Interest Scheme Act 2016September 2016
by , Ng Vi Kee
Interest schemes are currently regulated under Division 5 (Interests Other than Shares, Debentures, Etc) of Part IV of the Companies Act 1965 but are excluded from the new Companies Act 2016. The Interest Schemes Bill 2015 has received Royal Assent on 31 August 2016 and has been gazetted as the Interest Schemes Act 2016 (“Interest Schemes Act”) on 15 September 2016. Neither the new Companies Act 2016 nor the Interest Schemes Act has been brought into force as at the date of this article. Upon the Interest Schemes Act coming into effect, interest schemes would be regulated under a separate legislation. The Interest Schemes Act seeks to regulate the registration, administration and dissolution of schemes in Malaysia.
Key points to note include:
- “Interest” means any interest or right to participate, whether enforceable or not and whether actual, prospective or contingent whether in Malaysia or elsewhere in any (1) investment scheme; (2) time sharing scheme; or (3) recreational membership scheme, whether or not the interest or right is evidenced by a formal document or relates to a physical asset.
- “Scheme” includes any contract, arrangement, undertaking, enterprise, programmes or plans of actions relating to an investment scheme, a time-sharing scheme or a recreational membership scheme.
- Only a management company (which must be company incorporated under the Companies Act 2016, when it comes into force, or corresponding previous written law) may issue or offer to the public for subscription or purchase of or invite the public to subscribe for or purchase any interest.
- A scheme must be registered with the Companies Commission of Malaysia prior to any issue or offer to the public for the subscription or purchase of or invitation to the public to subscribe for or purchase any interest.
- A scheme may be registered as a premium scheme, a small scheme or a foreign scheme.
- The application for registration of a scheme must include, among others, a prospectus and trust deed for a premium scheme and a foreign scheme or a product disclosure statement and contractual agreement for a small scheme.
- The trust deed or contractual agreement must be approved by the Registrar (the Chief Executive Officer of the Companies Commission of Malaysia).
- A trustee must be appointed prior to registration of a scheme to act for the interest holders. The appointment would be subject to the approval of the Registrar.
- A prospectus and product disclosure statement must not be issued, circulated or distributed unless the prospectus or product disclosure statement (1) has been registered by the Registrar; (2) comply with the provisions of the Interest Schemes Act; and (3) lodged with the Registrar prior to the date of issue.
- A scheme may be wound up in any of the following circumstances: (1) as provided in the trust deed or contractual agreement of the scheme; (2) with approval by at least 75% of the interest holders of the scheme or a higher percentage specified in the trust deed or contractual agreement; (3) if the management company considers that the purpose of the scheme has been accomplished or cannot accomplished subject to fulfilment of the requirements in section 64 of the Interest Schemes Act; or (4) with a winding up order by the Court.