{"id":123098,"date":"2025-12-12T10:45:00","date_gmt":"2025-12-12T10:45:00","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=123098"},"modified":"2025-12-15T09:38:38","modified_gmt":"2025-12-15T09:38:38","slug":"malaysia-aviation-finance-leasing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/malaysia-aviation-finance-leasing\/","title":{"rendered":"Malaysia: Aviation Finance &amp; Leasing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-123098","comparative_guide","type-comparative_guide","status-publish","hentry","guides-aviation-finance-leasing","jurisdictions-malaysia"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Wan San &amp; Co<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/12\/Name-ASNP-rectangle.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Wan San &amp; Co<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/12\/Name-ASNP-rectangle.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Aviation Finance &amp; Leasing laws and regulations applicable in Malaysia<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What international aviation conventions has your jurisdiction signed and\/or ratified?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia has signed and ratified numerous key international aviation conventions that includes the following:<\/p>\n<p>1. Chicago Convention 1944 \u2013 Convention on International Civil Aviation (Chicago Convention 1944)<\/p>\n<p>2. Warsaw Convention 1929 \u2013 Convention for the Unification of Certain Rules Relating to International Carriage by Air<\/p>\n<p>3. Guadalajara Convention \u2013 Convention Supplementary to the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person Other Than the Contracting Carrier<\/p>\n<p>4. Montreal Convention 1999 \u2013 Convention for the Unification of Certain Rules for International Carriage by Air<\/p>\n<p>5. Cape Town Convention 2001 \u2013 Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment<\/p>\n<p>6. Tokyo Convention 1963 \u2013 Convention on Offences and Certain Other Acts Committed on Board Aircraft and the Protocol to Amend the Convention on Offences and Certain Other Acts Committed on Board Aircraft 2014<\/p>\n<p>7. Hague Convention 1970 \u2013 Convention for the Suppression of Unlawful Seizure of Aircraft<\/p>\n<p>8. Montreal Convention 1971 and Montreal Supplementary Protocol \u2013 Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation and the Protocol for the Suppression of Unlawful Acts Of Violence at Airports Serving International Civil Aviation, Supplementary to the Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation 1988<\/p>\n<p>Malaysia has also:<\/p>\n<p>1. undertaken to apply the Convention on the Privileges and Immunities of the Specialized Agencies;<\/p>\n<p>2. acceded to the New York Convention \u2013 Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958;<\/p>\n<p>3. acceded the Convention on the Marking of Plastic Explosives.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If your jurisdiction has signed and ratified the Cape Town Convention: a. Which qualifying declarations (opt-in and opt-out) has your jurisdiction made under the Cape Town Convention? b. Does the Cape Town Convention take priority over conflicting national law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><h4>a. Which qualifying declarations (opt-in and opt-out) has your jurisdiction made under the Cape Town Convention:<\/h4>\n<p>The following declarations were lodged by Malaysia at the time of the deposit of its instrument of accession to the Convention on International Interests in Mobile Equipment (\u201cCape Town Convention\u201d):<\/p>\n<p><strong>1. Form No. 1, specific opt in declaration under Article 39(1)(a) of the Cape Town Convention<\/strong><\/p>\n<p>Malaysia declares that the following categories of non-consensual right or interest have priority under Malaysian laws over registered international interests:<\/p>\n<p>(a) liens in favour of airline employees for unpaid wages arising since the time of a declared default by that airline under a contract to finance or lease an aircraft object;<\/p>\n<p>(b) liens or other rights of an authority of Malaysia relating to taxes or other unpaid charges arising from or related to the use of that aircraft object and owed by the owner or operator of that aircraft object, and arising since the time of a default by that owner or operator under a contract to finance or lease that aircraft object; and<\/p>\n<p>(c) liens in favour of repairers of an aircraft object in their possession to the extent of service or services performed on and value added to that aircraft object.