MALAYSIA Law and Practice Contributed by: Shelina Razaly Wahi and Vincent Chan Siew Onn, Abdullah Chan & Co
• a charge over a bank account. 3.2.2 Types of Security Not Available
the Companies Commission of Malaysia (CCM) or the LFSA, as the case may be, in order to be valid against a liquidator and third parties. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments A security assignment would need to be stamped in order to be admissible as evidence in court. If the assignment contains a power of attorney, then the assignment also needs to comply with the provisions of the Powers of Attorney Act 1949. Please see 2.7.2 Assignment/Novation of Leases Under Foreign Laws for legal assignments. 3.2.8 Domestic Law Security Instruments An English or New York law-governed security assign - ment would give rise to a charge which may then be registered against the domestic borrower – at either the CCM or the LFSA, as the case may be. Cape Town filings may be made without domestic law security instruments and/or local law filings. The International Interests in Mobile Equipment (Aircraft) Act 2006 supersedes any conflicting or inconsistent provisions of any other written law to the extent of a conflict or inconsistency. An ad valorem stamp duty is payable on mortgages and charges. The stamp duty on powers of attorney is MYR10 and the fees to register at the High Court starts at MYR35. The mortgage/charge registration fee is MYR300 or USD100 (for a Labuan company). The fee to register a mortgage with CAAM is MYR2,000. If the security assignment of a domestic law security interest creates a charge, then the charge may be reg - istered against the domestic party at the CCM or the LFSA, as the case may be. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines Novations and assignments over aircraft and/or engines are recognised. For registration purposes, any existing/past security interests are typically dis - 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
Security may be granted over an aircraft or related collateral such as engines, warranties or insurances. However, not necessarily every type of security is reg - istrable. In Malaysia, there is a no separate register for engines, warranties or insurances – however, assignments and charges are registrable against corporate entities, and they will be valid against a liquidator and third parties. 3.2.3 Trust/Trustee Concepts The concept of a trust and the role of a security trustee are recognised in Malaysia. A parallel debt structure is not common because it establishes distinct debt obligations between the borrower and the security agent, with potential extra costs such as stamp duty. While a joint and several creditor structure is feasible, the preferred method is to implement a security agency or trust arrangement. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee A borrower may assign to a security trustee pursuant to a security assignment or a mortgage its rights to the aircraft or under an aircraft lease (including in relation to insurances). 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations Please see 2.7.2 Assignment/Novation of Leases Under Foreign Laws . It is possible to assign the rights and benefits only without also assigning the obligations of the lessor under an aircraft lease. 3.2.6 Choice of Foreign Law A security assignment or a guarantee may be gov - erned by English or New York law, and the relevant contracts/documents would need to be stamped in order to be enforceable. A security assignment would also typically be regis - tered as a charge against the domestic party, at either
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