1. For the purposes of this ECM Notice -
1.1 A non-resident controlled company(hereinafter referred to as NRCC) means a company in Malaysia where -
1.1.1 More than 50% of its shareholding is held by non-residents and/or NRCCs;
1.1.2 It is a branch of a company which is incorporated outside Malaysia;
1.1.3 The majority shareholding is held by residents, but the ultimate right of control is held by non-residents and/or NRCCs; or
1.1.4 Although the ultimate right of control is held by residents, the majority shareholding is held by non-residents and/or NRCCs.
Notwithstanding the above, the Controller may, if he deems fit, direct that a particular company be designated as NRCC. Where doubt exists as to whether a company is a NRCC, the ruling of the Controller shall be sought, giving details of the shareholding by residents, NRCCs and non-residents, residential status of the members of the board of directors and positions held by them and any other relevant information.
1.2 shareholding means ownership of issued shares with voting rights.
1.3 trade financingﾓ includes facilities to guarantee payment for the purchase of goods.
1.4 NRCC includes the NRCC group comprising the holding companies and subsidiaries in Malaysia.
2. The Controller hereby gives permission to a resident to issue guarantees on behalf of a NRCC, other than guarantees which are included in the definition of trade financing.
3. The Controller hereby also gives permission, subject to the conditions in paragraph 8, to a resident to extend credit facilities to a NRCC -
3.1 Any amount in Ringgit or foreign currency for short-term trade financing where the tenure of the credit is less than 12 months; and
3.2 Up to an aggregate limit of RM10 million in Ringgit or foreign currency for any other credit facility;
Provided for paragraphs 3.1 and 3.2 -
I) The credit facilities in foreign currency are extended by a licensed bank or a licensed merchant bank.
ii) In the case of credit facilities extended by banking institutions, at least 60% of short-term trade financing and 60% of other types of credit facilities, are extended by Malaysian-owned banking institutions.
4. A banking institution which is a NRCC is exempted from the requirements of this ECM Notice.
5. The prior permission of the Controller is required for a resident to extend credit facilities which do not comply with the provisions in paragraph 3 to a NRCC.
6. Where the prior permission of the Controller is required, inter-alia, the following criteria will be considered -
6.1 The credit facility is for productive purpose.
6.2 The NRCC has a domestic debt (inclusive of the new credit facility) to eligible capital funds ratio not exceeding 3:1. For purposes of computing the domestic debt to eligible capital funds ratio -
domestic debtﾓ means the aggregate of all credit facilities, excluding
- short-term trade financing where the tenure of credit is less than 12 months (such
as letters of credit, trust receipts, bankers acceptances, export credit refinancing,
and bills discounting facilities); and
- guarantees eligible capital funds means the sum total of -
- paid-up capital;
- preference shares (excluding redeemable preference shares issued to residents which
are not ordinary shareholders);
- share premium;
- accumulated profits (less losses);
- concessional credit facilities from non-resident shareholders; and
- revaluation reserves for public-listed companies.
7. The definition of eligible capital funds will be applied in the computation of the domestic debt to eligible capital funds ratio only when the NRCC applies for extension of time to comply with any existing domestic debt to eligible capital funds ratio or for new credit facilities.
8. The main office/head office of a participating financial institution is required to report credit facilities extended to NRCCs in the Borrower Loan Information System.
9. Where prior permission of the Controller is required, the application shall be submitted by the NRCC to the Controller, providing information and documents as per the Appendix.
1. Name of NRCC.
2. Shareholding structure i.e. name and residential status of ordinary and preference shareholders, including the beneficial shareholders if the registered shareholders are nominees and amount of shares held (identify holder of 5% or more of total equity) and for preference shareholders state whether they have voting rights.
3. Members of board of directors, including residential status and position held by them.
4. Nature of borrower's business and if products are for export, state percentage of export.
5. Amount of total credit facilities for which approval is sought, i.e. type and currency of facility (e.g. term loan, overdraft, revolving credit, bankers acceptance etc. State if facility is combined or omnibus).
6. Purpose of credit facilities - (summary of proposed capital expenditure and other assets to be financed, distinguishing between payment for import and local materials and imposed sources of financing).
Sources and uses of funds (RM million)
Uses of funds
e.g.
Plant and Machinery 6.0
Land and building 7.0
Working capital 5.0
Contingencies 1.0
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19.0
Sources of funds
e.g.
Share capital 6.0
Foreign loans 3.0
Domestic borrowing(etc.) 10.0
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19.0
If large commercial property is being purchased, state if Foreign Investment Committee has given approval.
7. Details of any benefits expected to accrue to the national economy as a result of the borrowing (e.g. increased exports, saving of imports, etc). State average annual foreign exchange income.
8. Borrowerﾕs (including holding company and subsidiaries) limits of existing credit facilities (both in Ringgit and foreign currency) obtained and current amount outstanding.
9. Borrower's latest audited statement of accounts.