shall carry on or transact or hold himself out as carrying on or transacting any business as a Labuan insurance manager, Labuan underwriting manager or Labuan insurance broker or any other Labuan insurance-related activities as may be specified by the Authority unless that person holds a valid insurance licence.
(3) Except with the prior written approval of the Authority, a person who is not an insurance licensee shall not assume or use the words "Labuan insurer", "Labuan insurance manager", "Labuan underwriting manager", "Labuan insurance broker" or any derivative of such words in any language c
103 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-103. Application for insurance licence to carry on Labuan insurance business.
(1) Every applicant for an insurance licence to carry on Labuan insurance business shall satisfy the Authority that:-
(a) the applicant is, or will be, a Labuan company or a foreign Labuan company or a branch of a Malaysian insurer;
(b) the working funds of the applicant:-
(i) in a case where the applicant proposes to carry on either life insurance business or general insurance business, are at least seven million and five hundred thousand ringgit or its equivalent in any foreign currency or such other amount or denomination as may be specified by the Authority;
(ii) in a case where the applicant proposes to carry on solely reinsurance business, are at least ten million ringgit or its equivalent in any foreign currency or such other amount or denomination as may be specified by the Authority; or
(iii) in a case where the applicant proposes to carry on solely Labuan captive insurance busi
104 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-104. Application for insurance licence to carry on Labuan insurancerelated activities.
(1) Every applicant for an insurance licence to carry on business as a Labuan insurance manager, Labuan underwriting manager or Labuan insurance broker shall satisfy the Authority that:-
(a) the person in control, director and principal officer of the applicant are fit and proper persons;
(b) the applicant is able to maintain sufficient funds in its business to cover its expenses of operations and management in Labuan for at least six months;
(c) in respect of an applicant for an insurance licence to carry on the business of a Labuan insurance manager or Labuan underwriting manager:-
(i) the applicant has established, or undertakes to establish, its management in Labuan with adequate knowledge and expertise of the Labuan insurance business to be carried on; or
(ii) the applicant has appointed, or undertakes to appoint, a licensed Labuan insurance manager or Labuan underwriting manager in
105 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-105. Grant of insurance licence.
(1) Upon receiving an application for an insurance licence, the Authority may approve the application, with or without conditions, or reject the application.
(2) Where the Authority rejects the application, the Authority shall notify the applicant in writing of the rejection.
(3) Where the Authority approves the insurance licence under subsection (1), the Authority shall issue the insurance licence to the applicant.
(4) The Authority may specify in the insurance licence the type of activities the insurance licensee may carry on.
(5) An applicant who is aggrieved by the decision of the Authority under subsection (1) to reject his application, may within thirty days of the decision being notified to him, appeal to the Minister in writing.
(6) An insurance licensee shall comply with any conditions imposed under a license granted under subsection (1) for the duration of the license.
(7) A licence granted unde
106 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-106. Publication of list of all insurance licensees.
The Authority shall publish annually not later than 31 March of each year a list of all existing insurance licensees as at 31 December of the preceding year and their licence numbers in the Gazette , and if any licence is issued, revoked or surrendered, subsequent to such publication, the Authority shall cause to be published in the Gazette as soon as practicable a revised list of all existing insurance licensees and their licence numbers.
107 DIVISION 2 LICENSING OF LABUAN INSURANCE BUSINESS AND LABUAN INSURANCE-RELATED ACTIVITIES-107. Continuing licensing requirements.
(1) Every Labuan insurer which is a Labuan company shall, prior to the making of any amendment or alteration to any of its constituent documents, or prior to any change of its person in control, director or principal officer, furnish to the Authority particulars in writing of any such proposed amendment, alteration or change, for the approval of the Authority.
(2) Every Labuan insurer which is a foreign Labuan company shall, prior to the making of any change of its principal officer, furnish to the Authority the particulars in writing of any proposed change for the approval of the Authority.
(3) Every Labuan insurer which is a foreign Labuan company or a branch of a Malaysian insurer shall notify in writing within three months after the making of any amendment or alteration to any of its constituent documents, or any change of its person in control or director and furnish to the Authority particulars in writing of such amendment, altera
108 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-108. Appointment of actuary.
Every Labuan insurer carrying on life insurance business shall appoint an actuary annually within such period as may be specified by the Authority.
109 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-109. Margin of solvency.
Every Labuan insurer, including an insurance licensee which carries on Labuan captive insurance business, shall ensure that the realisable value of its assets exceeds the amount of its liabilities by a margin in such an amount or calculated in such manner as may be specified in writing by the Authority from time to time.
110 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-110. Separate accounts to be kept by Labuan insurer.
(1) Every Labuan insurer shall keep the accounts and funds in respect of its Labuan insurance business separate from its other funds.
(2) Every Labuan insurer which carries on both life insurance business and general insurance business shall keep the accounts and funds in respect of its life insurance business separate from the accounts and funds in respect of its general insurance business.
(3) Every Labuan insurer which is a branch of a Malaysian insurer shall keep the accounts in respect of its Labuan insurance business separate from the accounts in respect of its domestic insurance business carried on in Labuan.
111 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-111. Submission of financial statements.
Every Labuan insurer shall comply with the requirements with respect to the submission of financial statements as set out in the Third Schedule.
112 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-112. Subsidiaries and offices of insurance licensee.
An insurance licensee which is a Labuan company may, subject to the prior written consent of the Authority, open any office other than its principal place of business in Labuan, or acquire or establish any subsidiary.
113 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-113. Restriction on business by Labuan insurer.
(1) No Labuan insurer shall carry on any business activities in Labuan or elsewhere from its office in Labuan other than its Labuan insurance business or business activities in connection with or for the purposes of such Labuan insurance business.
(2) Notwithstanding the definition of "Labuan insurance business" and notwithstanding subsection (1), a Labuan insurer may carry on the reinsurance of domestic insurance business, including the reinsurance of domestic insurance business transacted in the Malaysian currency and such other business as may be specified by the Authority.
(3) No Labuan insurer shall act on behalf of another Labuan insurer as a Labuan insurance manager or Labuan underwriting manager unless such first-mentioned Labuan insurer has been granted an insurance licence to carry on business as Labuan insurance manager or Labuan underwriting manager, as the case may be.
114 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-114. Restrictions on and duties of Labuan insurance manager, Labuan underwriting manager and Labuan insurance broker.
(1) No licensed Labuan insurance manager shall provide any services other than administrative services and no licensed Labuan underwriting manager shall provide any services other than underwriting services.
(2) No licensed Labuan underwriting manager shall provide underwriting services in or from Labuan to any person not licensed under this Act or to any business carried on by an insurer registered under the Insurance Act 1996 or by a takaful operator registered under the Takaful Act 1984.
(3) A licensed Labuan insurance broker may handle the insurance or reinsurance of domestic insurance business, transacted in the Malaysian currency provided that such activity does not include any activity that is regulated or prohibited under other written law in Malaysia.
[(3) Subs. Act A1654:s.4]
(4) Every licensed Labuan insurance manager or licensed Labuan underwriting manager who acts on behalf of a Labuan
115 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-115. List of Labuan insurers to be supplied by Labuan insurance manager and Labuan underwriting manager.
Every licensed Labuan insurance manager and licensed Labuan underwriting manager shall, within thirty days from the close of its financial year, submit to the Authority, in such form and manner as may be specified by the Authority, a list of all Labuan insurers for whom such licensed Labuan insurance manager provides administrative services or licensed Labuan underwriting manager provides underwriting services.
