KUALA LUMPUR (March 2): The government plans to table a new Trust Companies Bill this year to strengthen regulation and modernise the legal framework for trust companies in Malaysia, as it closes loopholes that have long affected the cash trust sector in particular.
The proposed bill is structured around four main clusters, Deputy Domestic Trade and Cost of Living Minister Datuk Dr Fuziah Salleh said.
The first cluster sets parameters for permissible activities and introduces a mandatory registration regime. The second establishes a reporting framework for beneficial ownership related to trust businesses and activities.
The third cluster focuses on administration and corporate governance of trust companies, while the fourth covers name striking-off, corporate termination mechanisms, winding-up, and dissolution.
“The bill is intended to replace the existing Trust Companies Act 1949, and its review has been ongoing since 2018,” Fuziah told the Dewan Rakyat during the oral question-and-answer session on Monday.
She added that the public consultation process to finalise the bill began in April 2024. Engagements have also been held with stakeholders, relevant ministries, and agencies, including Bank Negara Malaysia, the Securities Commission Malaysia (SC), the Prime Minister’s Department, and the Legal Affairs Division.
Currently, companies conducting trust activities in Malaysia are governed by the Trust Companies Act 1949 under the Companies Commission of Malaysia (SSM).
However, the Act’s oversight is limited to registration, administration, and corporate governance. It does not cover enforcement or monitoring of the conduct, activities, transactions, or investments of trust companies.
On proposals to mandate the appointment of licensed fund managers, Fuziah said this would involve regulating fund management and investment activities, which fall under the Trustee Act 1949 (Act 208).
“Such matters cut across the jurisdiction of multiple ministries and agencies, depending on the nature of the activities and business involved,” she added.
Separately, the SC is finalising a new framework to clarify licensing requirements for cash trust schemes that invest in capital market products. This follows concerns that some schemes were marketed as investment products without proper regulatory oversight.
The SC’s powers were expanded this year under amendments to the Capital Markets and Services Act 2007. It has taken enforcement actions, investigated suspected unlicensed activities, and worked with industry bodies. The SC and SSM are also developing a joint framework to better coordinate oversight of cash trust activities.
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