MALAYSIA Law and Practice Contributed by: Will Fung, Penelope Gan and Kee Shao Yee, Richard Wee Chambers
status. AML obligations apply across all structures, and care must be taken to ensure the activity does not fall within the MLA or consumer credit regimes administered by KPKT. 2.5 Club Lending and Antitrust In Malaysia, club lending by private credit providers has, to the best of publicly available information, not raised material antitrust concerns, as the private credit market remains nascent and such structures are infre - quent compared to traditional bank syndications. The Competition Act 2010 prohibits anti-competitive agreements, including potential collusion on pricing, terms, or market allocation, but club deals in lending are generally viewed as pro-competitive when they enable larger transactions or risk-sharing without restricting broader market access. No recent cases or guidelines from the Malaysia Competition Commis - sion (MyCC) specifically target club lending in private credit, though providers must ensure arrangements do not inadvertently form cartels, such as through information-sharing that could influence independent pricing decisions. 3. Structuring and Documentation 3.1 Common Structures Private credit transactions in Malaysia are typically structured as bilateral or club term loans for growth, refinancing or project financing, with tenors of three to seven years and either bullet or amortising repay - ments. Venture debt is increasingly used by technol - ogy and growth-stage companies, often incorporating equity-linked features. Shariah-compliant structures are also common, particularly where Islamic capital pools are involved. Revolving facilities are available but less common than term loans and are generally used for working capital by established mid-market borrowers. Delayed or staged draw facilities are used in acquisition and project contexts, allowing drawdowns upon milestone satisfaction. Structuring has been influenced by greater foreign exchange flexibility, enabling more cross-border and
hybrid offshore-onshore arrangements. Tighter bank lending, interest rate volatility and regional fundraising pressures have also encouraged more flexible repay - ment profiles. 3.2 Key Documentation Private credit transactions are centred on a facility agreement setting out pricing, tenor, covenants and events of default. Documentation is typically bespoke and commercially flexible. Security documents commonly include debentures over assets, share charges, assignments of receiv - ables and guarantees. Ancillary documents include fee letters and powers of attorney. Cross-border deals usually require Malaysian legal opinions. Shariah- compliant structures are also widely used. Agreements among lenders are negotiated on a deal- specific basis, mainly in club or layered structures. Intercreditor agreements regulate priority, enforce - ment and voting. In simpler deals, these mechanics may be included in the facility agreement. First out–last out structures are not common in Malay - sia and are generally limited to larger or more complex financings. The market continues to favour straightfor - ward senior secured or senior-mezzanine structures. Foreign exchange flexibility has led to more detailed provisions on currency denomination, drawdowns, and repatriation in cross-border transactions. Increased regulatory focus on consumer credit has also driven clearer drafting to distinguish corporate lending from regulated consumer activity. 3.3 Restrictions on Foreign Direct Lenders As noted in 2.1 Licensing and Regulatory Approval , cross-border private credit extended by foreign lend - ers to Malaysian corporate borrowers is generally not subject to licensing, provided it does not involve onshore banking or systematic moneylending activi - ties in Malaysia. The main regulatory constraints arise under the BNM’s FEP Notices. Foreign currency lending to Malaysian residents is permitted up to an aggregate equiva - lent of MYR100 million on a corporate group basis
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