KOOTU FUNDS (PROHIBITION) ACT 1971

Kootu Funds (Prohibition) LAWS OF MALAYSIA Reprint Act 28 kootu funds (prohibition) Act 1971 As at 1 June 2014 Published by The Commissioner of Law revision, Malaysia Under the Authority of the Revision of Laws Act 1968 2014 1 2 kootu funds (prohibition) act 1971 Date of Royal Assent ... ... ... … … … 27 April 1971 Date of publication in the Gazette … … 29 April 1971 Latest amendment made by Act A1397 which came into operation on … … … 16 August 2011 Previous Reprints First Reprint ... ... ... ... ... 1993 Second Reprint ... ... ... ... ... 1999 Third Reprint ... ... ... ... 2006 ... 3 LAWS OF MALAYSIA Act 28 KOOTU FUNDS (PROHIBITION) ACT 1971 ARRANGEMENT OF SECTIONS Section 1. Short title 2. Interpretation 3. 4. Unlawful to carry on business of promoting kootu funds Registration of a business which promotes kootu funds prohibited in the States of Peninsular Malaysia 5. Licensing of a business which promotes kootu funds prohibited in Sabah 6. Licensing of a business which promotes kootu funds prohibited in Sarawak 7. 8. Registration of a company which promotes kootu funds prohibited Registered company which promotes kootu funds to cease business 9. Winding up on application by Minister 10. 11. Criminal liability Rules 12. This Act to prevail 13. Repeal 4 Laws of Malaysia Act 28 Kootu Funds (Prohibition) 5 LAWS OF MALAYSIA Act 28 KOOTU FUNDS (PROHIBITION) ACT 1971 An Act to prohibit the registration or licensing of businesses which promote or are designed to promote kootu funds and the registration of companies which have as their object or as one of their objects the promotion of schemes or arrangements variously known as kootus, cheetus, chit funds, hweis, tontines or otherwise as well as to make it unlawful for any person to carry on the business of promoting such schemes or arrangements and to provide for matters incidental thereto. [Throughout Malaysia—30 April 1971] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: Short title 1. This Act may be cited as the Kootu Funds (Prohibition) Act 1971. Interpretation 2. In this Act, unless the context otherwise requires— “company” means a company as defined in the Companies Act 1965 [Act 125], and includes a corporation as defined in the said Act; “kootu fund” means a scheme or arrangement variously known as a kootu, cheetu, chit fund, hwei, tontine or otherwise whereby the participants subscribe periodically or otherwise to a common 6 Laws of Malaysia Act 28 fund and such common fund is put up for sale or payment to the participants by auction, tender, bid, ballot or otherwise and includes any scheme or arrangement which with variations partakes of the nature of a kootu, cheetu, chit fund, hwei or tontine; “Minister” means, except in sections 4, 5 and 6, the Minister for the time being in charge of domestic trade and consumer affairs; “to promote” includes to manage, form, conduct or otherwise to organize, and also includes aiding, assisting or taking any part in such promotion. (2) The term “kootu funds” wherever used in this Act includes the term “a kootu fund”. (3) Any reference in this Act to the winding up of a company includes, in the case of a foreign company, a reference to the winding up of the affairs of the foreign company so far as the assets of the foreign company within Malaysia are concerned. Unlawful to carry on business of promoting kootu funds 3. It shall be unlawful for any person to carry on the business of promoting kootu funds and any person who carries on such business shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousand ringgit or to imprisonment for a term not exceeding ten years or to both. Registration of a business which promotes kootu funds prohibited in the States of Peninsular Malaysia 4. (1) There shall not be registered under the Registration of Businesses Act 1956 [Act 197] of the States of Peninsular Malaysia (hereinafter in this section referred to as “the Act”) any business which promotes or is designed to promote kootu funds. (2) No person shall obtain registration under the Act of any business which promotes or is designed to promote kootu funds. Kootu Funds (Prohibition) 7 (3) No person who carries on a business which is registered under the Act shall carry on the business of promoting kootu funds. (4) Any associate of a business which, on the date of coming into force of this Act, is registered under the Act and which promotes or is designed to promote kootu funds shall forthwith cease to do such business and shall forthwith inform the Registrar that the business promotes or is designed to promote kootu funds and thereupon the Registrar shall forthwith revoke the certificate of registration of such business. (5) The Registrar shall forthwith revoke the certificate of registration of a business if he is satisfied from the particulars of the business submitted under subsection 5(1) of the Act that the business promotes or is designed to promote kootu funds, and inform, in writing, a person responsible that such certificate has been revoked and the reason therefor. (6) Any associate of a business aggrieved by any decision made by the Registrar under subsection (5) may, within thirty days from the date on which the decision was communicated under subsection (5) to a person responsible, appeal therefrom to the Minister whose decision shall be final; while such appeal is pending it shall not operate as a stay of the revocation of the certificate of registration of the business unless the Minister directs otherwise. (7) Any person who contravenes subsection (2) or (3) and any associate of a business who fails to comply with subsection (4) shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding three years or to both. (8) Nothing in this section shall prejudice or be deemed to prejudice any civil claim that any person, including a participant in a kootu fund, may have against any associate of a business of which the certificate of registration is revoked under the provisions of this section or who ceases to do business by reason of the provisions of this section. (9) No person shall be entitled to any refund of fees as a result of the revocation of any certificate of registration of a business under this section. 