116 DIVISION 3 FINANCIAL REQUIREMENTS AND DUTIES OF AND RESTRICTIONS ON INSURANCE LICENSEES-116. Conduct of business.
(1) Every Labuan insurer shall:-
(a) conduct its business with due diligence and care in accordance with sound insurance principles;
(b) follow accepted international accounting standards or such other standards as may be approved by the Authority;
(c) register all assets in its name, or in the name of a custodian or nominee for the Labuan insurer where assets are acquired in the name of such custodian or nominee, and in the case of bearer shares, hold them in safe custody; and
(d) indicate clearly on its letterhead, stationery and other documents containing its name that it is licensed under this Act, together with the number of its insurance licence.
(2) No Labuan insurer shall advertise or publish, in any form, information which is untrue or which is likely to mislead another person in relation to the written laws applicable to Labuan insurers and their related businesses and activit
117 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-117. Application of this Division.
In this Division, a reference to a policy is a reference to a life policy, including a life policy under section 23 of the Civil Law Act 1956 [Act 67] , and a personal accident policy effected by a policy owner upon his own life providing for payment of policy monies on his death.
118 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-118. Power to make nomination.
(1) A policy owner who has attained the age of eighteen years may nominate a natural person to receive policy monies payable upon his death under the policy by notifying the Labuan insurer in writing of the name, date of birth, identity card number or birth certificate number and address of the nominee at the time the policy is issued.
(2) Where a nomination is made after the policy is issued, the policy owner shall submit the policy together with the particulars of the nominee referred to in subsection (1) for the Labuan insurer's endorsement of the nomination on the policy.
(3) A nomination made under subsection (1) shall be witnessed by a person of sound mind who has attained the age of eighteen years and who is not a nominee named under that subsection.
(4) The Labuan insurer:-
(a) shall prominently display in the nomination form a notice that the policy owner has to assign the policy benefits to his nom
119 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-119. Revocation of nomination.
(1) A nomination, including a nomination to which section 121 applies, shall be revoked:-
(a) upon the death of the nominee, or where there is more than one nominee, upon the death of all the nominees, during the lifetime of the policy owner;
(b) by a notice in writing given by the policy owner; or
(c) by any subsequent nomination.
(2) Subject to subsection (1), a nomination shall not be revoked by a will or by any other act, event or means.
(3) Where there is more than one nominee and one of the nominees predeceases the policy owner, in the absence of any subsequent nomination by the policy owner disposing of the share of the deceased nominee, the Labuan insurer shall pay the share of the deceased nominee to the remaining nominees in proportion to their respective shares.
120 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-120. Payment of policy monies.
(1) Subject to subsection (2), where a policy owner dies having made a nomination, the Labuan insurer shall pay the policy monies of the deceased policy owner according to the direction of the nomination upon receipt of a claim by the nominee and the claim is accompanied by proof of death of the policy owner.
(2) Where a nominee fails to claim the policy monies within two months of the Labuan insurer becoming aware of the death of the policy owner, the Labuan insurer shall notify the nominee in writing at his last-known address of his entitlement to claim the policy monies.
(3) Where a nominee fails to claim the policy monies within twelve months of the notification under subsection (2), section 124 shall apply as though no nomination was made.
(4) Where a nominee, other than a nominee under section 121, dies after the death of the policy owner but before any policy monies has been paid to him as nominee, section 119 or section
121 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-121. Trustee of policy monies.
(1) A nomination by a policy owner, other than a Muslim policy owner, shall create a trust in favour of the nominee of the policy monies payable upon the death of the policy owner, if:-
(a) the nominee is his spouse or child; or
(b) where there is no spouse or child living at the time of nomination, the nominee is his parent.
(2) A payment under subsection (1) shall not form part of the estate of the deceased policy owner or be subject to his debts.
(3) The policy owner, by the policy, or by a notice in writing to the Labuan insurer, may appoint trustees of the policy money and where there is no trustee:-
(a) the nominee who is competent to contract; or
(b) where the nominee is incompetent to contract, the parent of the incompetent nominee and where there is no surviving parent, the Public Trustee,
shall be the trustee of the policy monies and
122 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-122. Nominee other than a nominee under section 121.
(1) A nominee, other than a nominee under section 121, shall receive the policy monies payable on the death of the policy owner as an executor and not solely as a beneficiary and any payment to the nominee shall form part of the estate of the deceased policy owner and be subject to his debts and the Labuan insurer shall be discharged from liability in respect of the policy monies paid.
(2) Subsection (1) applies to a nominee of a Muslim policy owner who, on receipt of the policy monies, shall distribute the policy monies in accordance with shariah principles.
123 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-123. Assigned or pledged policy monies.
(1) Notwithstanding a nomination under section 118 or the creation of a trust under subsection 121(1), where the policy monies, wholly or partly, have been pledged as security or assigned to a person, the claim of the person entitled under the security or the assignee shall have priority over the claim of the nominee and, subject to the rights under the security or the assignment being preserved, the Labuan insurer shall pay the balance of the policy monies to the nominee.
(2) Where more than one person is entitled under the security or the assignment, the respective rights of the persons entitled under the security or the assignment shall be in the order of priority according to the priority of the date on which the security or the assignment was created, both security and assignment being treated as one class for this purpose.
124 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-124. Payment of policy monies where there is no nomination.
(1) Where a policy owner of a policy dies without having made a nomination, subject to section 123, the Labuan insurer shall pay the policy monies of the deceased policy owner to the applicant who produces the Grant of Probate or Letters of Administration or Distribution Order.
(2) Subject to subsection (1), the Labuan insurer may pay to the policy owner's spouse, child or parent in that order of priority and where there is more than one spouse, child or parent, in equal shares to each person of that class and where there is no spouse, child or parent and:-
(a) where the policy monies do not exceed one hundred thousand ringgit or its equivalent in foreign currency or such greater amount or denomination as may be specified, the Labuan insurer may pay all that policy monies without requiring the Grant of Probate or Letters of Administration or Distribution Order:-
(i) to a person who satisfies the Labuan
125 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-125. Payment to person incompetent to contract.
Where a person has not attained the age of eighteen years, or is certified by a medical practitioner in the public service to be of unsound mind and no committee of his estate has been appointed, or to be incapable, by reason of infirmity of mind or body, of managing himself and his property and affairs, the Labuan insurer:-
(a) in the case of a nominee under subsection 121(1):-
(i) if the policy monies are ten thousand ringgit or its equivalent in foreign currency or less or such other amount or denomination as may be specified, may pay to a person who satisfies the Labuan insurer that he will apply the policy monies for the maintenance and benefit of the nominee under subsection 121(1), or a person to whom policy monies are payable under subsection 124(2) or (6), subject to the execution of an undertaking by that person that the policy monies will be applied solely for the maintenance and benefit of the nomin
126 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-126. Distribution of policy monies in due course of administration.
A person to whom policy monies may be paid under section 124 shall receive the policy monies as an executor and not solely as a beneficiary and shall distribute the policy monies in the due course of administration of the estate of the deceased person in accordance with the terms of a will of the deceased person, and if there is not such will, in accordance with the law applicable to the administration, distribution and disposition of his estate upon his intestacy.
127 DIVISION 4 PAYMENT OF POLICY MONIES UNDER A LIFE POLICY AND PERSONAL ACCIDENT POLICY-127. This Division to prevail over policy and any other written law.
