#2: Definition of Foreign Proceedings<\/strong><\/h3>\nThe Bill mirrors the Model Law in defining \u201cforeign proceedings\u201d as a \u201ccollective judicial or administrative proceedings in a foreign State, including interim proceedings, under the law relating to insolvency in which proceedings the property and affairs of the debtor are subject to control or supervision by a foreign court, for the purposes of reorganization or liquidation\u201d,<\/p>\n
Unlike Singapore\u2019s Model Law, Malaysia does not use the wider phrase of \u201claw relating to insolvency and the adjustment of debt<\/strong>\u201d.<\/p>\nAs a result, Malaysian courts will need to interpret whether non-insolvency restructurings fall within this definition. These proceedings may include foreign schemes of arrangement, solvent liquidations or just and equitable liquidations, or other forms of rehabilitation.<\/p>\n
That said, the terms of \u201cMalaysian insolvency law\u201d and \u201cMalaysian insolvency office-holder\u201d in Clause 2(1) of the Bill adopt a wide definition to include voluntary winding up, corporate voluntary arrangement, judicial management, and schemes of arrangement.<\/p>\n
Therefore, there is support for a similar wide reading for \u201cforeign proceedings\u201d.<\/p>\n
#3: No Reciprocity Requirement<\/strong><\/h3>\nMalaysia has chosen not to impose a reciprocity requirement.<\/p>\n
This liberal approach promotes international cooperation and enhances Malaysia\u2019s accessibility as a venue for cross-border insolvency assistance.<\/p>\n
#4: Carve-Outs and Regulatory Safeguards<\/strong><\/h3>\nThe Bill includes two levels of carve-outs, set out in the Schedule of the Bill.<\/p>\n
Part I of the Schedule sets out complete carve-outs.<\/p>\n
The Bill shall not apply to any proceedings concerning any person specified in Part I of the Schedule. In summary:<\/p>\n
\n- Certain licensed entities and institutions under the Financial Services Act 2013, the Islamic Financial Services Act 2013, the Development Financial Institutions Act 2002, and the Malaysia Deposit Insurance Corporation Act 2011.<\/li>\n
- Any exchange holdings company and its subsidiaries as approved under the Capital Markets and Services Act 2007.<\/li>\n
- The central depository as approved under the Securities Industry (Central Depositories) Act 1991.<\/li>\n
- Licensed banks, insurers and various licensed entities under the Labuan Financial Services and Securities Act 2010 and the Labuan Islamic Financial Services and Securities Act 2010.<\/li>\n<\/ul>\n
Part II of the Schedule provisions cater for certain limits.<\/strong> Even if the Bill applies, courts are prohibited from granting recognition or relief if doing so would interfere with certain regulatory measures issued by the Central Bank of Malaysia, the Securities Commission Malaysia, or the Labuan Financial Services Authority.<\/p>\nThese carve-outs preserve regulatory oversight and financial stability.<\/p>\n
#5: Recognition of Foreign Proceedings<\/strong><\/h3>\nA foreign representative may apply under Clause 15 (equivalent to Article 15 of the Model Law) for recognition of foreign proceedings, supported by specified documents.<\/p>\n
A foreign representative is essentially a person or body authorised in foreign proceedings to administer the reorganization or liquidation of a debtor\u2019s property or affairs.<\/p>\n
If the foreign proceedings are recognised:<\/p>\n
\n- The proceedings are categorised as foreign main or foreign non-main proceedings. (Clause 17(3) of the Bill).<\/li>\n
- The foreign representative may apply for relief and engage with local proceedings (Clauses 17, 21, 24).<\/li>\n<\/ul>\n
#6: Direct Access for Foreign Representatives<\/strong><\/h3>\nForeign representatives have direct standing to apply to the Malaysian courts (Clause 9(1) of the Bill).<\/p>\n
There is no need for diplomatic channels or letters of request, ensuring speed and efficiency in cross-border recognition and cooperation.<\/p>\n
Foreign representatives may either apply in Court in person or apply through a Malaysian lawyer.<\/p>\n
#7: Automatic Relief on Recognition of Foreign Main Proceedings\u00a0<\/strong><\/h3>\nWhere a proceeding is recognised as a foreign main proceeding (i.e. the debtor\u2019s centre of main interests lies in that foreign jurisdiction), a form of automatic moratorium applies (Clause 20 of the Bill).<\/p>\n
This includes:<\/p>\n
\n- Stay of legal proceedings;<\/li>\n
- Suspension of enforcement and asset transfers.<\/li>\n<\/ul>\n
The scope of this stay mirrors a Malaysian winding-up (Clause 20(2) of the Bill) and includes carve-outs for secured creditors, hire-purchase rights, regulatory enforcement, and set-offs (Clause 20(3)\u2013(4) of the Bill).<\/p>\n
#8: Judicial Cooperation and Communication\u00a0<\/strong><\/h3>\nThe Bill empowers Malaysian courts to:<\/p>\n
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