<\/p>\n<p><strong>2. Form No. 4, general opt in declaration under Article 39(1)(b) of the Cape Town Convention<\/strong><\/p>\n<p>Malaysia declares that nothing in the Cape Town Convention shall affect the rights of Malaysia or that of any entity thereof, or any intergovernmental organisation in which Malaysia is a member, or other private provider of public services in Malaysia, to arrest or detain an aircraft object under the laws of Malaysia for payment of amounts owed to the Government of Malaysia, any such entity, organisation or provider directly relating to the service or services provided by it in respect of that or another aircraft object.<\/p>\n<p><strong>3. Form No. 6, opt in declaration under Article 40 of the Cape Town Convention<\/strong><\/p>\n<p>Malaysia declares that the following categories of non-consensual right or interest shall be registrable under the Cape Town Convention as regards any category of aircraft object as if the right or interest were an international interest:<\/p>\n<p>(a) liens in favour of airline employees for unpaid wages arising since the time of a declared default by that airline under a contract to finance or lease an aircraft object;<\/p>\n<p>(b) liens or other rights of an authority of Malaysia relating to taxes or other unpaid charges arising from or related to the use of that aircraft object and owed by the owner or operator of that aircraft object, and arising prior to the time of a declared default by that owner or operator under a contract to finance or lease that aircraft object; and<\/p>\n<p>(c) rights of a person obtaining a court order permitting attachment of an aircraft object in partial or full satisfaction of a legal judgment.<\/p>\n<p><strong>4. Form No. 11, declaration under Article 53 of the Cape Town Convention<\/strong><\/p>\n<p>Malaysia declares that all courts with competent jurisdiction under the laws of Malaysia are the relevant courts for the purposes of Article 1 and Chapter XII of the Cape Town Convention.<\/p>\n<p><strong>5. Form No. 13, mandatory declaration under Article 54(2) of the Cape Town Convention<\/strong><\/p>\n<p>Malaysia declares that any and all remedies available to the creditor under the Cape Town Convention which are not expressed under the relevant provision thereof to require application to the court may be exercised without court action and without leave of the court.<\/p>\n<p>The following declarations were lodged by Malaysia at the time of the deposit of its instrument of accession to the Protocol to the Convention on International Interests in Mobile Equipment (\u201cAircraft Protocol\u201d):<\/p>\n<p><strong>1. Form No. 19, opt-in declaration under Article XXX(1) in respect of Article VIII of the Aircraft Protocol<\/strong><br \/>\nMalaysia declares that it shall apply Article VIII.<\/p>\n<p><strong>2. Form No. 26, opt-in declaration under Article XXX(1) in respect of Article XII of the Aircraft Protocol<\/strong><br \/>\nMalaysia declares that it shall apply Article XII.<\/p>\n<p>3. Form No. 27, opt-in declaration under Article XXX(1) in respect of Article XIII of the Aircraft Protocol<br \/>\nMalaysia declares that it shall apply Article XIII.<\/p>\n<p><strong>4. Form No. 21, opt-in declarations under Article XXX(2) in respect of Article X of the Aircraft Protocol providing for the application of the entirety of Article X<\/strong><br \/>\nMalaysia declares that it shall apply Article X of the Aircraft Protocol in its entirety and that the number of working days to be used for the purposes of the time limit laid down in Article X(2) of the Aircraft Protocol shall be no more than:<\/p>\n<p>(a) 10 working days in respect of the remedies specified in Articles 13(1)(a), 13(1)(b) and 13(1)(c) of the Cape Town Convention (respectively, preservation of aircraft objects and their value; possession, control or custody of aircraft objects; and, immobilisation of aircraft objects); and,<\/p>\n<p>(b) 30 working days in respect of the remedies specified in Articles 13(1)(d) and 13(1)(e) of the Cape Town Convention (respectively, lease or management of aircraft objects and the income thereof, and, sale and application of proceeds from aircraft objects).<\/p>\n<p><strong>5. Form No. 23, general opt-in declarations under Article XXX(3) in respect of Article XI of the Aircraft Protocol<\/strong> <strong>providing for the application of Alternative A in its entirety to all types of insolvency proceedings<\/strong><\/p>\n<p>Malaysia declares that it shall apply Article XI, Alternative A, of the Aircraft Protocol in its entirety to all types of insolvency proceedings, and that the waiting period for the purposes of Article XI(3) of that Alternative shall be 60 working days.<\/p>\n<h4>b. Does the Cape Town Convention take priority over conflicting national law?