(1) This Division shall have effect in relation to a policy which is in force on or after its operation, and in relation to a nomination made before, on or after its operation, notwithstanding anything contained in the policy, and nothing contained in a policy shall derogate from, or be construed as derogating in any manner or to any extent from, this Division.
(2) This Division shall have shall force and effect notwithstanding anything inconsistent with or contrary to any other written law relating to probate, administration, distribution or disposition of the estates of deceased persons, or in any rule of law, practice or custom in relation to those matters.
128 DIVISION 5 WINDING-UP-128. Winding-up of Labuan insurer.
(1) The Authority shall be a party to any petition for the winding-up of any Labuan insurer.
(2) The Authority may present a petition for the winding-up of a Labuan insurer or its Labuan insurance business on the grounds of its inability to meet any liabilities or when it suspends payment to its creditors.
(3) For the purposes of subsections (1) and (2), the court shall have regard to the interests of the policy owners, other customers and creditors of the Labuan insurer.
(4) In any winding-up of a Labuan insurer, or when a Labuan insurer becomes insolvent, there shall be paid from the assets in the insurance fund or other funds of the Labuan insurer in priority to all other unsecured debts:-
(a) firstly, the costs and expenses of the winding-up, including the costs of the liquidator or the receiver;
(b) secondly, all wages or salary, whether or not earned wholly or in part by way of commission, incl
129 PART VIII COMPANY MANAGEMENT-129. Interpretation.
In this Part, unless the context otherwise requires:-
"company management" means the provision of treasury processing services and such other services, and to such persons, as may be permitted by the Authority;
"management company" means a Labuan company incorporated or foreign Labuan company registered under this Act for the purpose of undertaking or offering to undertake the business of company management.
130 PART VIII COMPANY MANAGEMENT-130. Register of management companies.
(1) The Authority may keep a register of all management companies licensed under this Part.
(2) The register kept under subsection (1) shall show:-
(a) the information required under paragraph 131(2)(c) with respect to each management company licensed under this Part;
(b) the date of grant of the licence; and
(c) if such licence is revoked, the date of its revocation.
(3) The register shall be in such form as the Authority may determine.
131 PART VIII COMPANY MANAGEMENT-131. Application for licence.
(1) No person, except a Labuan company incorporated, or a foreign Labuan company registered, under the Labuan Companies Act 1990, may apply to the Authority for a licence to carry on the business of company management.
(2) An application under subsection (1) shall be:-
(a) made in such manner as the Authority may determine; and
(b) accompanied by:-
(i) such application fees as may be prescribed;
(ii) a statement of the financial and human resources and administrative facilities available to the applicant for the competent and efficient conduct of its business; and
(iii) such other documents or information as the Authority may reasonably require for the purpose of considering the application;
(c) contain:-
(i) the address of the applicant's place of business and its address for service in Labuan;
(ii) the name and address of a per
132 PART VIII COMPANY MANAGEMENT-132. Grant of licence.
(1) The Authority may grant or refuse to grant a licence to any applicant.
(2) The Authority shall not grant a licence unless he is satisfied that the applicant:-
(a) is of sufficient good repute to be engaged in the business of company management;
(b) has or has available to it adequate knowledge, expertise, resources and facilities necessary for the proper management or administration of its business;
(c) has sufficient financial resources at its disposal to enable it to conduct its business effectively and meet its liabilities; and
(d) will be in a position to comply with any conditions imposed by the Authority.
(3) Notwithstanding subsection (2), the Authority shall reject an application if it determines that a licence should not be granted in the public interest.
(4) A licence may be granted subject to such terms, conditions, restrictions or limitations as the Autho
133 PART IX EXCHANGES DIVISION 1 PRELIMINARY-133. Interpretation.
(1) In this Part, unless the context otherwise requires:-
"business day" means a day during any part of which the facilities of an exchange established pursuant to this Part are available to its trading agents for trading purposes or would have been available but for a suspension of trading ordered by the Authority under section 143;
"committee" means the persons responsible for all matters relating to listing, licensing, trading and other matters related to the securities market;
"exchange" includes a body corporate established as a securities exchange under section 134 and the Labuan International Financial Exchange that was established by the Minister under section 30 of the Labuan Offshore Securities Industry Act 1998 [Act 579] that was approved and recognized immediately before the effective date;
"l
134 DIVISION 2 EXCHANGES-134. Establishment of exchanges.
The Authority may approve a Labuan company to be an exchange in Labuan upon such terms as it deems fit.
135 DIVISION 2 EXCHANGES-135. By-laws of exchanges.
The Authority may prescribe such by-laws as may be expedient or necessary for the purpose of carrying out the provisions and matters connected with any exchange.
136 DIVISION 2 EXCHANGES-136. Rules of exchanges.
An exchange established under section 134 may make rules which provide for:-
(a) the conditions and administration of licences issued by such exchange and for the regulation generally of the conduct of trading agents and listing sponsors in connection with the business of such exchange;
(b) the financial, accounting, record-keeping, disclosure and capital adequacy requirements applicable to trading agents and listing sponsors;
(c) the conditions under which securities may be listed for trading in the securities market proposed to be operated by such exchange;
(d) the conditions governing dealings in securities by trading agents and listing sponsors;
(e) the class or classes of securities that may be dealt in by trading agents and listing sponsors or listed in such exchange;
(f) confidentiality with respect to information relating to the affairs of such exchange and of any trading agent or lis
137 DIVISION 2 EXCHANGES-137. Regulatory functions of exchanges.
(1) In addition to its other functions, an exchange established under section 134 shall have regulatory functions and shall:-
(a) ensure that it adequately supervises the market operations and the conduct of market participants;
(b) ensure the adequacy and efficiency of internal controls;
(c) ensure market participants follow capital adequacy rules;
(d) investigate misconduct or apparent misconduct by market participants and their representatives that could seriously affect investors or other participating organisations and promptly report to the Authority on these instances of misconduct;
(e) investigate possible market abuses, including insider dealing and fraudulent behaviour; and
(f) take disciplinary measures or agree to a settlement after a public hearing.
(2) Where an investigation is carried out by such exchange, it shall, in writing, forthwith:-
138 DIVISION 2 EXCHANGES-138. Powers of the committee.
(1) The affairs of an exchange established under section 134 shall be managed by a committee consisting of not less than three persons who possess relevant experience in financial, commercial or legal matters of whom the chairman and one other person shall be appointed by the Minister and the rest appointed by the Authority.
(2) Subject to this Division, such committee shall have full power in all matters relating to listing, licensing, securities or dealings on such exchange and other matters related thereto.
(3) Subject to section 184, the provisions of the Labuan Companies Act 1990 shall, unless the context otherwise requires, apply in all respects to the persons who make up the committee as if such persons were directors for the purposes of that Act.
139 DIVISION 2 EXCHANGES-139. Dealing in securities.
(1) No person other than a trading agent shall engage in or hold himself out as engaging in the business of dealing in securities on any exchange.
(2) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
140 DIVISION 2 EXCHANGES-140. Register of trading agents and listing sponsors.
(1) An exchange established under section 134 shall keep a register of the trading agents and listing sponsors and shall enter therein the names and addresses of the trading agents and listing sponsors and the date upon which each was admitted and ceased to be a trading agent or listing sponsor.
(2) The register of trading agents and listing sponsors shall be made available for inspection at the registered office of such exchange during business hours.
(3) Any person may require, and if required, the relevant exchange shall forthwith provide, a copy of the register or any part thereof on payment of such fee as may be specified in writing by such exchange.
