ACT 125

COMPANIES ACT 1965 (REVISED - 1973)

PART IV - SHARES, DEBENTURES AND CHARGES

DIVISION 5 - INTERESTS OTHER THAN SHARES, DEBENTURES, ETC.

Section 88. Covenants to be included in deeds.

(1) A deed shall, for the purposes of paragraph 86(2)(a), contain covenants to the following effect, namely: (a) a covenant binding the management company that it will use its best endeavours to carry on and conduct its business in a proper and efficient manner and to ensure that any undertaking, scheme or enterprise to which the deed relates is carried on and conducted in a proper and efficient manner; (b) covenants binding the management company— (i) that the management company will pay to the trustee or representative, within thirty days after their receipt by the company, any moneys that, under the deed, are payable by the company to the trustee or representative; (ii) that the management company will not sell any interest to which the deed relates otherwise than at a price calculated in accordance with the deed; (iii) that the management company will, at the request of the holder of an interest, purchase that interest from the holder and that the purchase price will be a price calculated in accordance with the deed; and (iv) that the management company will not, without the approval of the trustee or representative, publish or cause to be published any advertisement, circular or other document containing any statement with respect to the sale price of interests to which the deed relates or the yield therefrom or containing any invitation to buy interests; (c) covenants binding the trustee or representative that it will— (i) exercise all due diligence and vigilance in carrying out its functions and duties and in watching the rights and interests of the holders of the interests to which the deed relates; (ii) keep or cause to be kept proper books of account in relation to those interests; (iii) cause those accounts to be audited at the end of each financial year by an approved company auditor; and (iv) send or cause to be sent by post a statement of the accounts with the report of the auditor thereon within two months of the end of the financial year, to each of the holders of those interests; (d) a covenant binding the management company and the trustee or representative, respectively, that no moneys available for investment under the deed will be invested in or lent to the management company, or to the trustee or representative, or to any company (other than a prescribed corporation within the meaning of subsection 38(6)) which is by virtue of section 6 deemed to be related to the management company or to the trustee or representative; (e) a covenant binding the management company that, to the same extent as if the trustee or representative were a director of the company, the company will— (i) make available to the trustee or representative, or to any approved company auditor appointed by it, for inspection the whole of the books of the company whether kept at the registered office or elsewhere; and (ii) give to the trustee or representative or to any such auditor such oral or written information as it or he requires with respect to all matters relating to the undertaking, scheme or enterprise of the company or any property (whether acquired before or after the date of the deed) of the company or otherwise relating to the affairs thereof; (f) a covenant binding the management company that the management company will make available, or ensure that there is made available, to the trustee or representative such details as the trustee or representative requires with respect to all matters relating to the undertaking, scheme or enterprise to which the deed relates; (g) as from a day to be fixed by the Minister by notice published in the Gazette, covenants binding the management company and the trustee or representative respectively, that the management company or the trustee or representative, as the case may be, will not exercise the right to vote in respect of any shares relating to the interests to which the deed relates held by the management company, trustee or representative at any election for directors of a corporation whose shares are so held, without the consent of the majority of the holders of the interests to which the deed relates present in person and voting given at a meeting of those holders summoned in the manner provided for in paragraph (h)(i) and (ii) for the purpose of authorizing the exercise of the right at the next election; and (h) a covenant binding the management company that the management company will within twenty-one days after an application is delivered to the company at its registered office, being an application by not less than fifty or onetenth in number, whichever is the less, of the holders of the interests to which the deeds relates— (i) by sending notice by post of the proposed meeting at least seven days before the proposed meeting to each of those holders at his last known address or in the case of joint holders to the joint holder whose name stands first in the company's records; and (ii) by publishing at least fourteen days before the proposed meeting an advertisement giving notice of the meeting in a newspaper circulating generally throughout Malaysia, summon a meeting of the holders for the purpose of laying before the meeting the accounts and balance sheet which were laid before the last preceding annual general meeting of the management company or the last audited statement of accounts of the trustee or representative, and for the purpose of giving to the trustee or representative such directions as the meeting thinks proper. (2) A meeting summoned for the purposes of a covenant contained in a deed in pursuance of paragraph (1)(g) or (h) shall be held at the time and place specified in the notice and advertisement, being a time not later than two months after the giving of the notice, under the chairmanship of— (a) such person as is appointed in that behalf by the holders of the interests to which the deed relates present at the meeting; or (b) where no such appointment is made, a nominee of the trustee or representative approved by the Registrar, and shall be conducted in accordance with the deed or, so far as the deed makes no provision, as directed by the chairman of the meeting. (3) Notwithstanding anything to the contrary contained in an approved deed, the undertaking, scheme, enterprise, contract or arrangement to which the deed relates may be continued in operation or existence if it appears to be in the interests of the holders of the interests to which the deed relates during such period as is or such periods as are agreed upon by the trustee or representative and the management company. (4) Where a direction is given to the trustee or representative at a meeting summoned pursuant to a covenant complying with paragraph (1)(h), the trustee or representative— (a) shall comply with the direction unless it is inconsistent with the deed or this Act; and (b) shall not be liable for anything done or omitted to be done by it by reason only of its following that direction. (5) Where the trustee or representative is of the opinion that any direction so given is inconsistent with the deed or this Act or is otherwise objectionable, the trustee or representative may apply to the Court for an order confirming, setting aside or varying the direction and the Court may make such order as it thinks fit.