<\/h4>\n<p>Section 7(2) of the International Interests in Mobile Equipment (Aircraft) Act 2006 provides for the application of the Cape Town Convention and the Aircraft Protocol into Malaysian law, states that:<\/p>\n<p>\u201c(2) \u2026 to the extent of any conflict or inconsistency between the provisions of this Act and those of any other written law relating to matters governed by the Cape Town Convention and the Aircraft Protocol, the provisions of this Act shall prevail and the conflicting or inconsistent provisions of such other written law shall, to the extent of the conflict or inconsistency, be deemed to be superseded.\u201d<\/p>\n<p>Thus, since the Cape Town Convention and Aircraft Protocol have been implemented into Malaysian law pursuant to the International Interests in Mobile Equipment (Aircraft) Act 2006, these instruments prevail over any conflicting Malaysian law relating to matters governed by the Cape Town Convention and the Aircraft Protocol.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Will a court uphold the choice of a foreign governing law in respect of the following contracts and if so, please also state any conditions or formality requirements to this recognition a. Lease and b. Security document (for example, mortgage)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><h4>a. Lease<\/h4>\n<p>Generally, Malaysian courts will uphold and give effect to the governing law chosen by the parties to a contract, subject that such choice of law was made bona fide (e.g. there was no intention to evade the provisions of Malaysian law), and does not contravene Malaysian public policy.<\/p>\n<p>Additionally, pursuant to the Form No. 19 opt-in declaration made by Malaysia to the Aircraft Protocol, Malaysia had declared that it shall apply Article VIII (Choice of Law) of the Aircraft Protocol, thus giving effect to the governing law chosen by the parties to a contract.<\/p>\n<h4>b. Security document (for example, mortgage)<\/h4>\n<p>Generally, Malaysian courts will uphold and give effect to the governing law chosen by the parties to a contract, subject that such choice of law was made bona fide (e.g. there was no intention to evade the provisions of Malaysian law) and does not contravene Malaysian public policy.<\/p>\n<p>Additionally, pursuant to the Form No. 19 opt-in declaration made by Malaysia to the Aircraft Protocol, Malaysia had declared that it shall apply Article VIII (Choice of Law) of the Aircraft Protocol, thus giving effect to the governing law chosen by the parties to a contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please confirm whether it is (i) customary and (ii) necessary to also take a local law mortgage and if so, why?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As Malaysia has ratified the Cape Town Convention pursuant to the International Interests in Mobile Equipment (Aircraft) Act 2006, a registered international interest under a mortgage is recognised and enforceable as a matter of Malaysian law. Therefore, it is not customary or necessary, from a Malaysian law perspective, to take a Malaysian law mortgage or a Malaysian law mortgage in addition to a foreign law governed Mortgage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign judgments recognized and enforceable by courts of your jurisdiction and if so, please also state any conditions or formality requirements to this recognition (for example, do you require a local court order confirming such recognition)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, foreign judgments are recognised and enforceable in Malaysia depending on whether:<\/p>\n<ol>\n<li>the foreign judgement is obtained from a superior court listed in the First Schedule of the Reciprocal Enforcement of Judgement Act 1958 of Malaysia (\u201cREJA\u201d);<\/li>\n<li>the foreign court has jurisdiction over the matter;<\/li>\n<li>there was want of notice of the proceedings in the foreign jurisdiction;<\/li>\n<li>the choice of the foreign governing law is:<br \/>\n(a) held to be evasive;<br \/>\n(b) made in bad faith (with an intention to evade provisions of Malaysian laws); and\/or<br \/>\n(c) contrary to Malaysian public policy;<\/li>\n<li>the foreign judgment was final and conclusive<\/li>\n<\/ol>\n<p><strong>Registration under Reciprocal Enforcement of Judgement Act 1958 (\u201cREJA\u201d)<\/strong><\/p>\n<p>If the foreign judgment is obtained from a superior court listed in the First Schedule of REJA as follows, the parties would merely need to register the foreign judgment with the High Court of Malaya prior to enforcing the same judgment in Malaysia:<\/p>\n<ol>\n<li>the High Court of England, United Kingdom<\/li>\n<li>the Court of Session in Scotland, United Kingdom<\/li>\n<li>the High Court in Northern Ireland, United Kingdom<\/li>\n<li>the Court of Chancery of the County Palatine of Lancaster, United Kingdom<\/li>\n<li>the Court of Chancery