8 Laws of Malaysia Act 28 (10) For the purposes of this section— (a) a Registrar or an inspector may exercise all the powers conferred upon them respectively under the Act in as full and ample a manner as if this section formed a part of the Act; and (b) section 2 of the Act shall apply as if this section formed a part of the Act. Licensing of a business which promotes kootu funds prohibited in Sabah 5. (1) There shall not be licensed under the Trades Licensing Ordinance of Sabah [Cap. 144] (hereinafter in this section referred to as “the Ordinance”) any business which promotes or is designed to promote kootu funds. (2) No person shall obtain a trading licence under the Ordinance in respect of any business which promotes or is designed to promote kootu funds. (3) No person who carries on a business which is licensed under the Ordinance shall carry on the business of promoting kootu funds. (4) Any proprietor or partner of a business which, on the date of coming into force of this Act, is licensed under the Ordinance and which promotes or is designed to promote kootu funds shall forthwith cease to do such business and shall forthwith inform the licensing authority that the business promotes or is designed to promote kootu funds and thereupon the licensing authority shall forthwith revoke the trading licence in respect of such business. (5) The licensing authority shall forthwith revoke the trading licence of a business if it is satisfied from the particulars of the business submitted to the licensing authority under the Ordinance that the business promotes or is designed to promote kootu funds, and inform, in writing, the proprietor or partner of the business that such trading licence has been revoked and the reason therefor. (6) Any proprietor or partner of a business aggrieved by any decision made by the licensing authority under subsection (5) may, within thirty days from the date on which the decision Kootu Funds (Prohibition) 9 was communicated under subsection (5), appeal therefrom to the Minister whose decision shall be final; while such appeal is pending it shall not operate as a stay of the revocation of the trading licence of the business unless the Minister directs otherwise. (7) Any person who contravenes subsection (2) or (3) and any proprietor or partner of a business who fails to comply with subsection (4) shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding three years or to both. (8) Nothing in this section shall prejudice or be deemed to prejudice any civil claim that any person, including a participant in a kootu fund, may have against any proprietor of a business the trading licence of which is revoked under this section or who ceases to do business by reason of this section. (9) No person shall be entitled to any refund of tax as a result of the revocation of any trading licence under this section. (10) For the purposes of this section— (a) a licensing authority may exercise all the powers conferred upon him under the Ordinance in as full and ample a manner as if this section formed a part of the Ordinance; and (b) section 2 of the Ordinance shall apply as if this section formed a part of the Ordinance. (11) “Minister” in this section means the Minister referred to in the Ordinance. Licensing of a business which promotes kootu funds prohibited in Sarawak 6. (1) There shall not be licensed under the Businesses, Professions and Trades Licensing Ordinance of Sarawak [Cap. 33] (hereinafter in this section referred to as “the Ordinance”) any business which promotes or is designed to promote kootu funds. 10 Laws of Malaysia Act 28 (2) No person shall obtain a trading licence under the Ordinance in respect of any business which promotes or is designed to promote kootu funds. (3) No person who carries on a business which is licensed under the Ordinance shall carry on the business of promoting kootu funds. (4) Any proprietor of a business which, on the date of coming into force of this Act, is licensed under the Ordinance and which promotes or is designed to promote kootu funds shall forthwith cease to do such business and shall forthwith inform the Collector that the business promotes or is designed to promote kootu funds and thereupon the Collector shall forthwith revoke the trading licence in respect of such business. (5) The Collector shall forthwith revoke the trading licence of a business if he is satisfied from the particulars of the business submitted to the Collector under the Ordinance that the business promotes or is designed to promote kootu funds, and inform, in writing, the proprietor of the business that such trading licence has been revoked and the reason therefor. (6) Any proprietor of a business aggrieved by any decision made by the Collector under subsection (5) may, within thirty days from the date on which the decision was communicated under subsection (5), appeal therefrom to the Minister whose decision shall be final; while such appeal is pending it shall not operate as a stay of the revocation of the trading licence of the business unless the Minister directs otherwise. (7) Any person who contravenes subsection (2) or (3) and any proprietor of a business who fails to comply with subsection (4) shall be guilty of an offence and shall, on conviction, be liable