Funds raised from issue of debentures in Malaysia cannot be used by the issuing corporation howsoever, whether it is a resident controlled company (RCC) or a non-resident controlled company (NRCC), for the following purposes:
| 1. |
(a) |
Development of the following properties:
| (i) |
Residential properties and shop houses where the individual unit costs more than RM250,000 each, except where the development is located in Sabah and Sarawak; and |
| (ii) |
Other commercial properties including new hotels, resorts, office buildings, golf courses, clubs and shopping complexes. |
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(b) |
Where mixed property development is involved, the proceeds from the issue of debentures must strictly be used to finance the development of properties other than those stated in paragraph 1(a); and |
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(c) |
Purchase of land for the purpose of developing properties stated in paragraph 1(a). |
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| 2. |
However, financing for the following purposes is exempted from the restrictions imposed on properties stated in paragraph 1: |
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(a) |
Development of residential properties priced above RM250,000 per unit, on condition that the proceeds of the bond issues shall only be drawn down upon achieving break-even sales (in value terms); |
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(b) |
Development of shop houses priced above RM250,000 per unit, on condition that such development is located within residential areas and the proceeds of the bond issues shall only be drawn down upon achieving break-even sales (in value terms); |
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(c) |
Development of residential properties, shop houses and office buildings in Putrajaya and Cyberjaya; |
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(d) |
Development of residential properties, shop offices, commercial building, shopping complex and hotel in Kulim Technology Park; |
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(e) |
Financing of properties described in paragraph 1(a) where construction has commenced, in the case of RCCs only; and |
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(f) |
Refinancing of properties where approval for the loan has been granted, in the case of RCCs only. |
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(g) |
Development of a hypermarket, subject to the following conditions:
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The proposal for operating a hypermarket has been approved by the Ministry of Domestic Trade and Consumer Affairs; |
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The building must be purpose-built for the issuer’s own business operations as a hypermarket; |
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Total retail floor space that is funded out of proceeds of a PDS offering shall not be leased out to third parties; and |
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The issuer continues to comply with the conditions set out above and all other conditions as may be prescribed by other regulatory authorities from time to time. |
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| 3. |
For NRCCs, additional restrictions may be imposed as stated in the Controller of Foreign Exchange’s Guidelines on Private Debt Securities. |
