PART IV - ISSUES OF SECURITIES AND TAKE-OVERS AND MERGERS DIVISION 4 - DEBENTURES Subdivision 1 - Trust deeds, duties of trustees, borrowers, etc.
Section 69.Persons who can be trustees.
(1) A trustee shall be-
(a) a company registered as a trust company under the Trust Companies Act 1949 [Act 100]; or
(b) a corporation that is a public company under the Companies Act 1965 or under the laws of any other country which has been allowed by the Commission to act as trustee for the purposes of this Act.
(2) A person shall not be eligible to be appointed or to act as trustee for debenture holders without the approval of the Commission if the person-
(a) is a shareholder who beneficially holds shares in the borrower;
(b) is beneficially entitled to moneys owed by the borrower to it;
(c) has entered into a guarantee in respect of the amount secured or payable under the debenture; or
(d) is a related corporation of-
(i) the persons referred to in paragraphs (a) to (c) ; or
(ii) the borrower.
(3) An application made by a corporation referred to in paragraph (1)(b) or an application for approval made by a person referred to in subsection (2) shall be made to the Commission in accordance with such procedure or other requirement as may be specified by the Commission.
(4) Notwithstanding the provisions of subsection (2) , a person is not prevented from being appointed or from acting as trustee by reason only that-
(a) the borrower owes to the trustee or any related corporation of the trustee any moneys, so long as such moneys are-
(i) moneys that do not, at the time of the appointment or at any time within a period of three months after the debentures are first offered for subscription or purchase or in respect of which an invitation to subscribe for or purchase is made, exceed one-tenth of the amount of the debentures proposed to be issued within that period and do not, at any time after the expiration of that period, exceed one-tenth of the amount the borrower owes to the holders of the debentures; or
(ii) moneys to which the trustee or any related corporation of the trustee is entitled to as trustee for holders of any debenture of the borrower, in accordance with the terms, provisions or covenants of the debenture or the trust deed; or
(b) the trustee or a related corporation of the trustee, despite being beneficial owners in the shares of the borrower, do not have the right to exercise more than one-twentieth of the voting power at any general meeting of the borrower.
(5) Where an application has been made to the Commission under subsection (3) , the Commission may, subject to such terms and conditions as it thinks fit-
(a) allow a corporation to act as trustee for the purposes of this Act; or
(b) approve a person to be appointed or to act as trustee.
(6) In exercising its discretion whether to allow a corporation to act as a trustee under paragraph (5)(a) or approve a person to be appointed or to act as trustee under paragraph (5)(b) , the Commission shall have regard to-
(a) the interests of holders of any debenture; and
(b) the ability of the trustee to safeguard the interests of such debenture holders as required by the provisions and covenants of the trust deed and the provisions of this Act.
(7) The Commission may revoke a decision to allow a corporation to act as trustee or an approval of a person to be appointed or to act as trustee under subsection (5) where the trustee has failed to comply with any term or condition imposed under subsection (5) or has contravened any provision of this Act.
(8) A trustee who-
(a) contravenes subsection (1) or (2) ; or
(b) fails to comply with a term or condition imposed by the Commission under subsection (5) ,
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 three years or to both.