Interest schemes were previously regulated under the nowrepealed
Companies Act 1965. The Act was utilised to regulate
long-term memberships offered by golf, recreational and
timeshare clubs. In 2007, the first investment scheme was
approved, pooling financial contributions from the public on
which the subscribers earned profits. Later, approvals were
granted for more plantation and aquaculture-related investment
vehicles, such as share-farming schemes or grower’s plot schemes,
breeding of livestock such as swiftlets and catfish for commercial
purposes, as well as land banking schemes.
However, there were concerns that interest schemes were not as
transparent and well-regulated as investments in shares of a listed
company or unit trusts. There were also concerns over whether
the Companies Commission of Malaysia had less stringent control
on management structure under section 84 of the Companies
Act, compared with supervision by the Securities Commission or
Bursa Malaysia.
The enactment of the Interest Schemes Act 2016, a stand-alone
statute, is the right way forward and bodes well for the industry.
The new legislation has been welcomed by industry players
as they feel it provides the industry with a firm foundation on
which it can prosper and investors can be protected. It also has
provisions for stronger investor protection and greater regulatory
powers for the Companies Commision of Malaysia.

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