of the County Palatine of Durham, United Kingdom<\/li>\n<li>the High Court of Hong Kong (Special Administrative Region of the People\u2019s Republic of China)<\/li>\n<li>the High Court of Singapore<\/li>\n<li>the High Court of New Zealand<\/li>\n<li>the High Court \/ District Courts of the Republic of Sri Lanka<\/li>\n<li>the High Court of India (excluding State of Jammu and Kashmir, State of Manipur, Tribal areas of State of Assam, Scheduled areas of the States of Madras and Andhra)<\/li>\n<li>the High Court of Brunei Darussalam<\/li>\n<\/ol>\n<p><strong>Summary Judgment<\/strong><\/p>\n<p>If the foreign judgment is not obtained from a superior court listed in the First Schedule of REJA, the parties may proceed to file the foreign judgment with Malaysian courts by way of summary judgment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your aircraft registry an owner-register (registering ownership interests) or an operator-register (registering interests as operator)? Please also state any conditions, procedural steps or formality requirements for such registration and explain how this is evidenced (for example, the issuance of a Certificate of Registration)<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Aircraft Registry maintained by the Civil Aviation Authority of Malaysia (\u201cCAAM\u201d) is an owner-register.<\/p>\n<p>Aircraft registered in the Aircraft Registry maintained by CAAM must be owned by or leased to a \u201cqualified person\u201d. A \u201cqualified person\u201d is defined as:<\/p>\n<ol>\n<li>the Government of Malaysia;<\/li>\n<li>a citizen of Malaysia; or<\/li>\n<li>a body incorporated and having its principal place of business in Malaysia.<\/li>\n<\/ol>\n<p>Thus, an aircraft owned by a foreign entity may be registered in the Aircraft Registry maintained by the CAAM, provided that the aircraft is leased to and operated by a qualified person.<\/p>\n<p>The owner of the aircraft may make an application to the CAAM to register the aircraft in the Aircraft Registry by submitting a form together with all documentary evidence of:<\/p>\n<ol>\n<li>eligible aircraft (e.g. proof that the aircraft type has been accepted by CAAM, confirmation of un-registration\/de-registration of aircraft from aviation authority in country of export);<\/li>\n<li>ownership (e.g. aircraft bill of sale)<\/li>\n<li>eligible owner (e.g. proof that the owner is a \u201cqualified person\u201d. If the aircraft owner is a foreign entity, the aircraft must be leased to and operated by a qualified person and evidence of the lease must be submitted).<\/li>\n<\/ol>\n<p>Once the CAAM registers the aircraft in the Aircraft Register, a Certificate of Registration will be issued.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a security document register in your jurisdiction where a mortgagee\u2019s interests will be recorded? If so, please also state any conditions, procedural steps or formality requirements for such registration and explain how this is evidenced (for example, the issuance of a certificate or official stamp on the security document)<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no separate register of aircraft mortgages in Malaysia. An aircraft mortgagee\u2019s interests may be registered in the Aircraft Register maintained at the CAAM. This is done by submitting a duly completed Entry of Aircraft Mortgage form together with a certified true copy of the mortgage to the CAAM. If the mortgage is in a language other than English or Bahasa Malaysia, a translation of the mortgage in English or Bahasa Malaysia must be included.<\/p>\n<p>Once registered in the Aircraft Register, the details of the aircraft mortgage and the mortgagee will be disclosed upon an aircraft search being made on the aircraft registered in the Aircraft Register.<\/p>\n<p>The registration of an aircraft mortgage on the Aircraft Register has no effect on the validity or priority of the aircraft mortgage. Such registration serves as a notice to third parties of the security interests created on the aircraft that is registered with the CAAM. Further, such registration of aircraft mortgage would ensure that the aircraft may not be deregistered from the Aircraft Register unless the mortgage is discharged or the mortgagee consents to the deregistration of the aircraft registered with CAAM.