PART A OVERVIEW INTRODUCTION APPLICABILITY... 1 PART B LEGAL PROVISIONS LEGAL PROVISIONS (Please refer to the BAFIA for the

Transcription

1 PART A OVERVIEW INTRODUCTION APPLICABILITY... 1 PART B LEGAL PROVISIONS LEGAL PROVISIONS (Please refer to the BAFIA for the full version of the law)... 2 PART C POLICY REQUIREMENTS POLICY REQUIREMENTS STAFFING... 6 PART D APPLICATION PROCEDURES APPLICATION TO ESTABLISH A REPRESENTATIVE OFFICE APPLICATION TO APPOINT AND REAPPOINT A CHIEF REPRESENTATIVE REPORTING REQUIREMENTS... 9 PART F PENALTY FOR NON-COMPLIANCE PENALTY FOR NON-COMPLIANCE PART G APPENDICES APPENDICES... 11

2 1/11 PART A OVERVIEW 1. INTRODUCTION 1.1 These guidelines serve as a guide for foreign institutions intending to establish representative offices in Malaysia. 1.2 Foreign institutions intending to establish representative offices in Malaysia must obtain the prior written approval from Bank Negara Malaysia (or the Bank ). 1.3 The representative offices of foreign institutions are not required to pay any fees to Bank Negara Malaysia for the establishment of the representative offices. 1.4 The prior written consent of the Minister of Finance is required for the representative offices to use the word bank or its equivalent or any other name prohibited under Section 15 of the Banking and Financial Institutions Act 1989 (BAFIA), in their names. 2. APPLICABILITY 2.1 These guidelines are applicable to all foreign institutions which intend to establish representative offices in Malaysia.

3 2/11 PART B LEGAL PROVISIONS 3. LEGAL PROVISIONS (Please refer to the BAFIA for the full version of the law) 3.1 Foreign institution as defined under Section 2 of the BAFIA means a person, not being a licensed institution or a scheduled institution, which carries on any business outside Malaysia, which corresponds, or is similar to the business of a licensed institution or scheduled institution such as the following business: Banking business Finance company business Merchant banking business Discount house business Money broking business Building credit business finance business Factoring business Leasing business 3.2 The establishment and maintenance of representative offices in Malaysia by foreign institutions are subject to the relevant provisions of PART III of the BAFIA. 3.3 Section 20 (1) of the BAFIA prohibits any foreign institution from establishing a representative office in Malaysia unless it has: Obtained the written approval of Bank Negara Malaysia to set up such representative office; and Complied with the requirement of Section 21(1) of the BAFIA and has obtained a written acknowledgement from Bank Negara Malaysia in respect of such compliance. 1 Merchant banking business has been expanded to include investment banking business under Section 33(1)(b) of the BAFIA.

4 3/ Section 20 (2) of the BAFIA further prohibits the foreign institution, from carrying out businesses which corresponds or is similar to the business of any licensed or scheduled institution through its representative office in Malaysia. 3.5 Section 20 (3) of the BAFIA empowers Bank Negara Malaysia to specify the activities or business that may be carried out by the representative office. 3.6 Section 21 (1) of the BAFIA requires the submission to Bank Negara Malaysia of documents and information as specified in Section 5 (1) (a) to (c) of the BAFIA. 3.7 Pursuant to Section 22 of the BAFIA, a foreign institution which is subject to Section 20 (1) of the BAFIA shall within three months after making any amendment or alteration to its constituent documents submit to Bank Negara Malaysia particulars in writing of such amendment or alteration duly verified by a statutory declaration made by a director of the institution. 3.8 Section 15(1) of the BAFIA requires the representative office to obtain the prior written consent from the Minister of Finance for any use of the word bank or any other name prohibited under the said Section in its name.

5 4/11 PART C POLICY REQUIREMENTS 4. POLICY REQUIREMENTS 4.1 Eligibility Criteria The applicant foreign institution intending to establish a representative office in Malaysia must fulfil the following criteria: The applicant is a reputable institution in the home country The applicant must receive support from its Central Bank or the home supervisory authority for the establishment of the representative office The applicant s presence in Malaysia would enhance communication with home investors and facilitate their understanding about Malaysia The applicant s presence in Malaysia would facilitate and promote trade and investment between Malaysia and the applicant s home country The establishment of the representative office in Malaysia would support the Malaysian Government s efforts on economic cooperation regionally and globally. 4.2 Permissible Activities of Representative Offices of Foreign Institutions in Malaysia The representative offices of foreign institutions in Malaysia are allowed to carry out the following activities: Establishing and maintaining contacts and relationships with the Malaysian Government departments and statutory authorities; Seeking opportunities for their respective institutions to provide and participate in the management and syndication of foreign currency international loan/bond issues to the Malaysian Government and statutory authorities;