(4) Any payment under subsection (3) shall be made to such exchange.
141 DIVISION 2 EXCHANGES-141. Financial statements of an exchange.
Within six months of the end of each financial year, an exchange established under section 134 shall file with the Authority a copy, certified by the secretary as a true copy, of the financial statements of such exchange for that year prepared and audited in accordance with the provisions of Part VI of the Labuan Companies Act 1990. Persons not deemed to be carrying on business in Malaysia 142. No person shall be deemed to be engaging in or carrying on a trade or business in Malaysia or with residents of Malaysia for the purpose of any written law by reason only of the fact that:-
(a) securities of such person are listed on a securities market operated by an exchange established under section 134;
(b) such person is a trading agent or listing sponsor and that transactions are effected by it or on its behalf through the facilities of such exchange; or
(c) such person undertakes activities in Labuan incidental to the
142 DIVISION 2 EXCHANGES-142. Persons not deemed to be carrying on business in Malaysia.
No person shall be deemed to be engaging in or carrying on a trade or business in Malaysia or with residents of Malaysia for the purpose of any written law by reason only of the fact that-
(a) securities of such person are listed on a securities market operated by an exchange established under section 134;
(b) such person is a trading agent or listing sponsor and that transactions are effected by it or on its behalf through the facilities of such exchange; or
(c) such person undertakes activities in Labuan incidental to the proper conduct of the activities referred to in paragraphs (a) and (b).
143 DIVISION 2 EXCHANGES-143. Suspension of trading on exchanges.
(1) The Authority may direct any exchange established under section 134 by written notice to suspend trading, or any committee established under section 138 may, after notifying the Authority, suspend trading, on such exchange either wholly for a period not exceeding five consecutive business days or in respect of specified securities for such period as the Authority deems fit if the Authority after consultation with the committee determines that the orderly conduct of such trading is being or is likely to be prevented by reason of force majeure, natural disaster, strike or lock-out, revolution or other political upheaval or economic or financial crisis, wherever occurring.
(2) Pursuant to subsection (1), suspension of trading shall be carried out in accordance with the rules of the relevant exchange.
(3) The Authority may, after consultation with the committee, direct an exchange to extend the period of suspension of trading under subs
144 DIVISION 2 EXCHANGES-144. Minister's power to suspend trading.
(1) Without prejudice to section 143, where the Minister is satisfied that it is in the public interest to do so, or that it is expedient for the protection of investors or for the proper regulation of an exchange to do so, he may, on the recommendation of the Authority, make a suspension order relating to all or any of the following:-
(a) the functions of an exchange or its committee;
(b) the functions of any subcommittee established by the committee referred to in paragraph (a); or
(c) the functions of the principal officer, by whatever name called, who is responsible for the conduct of the business and operations of an exchange or any committee, as the case may be.
(2) For so long as the suspension order is in force, the following provisions shall apply:
(a) none of the functions to which the order relates shall be performed by such exchange or committee or any subcommit
145 DIVISION 2 EXCHANGES-145. Powers of the Authority.
(1) For the purposes of this Act and the proper conduct of the business of any exchange established under section 134 and in addition to any other powers accorded to it under this Act, the Authority may:-
(a) at any time investigate or enquire into any transaction involving the purchase or sale of securities entered into by any person whether directly or indirectly to ascertain if that person has used dishonest, unfair or unethical devices or trading practices whether such devices or trading practices constitute an offence under this Act or any other written law or an infringement of any of the rules or otherwise;
(b) require any such person to submit detailed information of any transaction involving the purchase or sale of securities;
(c) require the production of, inspect and make copies or printouts of or take extracts from any document record or thing relating to:-
(i) the business or affair
146 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-146. Creation of false or misleading market.
Whoever creates or does anything which is calculated to create a false or misleading appearance of active trading in any securities or a false or misleading appearance with respect to the market for, or the price of, any such securities commits an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit.
147 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-147. Insider dealing.
Subject to the defences available under this Division, any individual who has information as an insider and:-
(a) he deals in securities that are price-affected securities in relation to the information;
(b) he encourages another person to deal in securities that, whether or not that other person knows it, are priceaffected securities in relation to the information; or
(c) he discloses the information otherwise than in the proper performance of the functions of his employment, office or profession, to another person,
commits an offence and shall, on conviction, be liable to a fine not exceeding five million ringgit.
148 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-148. Defences.
(1) An individual is not guilty of insider dealing by virtue
of dealing in securities or encouraging another person to do so if he shows:-
(a) that he did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was price-sensitive information in relation to securities;
(b) that at the time he believed on reasonable grounds that the information had been disclosed widely enough to ensure that none of those taking part in the dealing in the securities would be prejudiced by not having that information; or
(c) that he would have done what he did even if he had not had the information.
(2) An individual is not guilty of insider dealing by virtue of a disclosure of information if he shows:-
(a) that he did not at the time expect any person, because of the disclosure, to deal in securities; or
(b) that, alt
149 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-149. For the purposes of this Division, a person deals in securities if:-
(a) he acquires or disposes of securities, whether as principal or agent; or
(b) he procures, directly or indirectly, an acquisition or disposal of listed securities by another person.
150 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-150. Procuring the acquisition or disposal of securities.
(1) A person procures the acquisition or disposal of securities if securities are acquired or disposed of by a person who is, in relation to the acquisition or disposal:-
(a) his agent;
(b) his nominee; or
(c) a person who is acting at his direction.
(2) Subsection (1) is not exhaustive as to the circumstances in which a person may be regarded as procuring an acquisition or disposal of securities by another.
(3) "Acquisition" or "disposal" in relation to securities includes agreeing to acquire or dispose of securities or entering into or terminating a contract which creates the securities, as the case may be.
151 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-151. Inside information.
"Inside information" means information which:-
(a) relates to particular securities or to a particular issuer of securities or to particular issuers of securities and not to securities generally or to issuers of securities generally;
(b) is specific or precise;
(c) has not been made public; and
(d) is price sensitive.
152 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-152. "Price-affected securities" and "price-sensitive information".
Securities are "price-affected" securities in relation to inside information, and inside information is "price-sensitive" in relation to securities, if and only if the information would, if made public, be likely to have a significant effect on the price or value of the securities.
153 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-153. Information as an insider.
An individual has information as an insider if and only if:-
(a) it is, and he knows it is, inside information; and
(b) he has it, and knows that he has it, from an inside source, that is to say:-
(i) by virtue of being a director, employee or shareholder of an issuer of securities;
(ii) by virtue of having access to the information through his employment, office or profession; or
(iii) by virtue of the direct or indirect source of his information being a person who has it in either of the ways set out in subparagraph (i) or (ii).
154 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-154. Definition of "made public".
(1) "Made public" shall be construed in accordance with subsections (2) and (3), but these provisions are not exhaustive as to the meaning of that expression.
(2) Information is made public if:-
(a) it is published in accordance with the rules of the exchange for the purpose of informing investors and their professional advisors;
(b) it is contained in records which by virtue of law are open to inspection by the public;
(c) it can be readily acquired by those likely to deal in any securities, or with any issuer of securities, to which the information relates; or
(d) it is derived from information which has been made public.
