MALAYSIA Law and Practice Contributed by: Dilys Tan, Adnan Sundra & Low
3. Documentation 3.1 Bankruptcy-Remote Transfer of Financial Assets The documentation used to effect bankruptcy- remote transfers of assets to the SPE is typi - cally the sale and purchase agreement, which would, at the very least, contain the following provisions. • Description of the parties to the agreement. • Description of the assets to be transferred. • The intention of the parties to effect a true sale of the assets. • The transfer of the seller’s rights in and to the assets to the SPE. • The purchase consideration payable by the SPE to the seller in consideration of the sale of the rights in and to the assets. • The conditions precedent to be fulfilled prior to completion of the sale. • The representations, warranties and cov - enants by the seller in respect of itself and the assets. • The undertaking by the seller to repurchase the assets in the following circumstances: (a) where the assets have declined to a level that renders the asset securitisation trans - action uneconomical to carry on, under which the seller may retain a first right of refusal to repurchase such assets at a fair value; or (b) where the seller is under an obligation to do so when it has breached any condi - tion, representation or warranty in respect of the securitisation transaction. • The declaration of trust by the seller in favour of the SPE of any receivables received by the seller on or after the completion date of the transfer.
In relation to servicers of real estate assets that entail the management of property, the servicer would need to: • have a property manager licence under the Valuers, Appraisers, Estate Agents and Prop - erty Managers Act 1981 of Malaysia; or • appoint the relevant service provider, who is a licensed property manager under such Act, to perform and carry out such managerial func - tions accordingly. 2.6 Investors Investors of securitisation transactions include financial institutions and investment funds. Investors are primarily involved in the provision of funds to the originator via the SPE in a secu - ritisation transaction. 2.7 Bond/Note Trustees A bond/sukuk trustee is required for a securitisa - tion transaction, and the role is typically under - taken by trust companies registered with the SC. The bond/sukuk trustee’s role is primarily to hold the benefit of the covenants and rights in and to the assets on behalf of the investors, and to enforce the rights of the investors in and to the ABS. 2.8 Security Trustees/Agents A security trustee/agent holds the benefit and rights of the investors in and to the security on trust for the secured investors, and will generally enforce such rights upon the instructions of such investors following the declaration of an event of default/dissolution event. A security trustee/agent role can be undertaken by a trust company registered with the SC (as a security trustee) or an investment bank (as a security agent).
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