<\/p>\n<p><strong>Statement of Particulars<\/strong><\/p>\n<p>If the mortgagor is a corporate entity incorporated under the Companies Act 2016 of Malaysia, with the Companies Commission of Malaysia (\u201cCCM\u201d) (\u201cMalaysian company\u201d), or a corporate entity incorporated under the Labuan Companies Act 1990 of Malaysia with the Labuan Financial Services Authority (\u201cLFSA\u201d) (\u201cLabuan company\u201d), the mortgagor is required under the Companies Act 2016 or, as the case may be, Labuan Companies Act 1990, to:<\/p>\n<ol>\n<li>enter details of the aircraft mortgage into the Register of Charges maintained by the corporate entity concerned; and<\/li>\n<li>lodge the following documents:<\/li>\n<\/ol>\n<p>(a) in respect of a Malaysian company, lodge a Statement of Particulars To Be Lodged with Charge in respect of the aircraft mortgage with the CCM within 30 days from the date of the creation of the aircraft mortgage;<\/p>\n<p>(b) in respect of a Labuan company, lodge a Statement of Particulars In Respect of Charge (Form 21) in respect the aircraft mortgage with the LFSA within 1 month from the date of the creation of the aircraft mortgage<\/p>\n<p>Once the aircraft mortgage is registered under paragraphs 2(a) or (b) above, a Certificate of Registration of Charge would be issued by the CCM or, as the case may be, LFSA. Certain details of the aircraft mortgage will also be revealed when a company search is conducted on the Malaysian company with CCM or, as the case may be, Labuan company with the LFSA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the effect of registration of: a. Ownership interest (for example, proof of title to third parties of ownership) b. Lease (for example, perfects the status of the Lessor under the Lease) c. Security document (for example, secures priority over later registered security). If there are any interests that could rank prior to the security document please state these<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><h4>a. Ownership interest (for example, proof of title to third parties of ownership)<\/h4>\n<p>Registration of an owner\u2019s interest in the Aircraft Register maintained by the CAAM is a legal requirement under the Civil Aviation Act 1969 of Malaysia and Civil Aviation Regulations 2016 of Malaysia.<\/p>\n<p>In the event of any change in the ownership of an aircraft:<\/p>\n<ol>\n<li>the person who becomes the owner of the aircraft shall:<\/li>\n<\/ol>\n<p>(a) inform CAAM in writing within 28 days of such person becoming the owner; and<\/p>\n<p>(b) not operate the aircraft until CAAM grants a new Certificate of Registration in respect of the aircraft;<\/p>\n<p>2. the existing registered owner of the aircraft shall immediately return the Certificate of Registration in respect of the aircraft to CAAM.<\/p>\n<p>The registered owner of the aircraft in the Aircraft Registry is prima facie evidence of, though not conclusive, ownership of the aircraft.<\/p>\n<h4>b. Lease (for example, perfects the status of the Lessor under the Lease)<\/h4>\n<p>There is no requirement under Malaysian laws for the lease of an aircraft to be registered.<\/p>\n<p>However, it would be necessary for a copy of the lease to be submitted to the CAAM if the owner is a foreign entity, when the aircraft is submitted for registration with the CAAM. Certain details of the lease will also be noted in the Aircraft Register upon registration of the aircraft.<\/p>\n<p>The entry of the lease of the aircraft in the Aircraft Register serves as a notice to third parties of the existence of the lease over the aircraft.<\/p>\n<h4>c. Security document (for example, secures priority over later registered security). If there are any interests that could rank prior to the security document please state these<\/h4>\n<p>A secured creditor\u2019s security interest would be subject to any prior security interest having been created over the same asset. A security interest that is created first in time prevails over subsequent security interests. As such, priority is determined by the date and time of the creation of such security interest.<\/p>\n<p>Please refer to the declarations made by Malaysia under item 1 above in respect of the Cape Town Convention, on interests that would rank prior to a security document.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of lease are recognized in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysian law recognises financial leases and operational leases, in the form of dry-leases and wet-leases too.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What formalities are required to perfect Lessor\u2019s rights under a lease in your jurisdiction (for example, translation, notarization, apostille, legalization etc.)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Perfection<\/strong><\/p>\n<p>The concept of \u2018perfection\u2019 does not exist under Malaysian law for non-immovable properties. The word \u201cperfected\u201d when used in the current context means that no additional formalities or actions are required to create a valid and binding right and obligation from a Malaysian law perspective.