(3) Information may be treated as made public even though:-
(a) it can be acquired only by persons exercising diligence or expertise;
(b) it is communicated to a section of the public and not the public at large;
(c) it ca
155 DIVISION 3 FALSE OR MISLEADING MARKET AND INSIDER DEALING-155. Exceptions.
(1) For the avoidance of doubt, insider dealing is not committed in the following circumstances:
(a) an acquisition or disposal of securities or the communication of information that is carried out under any other written law relating to schemes of arrangement, reconstructions and take-overs relating to corporations;
(b) a clearing house which acquires or disposes of securities for the purpose of settlement of a market contract or in relation to any proceedings or other action relating to the settlement of a market contract where the acquisition or disposal of securities is effected in accordance with the rules of the clearing house;
(c) a stock exchange in relation to a sale or purchase of securities where the stock exchange acts on an instruction from a clearing house;
(d) the redemption of units of a collective investment scheme by a trustee or manager under a trust deed relating to that collective invest
156 PART X SELF-REGULATORY ORGANISATIONS-156. Declaration or recognition of a self-regulatory organisation.
(1) "Self-regulatory organisation" means a self-regulatory organisation whose object is to regulate the operations of its members or of the users of its services, their standards of practice and business conduct in order to better protect investors and consumers of securities or related services and includes such other organisations as may be declared or recognised as such by the Authority.
(2) The Authority may, subject to such terms and conditions as it thinks fit, by publication in the Gazette declare or recognise that a corporation or organisation shall be a self-regulatory organisation in relation to a specified sector or industry, or any part thereof, where the Authority is satisfied that the corporation or organisation:-
(a) has a constitution and internal rules and policies which are consistent with this Act and any written law applicable to such sector or industr
157 PART X SELF-REGULATORY ORGANISATIONS-157. Rules of a self-regulatory organisation.
(1) A self-regulatory organisation may make rules, not inconsistent with this Act, any regulations made under this Act or guidelines issued by the Authority or any other applicable law, with respect to the matters for which it has regulatory or supervisory functions, including such functions as may be delegated to it by the Authority.
(2) Rules made by the self-regulatory organisation under subsection (1), and amendments thereto, shall be of no effect unless approved by the Authority.
(3) The Authority shall be taken to have granted approval for the purposes of subsection (1) where it has not objected to them within one month after they were submitted to the Authority for such approval.
(4) The rules of a self-regulatory organisation may make provision with respect to shareholding and voting rights in the self-regulatory organisation in the interests of the members of the self-regulatory organisation, the consumers, investors an
158 PART X SELF-REGULATORY ORGANISATIONS-158. Restriction on decision-making.
A self-regulatory organisation shall not make a decision under its rules that adversely affects the rights of a person unless:-
(a) the self-regulatory organisation has given the person an opportunity to make representations about the matter; or
(b) the self-regulatory organisation considers, on reasonable grounds, that any delay in making the decision will prejudicially affect a class of consumers, investors or members of the sector or industry as may be applicable.
159 PART X SELF-REGULATORY ORGANISATIONS-159. Obligations of and in relation to officers of a self-regulatory organisation.
A self-regulatory organisation shall notify the Authority, in the manner specified by the Authority, as soon as practicable before or after a person is appointed as an officer of the selfregulatory organisation.
160 PART X SELF-REGULATORY ORGANISATIONS-160. Powers to direct a self-regulatory organisation.
(1) The Authority may, after giving a self-regulatory organisation reasonable opportunity to make representations about the matter, give a written direction to the self-regulatory organisation:-
(a) suspending, for the period specified in the direction, a specified provision of its constitution or its rules;
(b) requiring, subject to the Labuan Companies Act 1990 or any other law, the amendment of its constitution as specified in the direction so as to bring it in conformity with this Act, any regulations made under this Act or any rules made by the Authority;
(c) requiring the amendment of its rules as specified in the direction so as to bring them in conformity with the relevant Act; or
(d) for the implementation or enforcement of its constitution or its rules.
(2) Where the Authority has reasonable grounds to believe that:-
(a) an officer of a self-regulatory org
161 PART X SELF-REGULATORY ORGANISATIONS-161. Termination of arrangements and revocation of declaration or recognition.
(1) The Authority may revoke a declaration or recognition where:-
(a) the self-regulatory organisation has failed to commence operations within three months after an arrangement under this Part has been entered into;
(b) the Authority is not satisfied that the self-regulatory organisation is properly performing or is able to perform the functions or powers delegated to it, or its other functions and powers;
(c) the Authority is satisfied that the self-regulatory organisation has committed a material breach of an arrangement or of a relevant Act or other applicable law;
(d) it appears to the Authority that the self-regulatory organisation is involved in a financial crime; or
(e) the self-regulatory organisation fails to comply with a direction of the Authority.
(2) The Authority shall not revoke a declaration or a recognition unless the Authority has notified the self-regulatory
162 PART X SELF-REGULATORY ORGANISATIONS-162. Amendments to the constitution of a self-regulatory organisation.
Notwithstanding section 24 of the Labuan Companies Act 1990, an amendment to the constituent documents of a self regulatory organisation shall be of no effect unless it is approved by the Authority.
163 PART X SELF-REGULATORY ORGANISATIONS-163. Protection for a self-regulatory organisation.
A self-regulatory organisation, the officer or employee of a self-regulatory organisation or a member of a committee of a self-regulatory organisation shall not be liable for any loss sustained by or damage caused to any person as a result of anything done or omitted by them in the performance, in good faith, of their functions and duties in connection with the regulatory or supervisory functions of the self-regulatory organisation, including those delegated to it by the Authority.
164 PART X SELF-REGULATORY ORGANISATIONS-164. Financial statements of the self-regulatory organisation.
(1) Within six months of the end of each financial year the self-regulatory organisation shall file with the Authority a copy, certified by the secretary as a true copy, of the financial statements of the self-regulatory organisation for that year prepared and audited in accordance with Part VI of the Labuan Companies Act 1990.
(2) The financial statements shall be audited by an auditor.
(3) Where, in the course of his audit, the auditor of a selfregulatory organisation has reason to believe that:-
(a) there has been a material adverse change in the risks inherent in the business of a self-regulatory organisation with the potential to jeopardise the ability of the self-regulatory organisation to continue as a going concern;
(b) the self-regulatory organisation may be in contravention of this Act, any regulations made under this Act, any guidelines issued by the Authority or any directions issued by the Autho
165 PART X SELF-REGULATORY ORGANISATIONS-165. Powers of Authority with respect to self-regulatory organisations.
For the purposes of this Division, the powers conferred to the Authority under section 160 shall apply equally with respect to any Labuan corporation or organisation declared or recognised by the Authority as a self-regulatory organisation under section 156.
166 PART XI MISCELLANEOUS DIVISION 1 APPEALS-166. Appeals.
(1) Any person who is aggrieved by the decision of the Authority to reject an application for a licence or registration or to revoke a licence or registration under this Act may, within thirty days of the decision being notified to him, appeal to the Authority in writing.
(2) The Authority shall, after considering the appeal under subsection (1), make a final decision and shall notify the applicant in writing of its decision.
(3) An applicant who is aggrieved by the decision of the Authority under subsection (2) may, within thirty days of the decision being notified to him, appeal to the Minister in writing who may confirm, vary or reverse the decision, and whose decision shall be final.
(4) For the avoidance of doubt, the bringing of an appeal under subsections (1) and (3), does not suspend the decision being appealed against.
