Take 5: Volume 1
Financial Services Act 2013 and Islamic Financial Services Act 2013
The Parliament of Malaysia has enacted the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA). The Acts were published in the Gazette on 22 March 2013.
Impact of FSA/IFSA
- Financial holding company restructuring
If impacted companies do not want to become financial holding companies under the Act(s), they may pare down their stakes in respective financial institutions to below 50%.
- Corporate restructuring: insurers
Separation into two legal entities or divestment of one of the businesses
- Audit compliance
Impacted companies to allocate more resources to improve any weaknesses in internal controls
- Individual shareholding limit
Impacted individuals may need to pare down their stakes to 10% or below.
- Talent recruitment
Bank Negara Malaysia (BNM)/Central Bank of Malaysia approval for appointment of chairman, director and chief executive officer; a senior officer can only be appointed if the person fulfils the requirements stated in the Act(s) and as specified by BNM.
Impact to composite insurers, takaful operators
Insurance and takaful companies holding composite licences shall not carry on both life insurance/family takaful business and general insurance/general takaful business.
- Who will be impacted?
Licensed insurer/takaful operator lawfully carrying on both life insurance/family takaful business and general insurance/general takaful business
- Who will be exempted?
Licensed professional reinsurer and retakaful operator
Five years from the date of implementation of the Act(s) or longer as specified by the Minister of Finance, on the recommendation of BNM
- Non-compliance penalty
- Imprisonment of 8 years or less
- A fine of RM25 million or less
- Or both
Source: Extracts from FSA and IFSA