LOAN (LOCAL) ACT 1959

LAWS OF MALAYSIA ONLINE VERSION OF UPDATED TEXT OF REPRINT Act 637 LOAN (LOCAL) ACT 1959 As at 1 December 2011 2 LOAN (LOCAL) ACT 1959 First Enacted … … … … 1959 (Ordinance No. 43 of 1959) … … … … 2004 (Act 637 w.e.f 5 November 2004) Latest amendment made by Act A1257 which came into operation on … … 1 February 2006 Revised PREVIOUS REPRINTS First Reprint … … … 2006 3 LAWS OF MALAYSIA Act 637 LOAN (LOCAL) ACT 1959 ARRANGEMENT OF SECTIONS PART I PRELIMINARY Section 1. 1. Short title 2. 2. Interpretation PART II AUTHORIZATION AND APPLICATION OF LOAN 3. 3. Power to raise loan for purposes of the Development Fund 4. 4. Sums charged on and payable out of Consolidated Fund 5. 5. Application of loan 55AA. . (Deleted) PART III PROVISIONS APPLICABLE TO ISSUE AND TRANSFER OF STOCK 6. 6. Issue and form of stock 7. 7. Refusal of application 8. 8. Transfer of stock 88AA. . Participating investing institutions and primary investing institutions 88BB.. Depository institutions 4 Laws of Malaysia ACT 637 Section 88CC.. Duties and obligations of depository institutions in relation to transfers effected under subsection 8B(2) 88DD. Bank’s power to require information, inspect and take copies 88EE.. Maintenance of secrecy by the Bank 9.9. Payment of interest 10. Authorization of Bank PART IV PROVISIONS RELATING TO REDEMPTION, PURCHASE, CONVERSION AND CANCELLATION OF STOCK AND CREATION OF SINKING FUND 11. Redemption of stock 11 11AA. . Power to purchase and cancel stock 11 11BB. . Power to convert stock 12. Sinking fund 13. Application of sinking fund 14. Procedure if sinking fund insufficient 15. (Deleted) PART V GENERAL 16. Acceptance of advance deposits 17. False entries, etc., in books, documents, etc. 18. Contravention of Act, penalty and directors, etc. 19. Civil liability not affected by prosecution or nonprosecution, etc. 20. Rules 21. Liability of Government in respect of stock criminal liability of institutions, Loan (Local) Section 22. Minister’s power to amend the First or Second Schedule FIRST SCHEDULE SECOND SCHEDULE 5 7 LAWS OF MALAYSIA Act 637 LOAN (LOCAL) ACT 1959 An Act to authorize the raising of loans within Malaysia to provide sums required for the purposes of the Development Fund. [28 July 1959; Throughout Malaysia—1 April 1965, Act No. 27 of 1965] PART I PRELIMINARY Short title 1. This Act may be cited as the Loan (Local) Act 1959. Interpretation 2. (1) In this Act, unless the context otherwise requires— ―advance deposit‖ means the deposits as are received under subsection 16(1) of this Act; ―Bank‖ means Bank Negara Malaysia established under the Central Bank of Malaysia Act 1958 [Act 519]; ―customer’s account‖ means an account maintained by a depository institution in respect of a transferor or a transferee under subsection 8B(5); 8 Laws of Malaysia ACT 637 ―depository institution‖ means a participating investing institution authorized by the Bank under subsection 8B(1); ―financial institution‖ means— (a) any licensed bank, licensed merchant bank, licensed finance company, or licensed discount house, as those terms are defined in the Banking and Financial Institutions Act 1989 [Act 372]; (b) any State Government; (c) any statutory body; or (d) any fund, scheme, organization, body corporate or unincorporate, or any other person, as may be specified in writing by the Minister; ―participating investing institution‖ means a financial institution authorized by the Bank under subsection 8A(1); ―primary investing institution‖ means a participating investing institution appointed by the Bank under subsection 8A(2); ―statutory acknowledgement receipt‖ means an acknowledgement receipt in the form in the First Schedule issued under subsection 8B(6); ―statutory body‖ means any body or authority established, appointed or constituted by any written law, and includes any local authority; ―statutory monthly statement‖ means a monthly statement in the form in the Second Schedule issued under subsection 8C(2); ―stock‖ means stock issued pursuant to sections 3 and 6 or a stock held by any person or pursuant to a transfer of it, or of a part of it, under this Act; Loan (Local) 9 ―stock customer‖ means a person who makes or takes a transfer of a stock under subsection 8B(2); ―stock issue‖ means any loan raised under subsection 3(1) by the issue of stock under Part III; ―trustee stock‖ means any of the securities mentioned in section 4 of the Trustee Act 1949 [Act 208]; ―the Minister‖ means the Minister for the time being charged with the responsibility for finance; (2) In relation to Sabah and Sarawak, references in this Act to any written law or to any provisions of it shall— (a) if that written law has been extended to apply to Sabah or Sarawak be construed as references to the written law or provisions as so extended to Sabah or Sarawak, as the case may be; (b) if that written law has not been so extended, be construed as references to the corresponding written law or provisions, if any, in force in Sabah or Sarawak, as the case may be. (3) Where any record or account is required to be maintained under this Act by the Bank or by any participating investing institution, whether acting in its capacity as a primary investing institution or a depository institution or otherwise, it shall be maintained in the manner or the means as the Bank may determine or specify, including its maintenance in writing or by means of any visual recording (of still or moving images), or any sound recording or any electronic, magnetic, mechanical, or other recording whatsoever, on any substance, material, thing or article. (4) The functions, powers and duties conferred upon the Bank under this Act shall be performed, exercised and discharged by the Bank on behalf of the Minister. 