PART IV - ISSUES OF SECURITIES AND TAKE-OVERS AND MERGERS DIVISION 4 - DEBENTURES Subdivision 1 - Trust deeds, duties of trustees, borrowers, etc.
Section 77. Duty of borrower where prospectus states purpose or project for which moneys are to be applied.
(1) Where the prospectus relating to a debenture contains a statement as to the particular purpose or project for which amounts secured or payable under the debenture to which the trust deed relates are to be applied and the borrower intends to change the purpose or project for which such amounts are to be applied after the debenture has been issued to debenture holders, the borrower shall-
(a) notify the Commission; and
(b) give a notice in writing that is approved by the Commission under subsection (2) to each debenture holder.
(2) A notice referred to in subsection (1) may be approved by the Commission if the notice-
(a) specifies the purpose or project for which amounts secured or payable under the debenture would in fact be applied;
(b) offers to repay such amounts to each debenture holder; and
(c) contains such information and particulars as may be approved by the Commission.
(3) The borrower shall not be liable to repay the amount secured or payable under the debenture issued by the borrower under subsection (1) where the debenture holder does not demand in writing for the repayment of such amounts within fourteen days after receipt of the notice or such longer period as may be specified in the notice.
(4) Where the Commission is of the opinion that the new purpose or project is contrary to the approval or to the terms or conditions of the approval granted under subsection 32(5) , the Commission may disallow the borrower from pursuing the new purpose or project for which amounts secured or payable under the debenture are to be applied and direct repayment of such amounts to each person from whom such amounts were received.
(5) Where a borrower receives a notice referred to in paragraph 82(1)(m) , subsection 89(4) or 89(5) , the borrower shall be liable to repay the amount secured or payable under the debenture issued by the borrower to any person to whom such amounts are owed or from whom such amounts were received.
(6) Subject to subsection (4) , a notice given by the borrower under paragraph (1)(b) shall have effect as if the purpose or project specified in the notice is the purpose or project specified in the prospectus.
(7) Notwithstanding the provisions of subsection (1) , the Commission may, on the written application of any borrower or of its own accord, make an order relieving such person from, or approving any variation of, the requirements of this section.
(8) A borrower who contravenes this section shall be guilty of an offence and shall on conviction be punished with a fine not exceeding three million ringgit or imprisonment for a term not exceeding ten years or both.