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By : LEE SWEE SENG LLB.LLM,MBA Advocate & Solicitor, High Court, Malaya Patent, Trademark & Industrial Design Agent, Certified Mediator, Notary Public sweeseng@tm.net.my www.leesweeseng.com copyright Assisted By : SALLY KEE SEOK MENG LLB (London), of Lincolns Inn, Barrister Advocate & Solicitor High Court, Malaya
Definitions
The definition of 'moneylenders' has been extended. Previously it was "moneylender" includes every person whose business is that of moneylending or who carries on or advertises or announces himself or holds himself out in any way as carrying on that business whether or not that person also possesses or earns property or money derived from sources other than the lending of money and whether or not that person carries on the business as a principal or as an agent"
Now it is:
moneylender means any person who lends a sum of money to a borrower in consideration of a larger sum being repaid to him Person here includes a body of persons, corporate or unincorporated: Interpretation Acts 1948 and 1967 (Act 388) s 3 Thus it appears to cover a broader category of lenders.
Section 2A of the Act provides for exemption for certain bodies, companies or institutions. Besides adding a new paragraph " (fa) a development financial institution prescribed under the Development Financial Institutions Act 2001 [Act 618]"
It deletes paragraph (h) which used to read : any person bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money.
The amendment to the definition also cause a deletion to any reference on principal and agents throughout the Act. Reference to contract, promissory note or agreement were amended to read moneylending agreement.
With the deletion of para (h), it appears that a wider category of people will be caught under the Act. This may mean that loans from shareholders or other inter-company loans which are not granted by those bodies, companies or institutions who are exempted from s 2A(1) may be unenforceable under s 15 of the Act. Previously, the lender who was subjected under the Act are lenders who carry on the business of moneylending. Where 'carrying on' was held to involve some sort of course of continuing conduct': Baju Ria v Liau Kim Lian [1965] 1 MLJ 128.
Under s 8(b) of the old Act or s 5 after the amendment, any person who carries on the business as moneylender without a valid licence commits an offence. In the Singapore case of Ng Kum Peng v Public Prosecutor [1995] 3 SLR 231, the court held that for an offence to be established under s 8(b), it must be shown that the defendant carried on business as a moneylender without a licence. Under s 3, there was a rebuttable presumption that a person who lent money in return for interest was a moneylender. Once established, the onus is on the defendant to rebut that presumption. In rebutting that presumption, regard must be had to the definition of a moneylender.
With the deletion of s 3, presumption was also deleted. Hence one will not be able to prove to the contrary that they are not moneylenders merely because they lend money to a borrower in consideration of a larger sum being repaid to him.
The term carries on business remains. The words 'carrying on business' denote something of a permanent character, and not isolated an transaction (incidental to the main business activity) and a business is carried on only where there is some degree of management or control; Pui Miaw v Bong Kee Man [1964] MLJ 94 In that of the Moneylenders Acts it has been held that the word business imports the notion of system, repetition and continuity: Edgelow v McElwee [1918] 1 KB 205 at 206
Business
The term business in relation to moneylenders, continue to appear throughout the Act, in particular the definition in authorized name, ss 5, 5A, 5F, 8, 9, 9A, 9G, 11, 12 and Pt V.
Moneylenders must enter into a moneylending agreement with the borrower and that agreement shall be in a prescribed form. Any moneylender who contravenes this section shall be guilty of an offence - s 10P
The Act is now divided into parts. Part II now deals with Licensing of Moneylenders. Sections 5A-5F have been added which deals with application, granting, duration, conditions, renewal, requirement for display of licences The penalty for not having a licence have been increased from RM1,000 to a minimum of RM20,000 not exceeding RM100,000.
Previously one has to show satisfactory evidence of good character. Under the amendment a licence will not be granted where there is a previous conviction of an offence under the Act or Penal Code or where the company has been wound up or dissolved by the court or where evidence has been shown of bad character.
These sections deal with revocation of licence, opportunity of being heard, appeal to Minister, validity of licence extended in successful appeal, prohibition of subsequent appeal pending appeal on earlier application, surrender of licence, transfer or assignment of licence being prohibited.
New sections 10A-10L deal with power of police officers in investigation, power to investigate into complaints and inquire into information, power to examine persons, search by warrant, power of arrest, search without warrant, seizure of movable property and further provision relating to seizure, obstruction of inspection and search, authority to act, release of property seized
Part IV - Evidence
Sections
10L- 10O deal with evidence of accomplice, protection of informer, admissibility of statement by accused and provisions as to evidence.
New section 10P - deals with moneylender and borrower who must enter into a moneylending agreement in the prescribed form. Contravention of this section is an offence. And if it does not comply with the prescribed form, it is void and will have no effect.
Section 11 - Advertisement
Now moneylenders are required to obtain a permit before they are allowed to advertise. Section 11A was inserted to deal with such application for advertisement.
There is now a cap on the interest for secured loans not exceeding 12% per annum and unsecured loans not exceeding 18% per annum
This was as in the previous section except the amendment to the word any agreement to any moneylending agreement. The payment of any sum on account of costs, charges or expenses other than stamp duties, fees payable by law and legal costs incidental to or relating to the negotiations for or the granting of the loan or proposed loan shall be illegal
These new sections deal with harassment of borrower, where such offences were committed by companies, societies, firms or other body of persons, the prosecution of such offence, power to compound, jurisdiction, power to make regulations
It is an offence if not in the prescribed form Any waiver, modification, change, alteration, variation, addition or omission of any provision in Schedule J or K without the prior consent of the Registrar shall render the agreement to be void and have no effect and shall not be enforceable. No moneylender shall collect any payment by whatever name called except as prescribed in the moneylending agreement Regulation 10(4)
Summary
The effects of the amendment to the definition of moneylenders and the deletion of section 2A(h) remains to be seen. Likely the court will use the mischief approach in interpreting the Amendment Act; see Majlis Perbandaran P.Pinang v Lembaga Rayuan Negeri P.Pinang & anor [2003] 5 CLJ 181, quoting Seaford Court Estates Ltd v. Asher [1949] 2 All ER 155, p. 164 (CA):
... when a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give "force and life" to the intention of the legislature. ... .A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases.
Some FAQ
What is the effect of Moneylending Agreement signed prior to 1st November 2003? A moneylending agreement already in existence must be executed in the prescribed form, not later than thirty days after the appointed date. Failure of which it is an offence and moneylender is liable to a fine of not more than RM10,000 or imprisonment for a term not more than 12 months or both. S 46 (5) Moneylenders (Amendment) Act 2003 (Act A1193).
Some FAQ
What is the effect of Moneylending Agreement signed prior to 1st November 2003? The old moneylending agreement will not be enforceable: s 10P(3), Moneylenders Act 1951.
Some FAQ
Who bear legal and stamping costs ? Schd J (Unsecured Loans) : Clause 5 Schd K (Secured Loan) : Clause 7 All stamp duties and attestation fees incurred shall be borne by the Borrower.
Some FAQ
Advertisement permit Permit is required when there are advertisements in: Brochure, Newspaper, Signboard, Radio, Internet, Television, Compact disc-video, Cinema. There is also others in the Schd H of the Moneylenders (Control & Licensing) Regulation 2003. This has not been further defined.
The END