<\/p>\n<p>A lease agreement may be executed under hand or, if applicable, under the corporate entity\u2019s common seal. There is no Malaysian legal requirement for a lease agreement that is prepared in the English language to be translated into Bahasa Malaysia.<\/p>\n<p>There is also no need for a lease to be notarised, apostilled, or legalised in order for the lease to be recognised under Malaysian law.<\/p>\n<p><strong>Stamping<\/strong><\/p>\n<p>Notwithstanding the above, a lease agreement would attract ad valorem stamp duty of 0.5% of the rental amount payable within 30 days from the date of the lease agreement, or 30 days from the date the lease agreement (including electronic copy) is first received in Malaysia for lease agreement executed outside of Malaysia.<\/p>\n<p><strong>Late Stamping Penalty<\/strong><\/p>\n<p>In the event the lease agreement is not paid within the said 30 days, late stamping penalty would be payable as follows:<\/p>\n<ol>\n<li>RM50.00 or 10% of the deficient duty, whichever is higher, if stamped within 3 months after the time for stamping;<\/li>\n<li>RM100.00 or 20% of the deficient duty, whichever is higher, if stamped after 3 months from the time for stamping;<\/li>\n<\/ol>\n<p>Upon payment of the requisite ad valorem stamp duty, the Inland Revenue Board of Malaysia would issue a stamp certificate evidencing the consideration sum, stamp duty payable, and late stamping penalty, if any.<\/p>\n<p><strong>Stamp Duty Exemption<\/strong><\/p>\n<p>A lease agreement would be exempted from stamp duty if it is executed by a Labuan entity in connection with a Labuan business activity, in accordance with the Stamp Duty (Exemption)(No. 3) Order 2012. For lease agreement that is exempted from stamp duty, the lease agreement must still be submitted to the Inland Revenue Board of Malaysia so that a Stamp Duty Exemption Certificate may be issued accordingly.<\/p>\n<p><strong>Admissibility As Evidence<\/strong><\/p>\n<p>Failure to pay sufficient stamp duty may render the lease inadmissible as evidence in the courts of Malaysia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are the ownership rights relating to engines recognized as separate and distinct from the ownership of the rest of the aircraft in your jurisdiction? Please highlight any separate registration, filing or additional formalities that are required to be completed to perfect Lessor\u2019s interest in the engines<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Ownership rights in engines are recognised as separate from the ownership of the aircraft, pursuant to the International Interests in Mobile Equipment (Aircraft) Act 2006. Any ownership interests in engines which are registered at the international registry will be recognised under Malaysian laws. In this regard, there is no engine registry maintained by the CAAM or any other governmental body or authority in Malaysia to publicly record the ownership rights in respect of aircraft engine.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What form does security over aircraft generally take in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The usual form of security in Malaysia over an aircraft is an aircraft mortgage, Irrevocable Deregistration and Export Request Authorisation (\u201cIDERA\u201d), and Deregistration of Power of Attorney (DPOA).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any particular terms or characteristics that such a security document must take (for instance, a cap on the secured liabilities)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Apart from the usual elements of contracts of offer, acceptance, consideration, intention to create legal relations, in order for the security document to be legal, valid, binding, and enforceable, the security document must be worded clearly to ensure that the provision\/security document is not void for uncertainty.<\/p>\n<p><strong>Powers of Attorney<\/strong><\/p>\n<p>As it is likely that powers of attorney are conferred within a security document, the execution of the security document by the chargor \/ donor of the powers of attorney must be witnessed by an advocate and solicitor of the High Court of Malaya, commissioner for oaths in Malaysia, or a notary public, who shall be required to complete and sign an authentication clause in the form prescribed under the Powers of Attorney Act 1949 of Malaysia. This is to enable such security document to be submitted for registration with the High Court of Malaya prior to the powers of attorney being capable of validly exercised in Peninsular Malaysia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any perfection requirements for such security document? If so, please state any conditions, procedural steps, formality requirements or documentation (for example, corporates, list of directors etc.) required to effect this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Perfection<\/strong><\/p>\n<p>Please refer to our response under item 10 above where the concept of \u201cperfection\u201d shall also apply to \u2018security document\u2019, mutatis mutandis.