167 DIVISION 2 REVOCATION AND SURRENDER-167. Revocation of consent, licence or registration.
The Authority may revoke any consent, licence or registration made under this Act:-
(a) at the request of the licensed entity;
(b) where:-
(i) the licensed entity has ceased to carry on business in or from within Labuan;
(ii) the licensed entity has contravened any provision of this Act or any terms, conditions, restrictions or limitations attached to the licence or registration as the case may be;
(iii) the Authority has, either in connection with the application for the licence or registration, or at any time after the grant of the licence or registration, been provided with false or misleading information, document or declaration by or on behalf of the licensed entity;
(iv) the licensed entity has been convicted of an offence under this Act or of a criminal offence in any recognised country or jurisdiction;
(v) the licensed entity has knowingly and wilfully supplied fa
168 DIVISION 2 REVOCATION AND SURRENDER-168. Revocation procedure.
(1) Before revoking any consent, licence or registration under section 167, the Authority shall:-
(a) give the licensed entity notice in writing of the grounds on which it intends to do so;
(b) afford the licensed entity opportunity to make written representations to it within a period of thirty days after receipt of the notice; and
(c) take such representations into consideration.
(2) Where the Authority revokes any licence or registration under section 167, the Authority shall give notice in writing to the licensed entity of such revocation and the revocation shall take effect on the date specified in the notice.
(3) Where the revocation is of a bank licence or an insurance licence, the Authority shall, as soon as practicable, publish in one widely circulated newspaper in Malaysia and one international financial newspaper a notice of the revocation of the bank licence or the insurance
169 DIVISION 2 REVOCATION AND SURRENDER-169. Surrender of licence or registration.
(1) Any licensed entity under this Act may surrender its licence or registration respectively with the prior approval of the Authority.
(2) The licensed entity shall give fourteen days' notice to the Authority of the surrender.
(3) The Authority shall give its approval if it is satisfied that licensed entity has made adequate provision in respect of all its liabilities, and thereupon shall appoint a date on which the surrender is to take effect.
(4) Where the approval of the Authority has been obtained under subsection (3), the licensed entity shall, not later than twenty-one days before the date appointed under subsection (3), publish an advertisement of the proposed surrender in at least one widely circulated Malaysian newspaper and one international financial newspaper.
(5) The Authority shall, as soon as practicable, publish in the one widely circulated Malaysian newspaper and one international financial newspaper a
170 DIVISION 2 REVOCATION AND SURRENDER-170. Consequences of revocation or surrender of licence.
(1) Where the revocation of a licence or registration under section 167 or the surrender of a licence or registration under section 169 has taken effect, the licensed entity shall, as from the date such revocation or surrender takes effect, cease to transact any further business.
(2) Notwithstanding subsection (1), where a licensed entity continues to exist as a corporation after the revocation of its licence has taken effect, the Minister may, on the recommendation of the Authority, authorise in writing such licensed entity to continue to transact its business activities to such extent and for such duration as the Minister may specify in the authorisation for the purposes of the winding-up of its affairs or for the purposes of meeting the claims of its policy owners, other customers or creditors.
(3) Every licensed entity whose licence has been revoked or surrendered shall continue to be subject to the provisions of this Act as long as
171 DIVISION 3 GENERAL-171. Payment systems.
(1) No person shall:-
(a) commence to operate any payment system in, from or through Labuan; or
(b) where such person has been operating any payment system in, from or through Labuan immediately before the coming into operation of this Act, continue to operate such system, unless he has submitted for the approval of the Authority the scheme of operations of the payment system and the rules, contract, by-laws or other documents relating to the rights, duties and liabilities of the persons participating in the payment system and obtained the authorisation in writing of the Authority to operate the payment system.
(2) Before making any decision under subsection (1), the Authority may require the person seeking authorisation to submit to the Authority such other information and particulars relating to the payment system or to the person seeking the authorisation, or to the persons who are or will be partic
172 DIVISION 3 GENERAL-172. Transfer of business.
(1) For the purposes of this section, any reference to "transferor" is a reference to a licensed entity under Part V (Divisions 1, 2 and 3 only), Part VI and Part VII, transferring its business which requires it to be licensed under this Act and the "transferee" is a reference to the licensed entity who is licensed to carry out such business, receiving the transfer from the transferor.
(2) The whole or any part of the business of a transferor may be transferred to the transferee if the transfer is effected by a scheme under this section.
(3) A scheme under this section shall not provide for the business of the transferor to be transferred to a person who is not yet licensed to carry out such business under this Act or who is not yet in existence except when it is expressly provided in the scheme that such scheme shall only come into operation upon such person being licensed.
(4) A scheme under this section may include provisions
173 DIVISION 3 GENERAL-173. Internal audit.
(1) Every bank licensee and insurance licensee shall conduct an internal audit of its books and operations as the Authority may specify from time to time and shall submit to the Authority a report of such internal audit which shall include a report on the said licensee's accounting system and controls.
(2) An internal auditor appointed by a bank licensee or an insurance licensee to carry out an internal audit of its books and operations under subsection (1) shall for the purposes of this Part be deemed to be an officer of the bank licensee or the insurance licensee respectively and shall, at all times, be subject to section 178.
(3) An internal audit may be carried out by any person except an external auditor of the bank licensee or insurance licensee, as the case may be, under section 174.
(4) An internal auditor shall immediately report to the Authority if, in the course of his duties as an internal auditor of a bank licensee
174 DIVISION 3 GENERAL-174. External auditor.
(1) Every licensed entity shall appoint an external auditor annually before such date or within such period as may be specified by the Authority.
(2) The Authority may maintain a list of auditors for the purpose of this section.
(3) An auditor appointed under subsection (1) shall carry out an audit of the accounts of the licensed entity in respect of its business operations and shall submit a report of such audit together with his comments on the accounting system and controls of the licensed entity to the participants of the licensed entity and to the Authority.
(4) The Authority may, at any time, require an auditor appointed under this section to submit to the Authority such clarifications in relation to his audit as the Authority may specify.
(5) An auditor shall immediately report to the Authority if, in the course of his duties as an auditor of a licensed entity, he is satisfied that:-
(a) there
175 DIVISION 3 GENERAL-175. Accounts and records.
(1) A licensed entity under this Act shall cause to be kept proper accounting and other records that will sufficiently explain the transaction and financial position of the licensed entity.
(2) Every licensed entity and the directors thereof shall cause appropriate entries to be made in the accounting and other records of the licensed entity within sixty days of completion of the transaction to which they relate.
(3) It shall be mandatory for the accounting and other records of a licensed entity to be kept at the registered office of the licensed entity or at such place in Labuan as the directors of the licensed entity think fit and the accounting and other records shall at all times be open to inspection by any director and shall be kept in such manner as to enable them to be conveniently and properly audited.
(4) The Authority may, in any particular case, direct that the accounting and other records of a licensed entity be ope
176 DIVISION 3 GENERAL-176. Money or other property from illegal activities.
(1) Any licensed entity or any person carrying on any activity under this Act shall not accept:-
(a) any money or other property originating from a transaction, operation or other activity which is a criminal offence under the laws of Malaysia or which, had it been carried out in Malaysia, would have been such an offence; or
(b) any money or other property the receipt, ownership or control of which is or would be an offence as specified in paragraph (1)(a).
(2) Where any person, being a director, officer or agent of any such licensed entity or such person specified in subsection (1):-
(a) has reason to believe that the licensed entity or person specified in subsection (1) has property or has income accruing to it or derived by it and originating from a transaction, operation or other activity which is a criminal offence under the laws of Malaysia or which, had it been carried out i
177 DIVISION 3 GENERAL-177. Examination and inspection of books and documents of licensed entities.
(1) The Authority may from time to time:-
(a) examine and inspect the books or other documents, accounts and transactions of any licensed entity; or
(b) obtain from any licensed entity, require any licensed entity to provide access to the Authority to, or require any licensed entity to furnish, any information or copies of any records, books or other documents relating to the business of such licensed entity being carried on under this Act which, in the opinion of the Authority, are necessary to enable it to ascertain compliance with the provisions of this Act.