10 Laws of Malaysia ACT 637 PART II AUTHORIZATION AND APPLICATION OF LOAN Power to raise loans for purposes of the Development Fund 3. (1) Subject to the Constitution and this Act, the Minister may, from time to time, raise within Malaysia in the manner and on the terms and conditions as he thinks fit, the sums as may be required by Malaysia for purposes of the Development Fund or for one or more of those purposes. (2) Where the loan is raised by the issue of stock, Part III shall apply. (3) The sums raised under this Act shall not exceed the *sum specified, from time to time, by the Yang di-Pertuan Agong by order published in the Gazette and the order shall, as soon as possible after its publication, be laid by the Minister before the Dewan Rakyat. Sums charged on and payable out of Consolidated Fund 4. (1) All debt charges in respect of loans raised under this Act are charged upon and payable out of the Consolidated Fund. (2) In this section ―debt charges‖ includes interest, sinking fund charges, the repayment or amortization of debt, and all expenditure in connection with the raising of the loans and the service and redemption of debt created by it. (3) All expenditure in connection with the purchase, conversion and cancellation of stock made in accordance with this Act are charged upon and payable out of the Consolidated Fund. * NOTE—Not exceeding ninety thousand million ringgit at any one time–see P.U. (A) 195/1990. Loan (Local) 11 Application of loan 5. (1) Any sum raised under this Act less the sum required to defray the expenses in connection with the raising of the loan shall, subject to subsection (2), be paid into the Development Fund specified in the Second Schedule to the Financial Procedure Act 1957 [Act 61], and shall be applied for the purposes of the Fund. (2) Any sum raised under this Act may be applied— (a) for the repayment or amortization of loans raised under this Act or any other written law; or (b) where a loan is raised by the issue of stock under this Act or any other written law, for the purchase or conversion of such stock. 5A. (Deleted by Act A748). PART III PROVISIONS APPLICABLE TO ISSUE AND TRANSFER OF STOCK Issue and form of stock 6. Stock issued under this Act shall be issued by the Bank on behalf of the Minister upon the terms as may be approved by the Minister and shall be issued in the form of an entry in the records of the Bank under subsection 8A(3). Refusal of application 7. Any application to take up stock issued under this Act may be refused by the Secretary General to the Treasury without reason assigned. 12 Laws of Malaysia ACT 637 Transfer of stock 8. Every stock, or any part of it, may be transferred in accordance with this Act and in no other manner. Participating investing institutions and primary investing institutions 8A. (1) The Bank may authorize, in writing, any financial institution to be a participating investing institution. (2) The Bank may appoint, in writing, any participating investing institution to be a primary investing institution. (3) Only a primary investing institution may take up stock from the Bank, and the Bank shall maintain an entry in its records of every such stock. (4) A participating investing institution shall maintain a single account with the Bank— (a) of all transfers of stock to itself by another participating investing institution or by itself to another participating investing institution; and (b) where the participating investing institution has been appointed a primary investing institution under subsection (2), there shall be included in the single account mentioned in paragraph (a) an account of all its stock taken up under subsection (3). (5) The Bank shall— (a) pay to the participating investing institution interest on each of its stock standing in its account under subsection (4) on the date the interest becomes payable under section 9; and Loan (Local) 13 (b) repay to the institution each of the stock standing in its account under subsection (4) on the date the stock becomes redeemable under section 11, by the means and in the manner as may be determined by the Bank. (6) The Bank shall maintain records of the account of a participating investing institution, and the records shall be the sole and conclusive evidence of the state of the account, and of all the particulars and details of it, and it shall be binding on the Bank, the participating investing institution and on any other person having any interest in it. Depository institutions 8B. (1) The Bank may authorize, in writing, any participating investing institution to be a depository institution. (2) Any person, other than a participating investing institution, desiring either to make or take a transfer of a stock shall do so only through a depository institution. (3) A depository institution shall maintain with the Bank, in addition to the account maintained by it under subsection 8A(4), a separate single account in respect of all transfers effected through it under subsection (2). (4) The Bank shall— (a) pay to a depository institution the interest due on the principal moneys represented by each of the stock standing in the depository institution’s account under subsection (3) on the date the interest becomes payable under section 9; and (b) repay to the institution the principal moneys represented by the stock standing in its account under subsection (3) on the date it becomes redeemable under section 11, 14 Laws of Malaysia ACT 637 by the means and in the manner as may be determined by the Bank. (5) A depository institution shall maintain a customer’s account in respect of every transferor and transferee who is a party to any transfer effected through the depository institution under subsection (2), except where a customer’s account in respect of a transferee is maintained by another depository institution, in which case the first mentioned depository institution shall have the stock transferred into the transferee’s account with the second mentioned depository institution. (6) Where a transfer of stock is made by any person under subse