6 5/ Identifying international project tenders issued by the Malaysian Government and/or statutory authorities and private sector companies for clients of their respective institutions and providing liaison and assistance to these clients in their bids for such projects; Maintaining and servicing correspondent relationships with local financial institutions, including arranging for correspondent bankers to attend training courses, seminars and conferences organised by their respective institutions or related corporations; Introducing local banks to clients of their respective institutions which have operations in Malaysia; Identifying Malaysian companies which require offshore financing and assisting these companies to secure such financing; Gathering and disseminating trade, economic and financial information or advice on Malaysia to overseas interests and assisting those who are keen to invest in Malaysia or trade with Malaysian concerns, and vice versa; Providing information or advice to Malaysian exporters on the market potential in countries where their respective institutions have representation and assisting in finding new markets through the services of their international offices; Introducing clients of their respective institutions to Malaysian companies with a view to establishing jointventure companies in Malaysia; Arranging and liaising the visits of personnel of their respective institutions or overseas offices and their major clients to Malaysia; Liaising in trade mission or expositions between Malaysia and home countries; and

7 6/ Serving as a point of contact and liaison for any problems or enquiries that may arise from business dealings between Malaysian companies and the offices of the foreign institution overseas In addition, the Representative Offices are allowed to perform the following functions:- Sign documents on behalf of their respective institutions or overseas offices under power of attorney; and Sit on the boards of joint-venture companies in which their respective institutions have interests. 5. STAFFING 5.1 As the representative offices are allowed to conduct only limited activities, staffing should be kept to a minimum. 5.2 Each representative office is allowed to employ only one expatriate staff at any point of time.

8 7/11 PART D APPLICATION PROCEDURES 6. APPLICATION TO ESTABLISH A REPRESENTATIVE OFFICE 6.1 A foreign institution applying to set up a representative office in Malaysia is required to complete Form BNM/RO and submit the completed form to Bank Negara Malaysia, together with the following documents: A copy of the memorandum and articles of association or other constituent documents under which the applicant is established, duly verified by a statutory declaration made by a director of the applicant; A copy of the latest audited balance sheet of the applicant; and A letter of approval from the home supervisory authority of the applicant on its proposed establishment of a representative office in Malaysia to the address below: The Director Bank Negara Malaysia P.O. Box Kuala Lumpur MALAYSIA 6.2 In addition to the above, Bank Negara Malaysia may require the applicant to submit additional documents or information deemed necessary to facilitate the assessment and processing of the application.

9 8/11 7. APPLICATION TO APPOINT AND REAPPOINT A CHIEF REPRESENTATIVE 7.1 A representative office is required to appoint a Chief Representative to manage the representative office on a full time basis. 7.2 The appointment of the Chief Representative is valid for a term of two years. 7.3 The application to appoint a Chief Representative must be accompanied by his curriculum vitae. 7.4 If the proposed Chief Representative is a non-malaysian citizen, the foreign institution or the representative office is also required to complete Form BNM/Expat and submit the completed form to Bank Negara Malaysia. This form is to facilitate the issuance of a work permit by the Malaysian Immigration.

10 9/11 PART E REPORTING REQUIREMENTS 8. REPORTING REQUIREMENTS 8.1 The representative office is required to submit to Bank Negara Malaysia the following documents: A semi-annual report which summarises the activities undertaken by the representative office, including information on credit facilities granted by the foreign institution or its related institutions to Malaysian borrowers. Such report, for the period ended 30 June and 31 December of each year should be submitted within 14 days from the reporting dates. A nil return should be submitted in the event that there are no activities A copy of the foreign institution s annual report within one month after publication.

11 10/11 PART F PENALTY FOR NON-COMPLIANCE 9. PENALTY FOR NON-COMPLIANCE Contravention of Sections 15, 19, 20, 21 and 22 of the BAFIA would render a person liable upon conviction, to a fine or imprisonment or both as specified in the Fourth Schedule pursuant to Section 103 of the BAFIA.

12 11/11 PART G APPENDICES 10. APPENDICES 10.1 Appendix 1 Form BNM/RO 10.1 Appendix 2 Form BNM/Expat