(2) The Authority may approve the home supervisory authority of a licensed entity to conduct the activities referred to in paragraphs (1)(a) and (b).
(3) Every director or officer of a licensed entity shall extend his co-operation and assistance to the Authority to facilitate any examination and inspection carried out under paragraph (1)
178 DIVISION 3 GENERAL-178. Secrecy.
(1) No person who for any reason has access to any record, book, register, correspondence or other document, material or information whatsoever relating to the affairs or accounts of the following persons, shall disclose to any other person, or make a record for any person of any such record, book, register, correspondence or other document, material or information:-
(a) a mutual fund under Part III;
(b) any customer of a Labuan trust company or a Labuan private trust company under Part V;
(c) any customer of a bank licensee under Part VI;
(d) any policy owner under Part VII;
(e) an exchange established under Part IX;
(f) a self-regulatory organisation established under Part X; and
(g) any licensed entity under this Act.
(2) Subsection (1) shall not apply to:-
(a) any disclosure lawfully required under section 28B of the Labuan Financial Services Authorit
179 DIVISION 3 GENERAL-179. Translation.
Where any instrument or document required to be lodged with the Authority is in a language other than in the national or English language, the instrument or document shall be accompanied by a verified or certified translation thereof either in the national or English language.
180 DIVISION 3 GENERAL-180. Application of Labuan Financial Services Authority Act 1996.
Where there is any conflict or inconsistency with the provisions of this Act and the Labuan Financial Services Authority Act 1996, the provisions of Labuan Financial Services Authority Act 1996 shall prevail.
181 DIVISION 3 GENERAL-181. Application of Labuan Islamic Financial Services and Securities Act 2009.
(1) A licensed entity who carries on or transacts or holds himself out as carrying on or transacting any Islamic banking business, Islamic investment banking business, takaful, retakaful or any other business under this Act which is shariah compliant, shall comply with the provisions of the Labuan Islamic Financial Services and Securities Act 2010 in matters where such shariah compliance are concerned, subject to such modifications as may be made by the Authority pursuant to guidelines.
(2) Where there is any conflict or inconsistency between the provisions of this Act and the Labuan Islamic Financial Services and Securities Act 2010 in matters where shariah compliance are concerned, the provisions of the Labuan Islamic Financial Services and Securities Act 2010 shall prevail.
182 DIVISION 3 GENERAL-182. Application of Exchange Control Act 1953.
(1) Subject to subsections (2) and (3), nothing in this Act shall affect the provisions of the Exchange Control Act 1953 and in the application of any provision of this Act to a person or bank licensee, such provision shall apply subject to the provisions of the Exchange Control Act 1953.
(2) Where there is conflict or inconsistency between the provisions of this Act and the Exchange Control Act 1953, the provisions of the Exchange Control Act 1953 shall prevail.
(3) The provisions of the Exchange Control Act 1953 shall not apply in respect of any transactions exempted under that Act and any guidelines, circulars or notices issued thereunder.
183 DIVISION 3 GENERAL-183. Application of Capital Markets and Services Act 2007.
(1) Subject to subsections (2) and (3), nothing in this Act shall affect the provisions of the Capital Markets and Services Act 2007 and in the application of any provision of this Act to any person, such provision shall apply subject to the provisions of the Capital Markets and Services Act 2007.
(2) Where there is conflict or inconsistency between the provisions of this Act and the Capital Markets and Services Act 2007, the provisions of the Capital Markets and Services Act 2007 shall prevail.
(3) The provisions of the Capital Markets and Services Act 2007 shall not apply to a licensed entity in respect of any licensed activity under this Act, when such licensed activity is carried on in Labuan or outside Malaysia.
184 DIVISION 3 GENERAL-184. Application of Labuan Companies Act 1990 and Companies Act 1965.
(1) In addition to, and not in derogation of, the provisions of this Act:-
(a) the Labuan Companies Act 1990 shall apply to:-
(i) a bank licensee that is not a Malaysian bank licensee; and
(ii) an insurance licensee that is a Labuan company or a foreign Labuan company; and
(b) the Companies Act 1965 shall apply to:-
(i) a Malaysian bank licensee or a licensed entity licensed under section 90 which is an office of a Malaysian bank established under that Act; and
(ii) an insurance licensee which is a branch of a Malaysian insurer.
(2) Where there is any conflict or inconsistency between the provisions of this Act and the other Acts referred to in subsection (1) in their application to the respective licensed entities, the provisions of this Act shall prevail.
(3) Where any difficulty or doubt arises in the appli
185 DIVISION 3 GENERAL-185. Non-application of certain laws.
(1) No bank licensee shall, in respect of any business carried on by such licensee, be subjected to any of the provisions of the Banking and Financial Institutions Act 1989 and the Islamic Banking Act 1983.
(2) No insurance licensee shall, in respect of any business carried on by such licensee under Part VII, be subjected to any of the provisions of the Insurance Act 1996 and the Takaful Act 1984.
(3) For the purpose of Part IX:-
(a) the provisions of the Capital Markets and Services Act 2007 shall not be applicable to the establishment, conduct, activity and business of any exchanges established under Division 2 of Part IX;
(b) section 7, subsection 21(2), sections 24, 85, subsections 87(2), 87(4), 87(5), 87(10), 93(2), 93(6) and 93(7) of the Labuan Companies Act 1990 shall not be applicable to any exchange established under Division 2 of Part IX; and
(c) the provisions of the Holidays Act 1951
186 DIVISION 3 GENERAL-186. Immunity.
(1) No action, suit, prosecution or other proceedings shall lie or be brought, instituted or maintained in any Court or any tribunal against any of the following persons, that is:-
(a) the Minister;
(b) the Authority;
(c) any member, officer, committee, servant or agent of the Authority; and
(d) any other person lawfully acting on behalf of, or in compliance with instructions of, the Authority,
for or on account of, or in respect of, any act done or statement made or omitted to be done or made, or purporting to be done or made or omitted to be done or made, in pursuance or in execution of, or intended pursuance or execution of this Act, or any guidelines, directions, advisories or other thing whatsoever issued under this Act:-
Provided that such act or such statement was done or made, or was omitted to be done or made, in good faith.
(2) Subsec
187 DIVISION 3 GENERAL-187. General penalty.
(1) A person who contravenes a requirement of this Act commits an offence.
(2) A person who commits an offence against this Act for which no penalty is expressly provided shall be liable:-
(a) in the case of a body, incorporated or unincorporated, to a fine not exceeding three million ringgit; or
(b) in the case of an individual, to a fine not exceeding one million ringgit,
and in the case of a continuing offence, shall, in addition, be liable to a daily fine not exceeding five thousand ringgit for each day the offence continues to be committed.
188 DIVISION 3 GENERAL-188. Offences by body corporate.
(1) If a body corporate commits an offence under this Act or any regulations made under this Act, any person who, at the time of the commission of the offence, was a director or other similar officer or was purporting to act in any such capacity:-
(a) may be charged severally or jointly in the same proceedings with the body corporate; and
(b) if the body corporate is found to have committed the offence, shall be deemed to have committed that offence unless, having regard to the nature of his functions in that capacity and to all circumstances, he proves:-
(i) that the offence was committed without his knowledge, consent or connivance; and
(ii) that he took all reasonable precautions and had exercised due diligence to prevent the commission of that offence.
