MALAYSIA Law and Practice Contributed by: Will Fung, Penelope Gan and Kee Shao Yee, Richard Wee Chambers
Foreign lenders may take security over Malaysian assets without a local licence, subject to compliance with perfection requirements under the CA 2016 and, where applicable, the National Land Code (NLC), including registration and any required state consent for land security. 2.2 Regulators of Private Credit Funds Malaysia does not have a single regulator dedicated exclusively to “private credit”. Regulatory oversight is activity-based, and the applicable authority depends on the legal structure, counterparties, and instruments involved. BNM regulates licensed financial institutions under the FSA and the IFSA, including banks, insurers, payment system operators, and approved intermediaries. BNM administers FEP Notices, which are a key considera - tion for cross-border private credit funding, repayment flows, guarantees, and security arrangements. The SC regulates capital market activities under the Capital Markets and Services Act 2007 (CMSA). Pri - vate credit activity falls within the SC’s jurisdiction where it is conducted through regulated fund struc - tures, involves licensed fund managers, or constitutes the offering of regulated capital market products. Pri - vate credit funds structured as wholesale funds or managed by licensed entities are typically subject to SC oversight, even where lending is conducted on a bilateral or non-public basis. The Companies Commission of Malaysia (CCM) is responsible for corporate registration and statutory fil - ings under the CA 2016. In private credit transactions, CCM oversight is relevant to the incorporation of bor - rower and SPV entities, as well as the registration of charges over company assets, including debentures and fixed or floating charges. Security over real property is regulated at the state level under the NLC. Land offices and relevant state authorities oversee the registration and perfection of land charges, consent requirements, and restrictions in interest affecting property-backed private credit transactions.
The Ministry of Housing and Local Government (KPKT) regulates the business of moneylending under the Moneylenders Act 1951 (MLA). Private credit pro - viders that extend credit directly to individuals or non- excluded borrowers, outside permitted exemptions, may fall within the moneylending regime and require licensing. Structuring is therefore critical to avoid inad - vertent classification as regulated moneylending. 2.3 Restrictions on Foreign Investments Malaysia does not impose specific foreign ownership caps on private credit funds. Foreign investors may participate, subject to compliance with SC capital markets requirements and the BNM’s FEP Notices. There are no foreign ownership caps specific to pri - vate credit structures. Foreign exchange rules are generally liberal and invest - ment and repatriation of returns are generally permit - ted, subject to payment compliance with applicable classification, currency, and reporting requirements under the FEP Notices. In practice, the key focus is structuring to avoid triggering licensing under the MLA and ensuring proper perfection of security under the CA and, where relevant, the NLC. 2.4 Compliance and Reporting Requirements Malaysia does not operate a private credit-specific regulatory regime. Compliance and reporting obliga - tions are activity-based and depend on the structure adopted. For foreign private credit providers lending cross-border, no banking licence or routine report - ing is generally required, provided the activity does not amount to onshore banking or regulated money - lending. The primary compliance framework arises under the BNM’s FEP Notices, which regulate foreign exchange flows, including foreign currency borrowing limits, restrictions on Ringgit lending by non-residents, and permitted drawdown and repatriation mechanics. Where private credit is deployed through onshore fund structures or licensed managers, the regime admin - istered by the SC applies, including reporting, dis - closure, audit and record-keeping obligations at the fund management level. Transactional compliance requirements, such as registration of charges with CCM and land-related registration or consent require - ments under the NLC, apply regardless of licensing
133 CHAMBERS.COM
Powered by FlippingBook