189 DIVISION 3 GENERAL-189. Annual and licence fees.
(1) The Authority may prescribe such annual, licence or registration fees by regulations in respect of the activities of a licensed or registered entity or other activities under this Act.
(2) Such fees as may be prescribed shall be payable on or before 15 January of every year following the year in which any consent, licence or registration is granted.
(3) An unpaid fees may be sued for by the Authority by action as a civil debt and in addition the Authority may require payment of a penalty for late payment up to an amount equivalent to twice the amount of the fees unpaid and costs of recovering the amount including but not limited to costs of legal proceedings.
190 DIVISION 3 GENERAL-190. Fees and penalties to be paid into Fund.
(1) All fees and penalties paid to the Authority under this Act and all sums of money paid under this section shall be paid into and form part of the Fund established under section 29 of the Labuan Financial Services Authority Act 1996.
(2) Notwithstanding subsection (1), all fees paid under section 140 of Part IX shall be paid into the fund of the Exchange or such other exchanges established pursuant to Part IX and may be used in accordance with the provisions of the by-laws of the Exchange or such other exchange.
191 DIVISION 3 GENERAL-191. Procedure where none laid down.
In the event that any act or step is required or permitted to be done or taken under this Act and no form is specified or procedure laid down either in this Act or the regulations, application may be made to the Authority for directions as to the manner in which the same may be done or taken, and any act or step done or taken in accordance with such directions shall be a valid performance of such act or step.
192 DIVISION 3 GENERAL-192. Misrepresentation.
A person who:-
(a) wilfully or recklessly makes a misrepresentation in any document or material or records required to be filed, supplied or delivered under this Act;
(b) makes any statement or gives any information required under this Act that he knows to be false or misleading;
(c) knowingly fails to disclose any fact or information required to be disclosed under this Act; or
(d) being in charge of, or having alone or with another or others possession of or control over, any information, records, books or other documents referred to in the provisions of this Act refuses or wilfully neglects to comply with any lawful direction given under such provisions,
commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
193 DIVISION 3 GENERAL-193. Enforcement
(1) Where:-
(a) a licensed entity is insolvent or is likely to become unable to meet all or any of its obligations or is about to suspend payment to any extent;
(b) a licensed entity, its principal officer, officer or any other such similar person is carrying on business in a manner the Authority reasonably believes to be detrimental to the interest of its beneficiaries, investors, creditors or any other such similar interested parties; or
(c) a licensed entity, its principal officer, officer or any other such similar person has contravened any provision of this Act or any other written law for the time being in force,
the Authority may:-
(A) where applicable, impose new or additional terms, conditions, restrictions or limitations upon the operation of the licensed entity or vary or revoke any which have already been imposed;
(B) require the removal of any of the li
194 DIVISION 3 GENERAL-194. Power to compound.
(1) The Authority may, with the written consent of the Public Prosecutor, in a case where he deems it fit and proper so to do, compound any offence committed by any person which is punishable under this Act by making a written offer to such person to compound the offence on payment to the Authority, within such time as may be specified in the offer, of an amount which shall not exceed fifty per centum of the amount of the maximum fine to which that person would have been liable if he had been convicted of the offence.
(2) An offer under subsection (1) may be made at any time after the offence has been committed, but before any prosecution for it has been instituted.
(3) Where the amount specified in the offer under subsection (1) is not paid within the time specified in the offer, or within such extended period as the Authority may grant, prosecution of the offence may be instituted at any time after that against the person to whom the
195 DIVISION 3 GENERAL-195. Service of documents.
(1) Any document or notice required to be served by the Authority to a licensed entity, a mutual fund, a self-regulatory organisation or an exchange under this Act may be served by leaving it at, or sending it by post to, the registered office of the particular licensed entity, mutual fund, self-regulatory organisation or exchange.
(2) Where the document or notice has been served in accordance with subsection (1), the document or notice is deemed to have been properly served on the particular licensed entity, mutual fund, self-regulatory organisation or exchange.
196 DIVISION 3 GENERAL-196. Power of the Minister to make regulations.
The Minister may, on the recommendation of the Authority, make regulations prescribing all matters and things required by this Act to be prescribed or provided, for the carrying out of, or giving full effect to, the provisions of this Act.
197 DIVISION 3 GENERAL-197. Power of Minister to issue directions.
(1) The Minister may, on the written recommendation of the Authority, in the public interest, issue, by notification in the Gazette , a direction:-
(a) prohibiting the formation of any business or activities, including any class of the business or activities; or
(b) directing a licensed entity, to cease to carry on its business or part of its business either immediately or within such time as may be specified in the direction.
(2) A direction made under this section may be revoked or varied by the Minister.
198 DIVISION 3 GENERAL-198. Power of the Minister to amend schedules.
(1) The Minister may, on the recommendation of the Authority, from time to time by order published in the Gazette , vary, delete, add to, substitute for, or otherwise amend any of the schedules to this Act and upon publication of the order, such schedule as varied, deleted, added to, substituted for or otherwise amended, shall come into full force and effect and shall be deemed to be an integral part of this Act as from the date of such publication, or from such later date as may be specified in the order.
(2) The Minister in varying, deleting or substituting any of the schedules referred to in subsection (1) may impose such terms and conditions as he thinks necessary.
199 DIVISION 3 GENERAL-199. Power of the Minister to grant exemptions.
The Minister may, on the recommendation of the Authority, exempt a Labuan licensed entity from any of the provisions of this Act and may, in granting such exemption, impose such terms and conditions as the Minister thinks fit.
200 DIVISION 3 GENERAL-200. Publication of notification, Gazette.
Without prejudice to any other provisions of this Act, the Authority shall, either as expressly provided in the provisions or where no time frame is specified, as soon as practicable, publish the notification, including notification of Gazette , but any delay in publishing such notification shall not in any manner affect the validity of the notification or the content or order made therein.
201 DIVISION 3 GENERAL-201. Repeal, savings and transitional.
(1) For the purposes of this section, "effective date" means the date appointed by the Minister under section 1.
(2) The Labuan Trust Companies Act 1990, Offshore Banking Act 1990, Offshore Insurance Act 1990 and Labuan Offshore Securities Industry Act 1998 (the "repealed Acts") are repealed with effect from the effective date.
(3) Notwithstanding subsection (1):-
(a) all:-
(i) regulations, orders, directions, notifications, exemptions and other subsidiary legislation, howsoever called; and
(ii) all approvals, directions, decisions, notifications, exemptions and other executive acts, howsoever called, made, given or done under or in accordance with, or by virtue of the repealed Acts shall be deemed to have been made, given, or done under, or in accordance with, or by virtue of, the corresponding provisions of this Act, and shall continue to rem
202 DIVISION 3 GENERAL-202. Continuance of other rights, liabilities, etc., under the repealed Acts.
(1) Nothing in the repealed Acts or this Act shall affect any person's liability to be prosecuted or punished for offences or breaches committed under the repealed Acts before the effective date or any proceedings brought, sentence imposed or action taken before that day in respect of such offence or breach.
(2) Any right, privilege or obligation or liability acquired, accrued or incurred before the effective date or any legal proceedings, remedy or investigation in respect of such right, privilege, obligation or liability shall not be affected by this Act and shall continue to remain in force as if this Act had not been enacted.
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