<\/p>\n<p><strong>Stamping<\/strong><\/p>\n<p>As for stamping, in accordance with Section 4(3) of the Stamp Act 1949 of Malaysia, if several security documents are employed for completing the transaction, only the principal instrument as determined by the parties shall be chargeable with ad valorem stamp duty. All other instruments being the secondary instrument shall be chargeable with nominal stamp duty of RM10 only. Additionally, if there are powers of attorney conferred within the same security document, an additional amount of nominal stamp duty of RM10 shall also be chargeable.<\/p>\n<p>Likewise, please refer to our response under item 10 above in where the following issues shall also apply to security document, mutatis mutandis:<\/p>\n<ul>\n<li>late stamping penalty<\/li>\n<li>stamp duty exemption<\/li>\n<li>admissibility as evidence.<\/li>\n<\/ul>\n<p><strong>Power of Attorney<\/strong><\/p>\n<p>Please refer to our response under item 13 above pertaining to the authentication requirements and registration of the powers of attorney with the High Court of Malaya prior to the powers of attorney being validly exercised in Peninsular Malaysia.<\/p>\n<p><strong>Statement of Particulars<\/strong><\/p>\n<p>Please refer to our response under item 7 relating to the lodgment of Statement of Particulars where reference to \u2018aircraft mortgage\u2019 shall apply to \u2018security documents\u2019 mutatis mutandis.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Summarize any captive insurance regime in your jurisdiction as applicable to aviation.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>[WAN SAN &amp; CO. COMMENT: We have no comments on the captive insurance regime in Malaysia as applicable to aviation]<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are cut-through clauses under the insurance and reinsurance documentation legally effective in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cut-through clauses are legally effective in Malaysia, given that they are commercially agreed between the parties.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there minimum requirements for the amount of third-party liability cover that must be in place in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Article 50 of the Montreal Convention 1999, which mandates state parties to require a carrier to maintain adequate insurance covering the carrier\u2019s liability, has been incorporated into Malaysian law pursuant to the Carriage By Air Act 1974.<\/p>\n<p>However, there is no publicly available information on the specific minimum amount of third party liability cover a carrier must have in place.<\/p>\n<p>Notwithstanding this, Malaysian law requires:<\/p>\n<ol>\n<li>the holder of an Air Operator Certificate (AOC) to maintain valid insurance to cover its liability towards passengers and their baggage, crew, cargo, hull loss and third party liability; and<\/li>\n<li>the holder of Foreign Air Operator Certificate (FAOC) granted under the law of any state to submit, inter alia, the Carrier\u2019s Liability Insurance Certificate to the CAAM.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a mortgagee (or equivalent security interest holder) or lessor following an event of default under a mortgage (or equivalent security document) or lease, respectively, take possession of the aircraft without judicial intervention in your jurisdiction? Please also state any conditions, procedural steps, formality requirements or documentation (for example, original, legalized, translated Lease\/Mortgage, corporates etc.) required to effect this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Article 54(2) of the Cape Town Convention, Malaysia has made a declaration that any and all remedies available to the creditor under the Cape Town Convention which are not expressed under the relevant provision thereof to require application to the court, may be exercised without court action and without leave of the court.<\/p>\n<p>However, if the repossession is contested by the mortgagor\/lessee (such as where mortgagor\/lessee denies access to the aircraft, or fails to deliver up the aircraft to the lessor\/lender), the lessor\/lender may need to obtain an order of Court for, inter alia, the enforcement of the terms and conditions of the mortgage\/lease and the re-delivery of the aircraft in accordance with the terms of the mortgage\/lease.<\/p>\n<p>The formalities required to commence a court action in Malaysia would include the filing of an originating summons in court, affidavits in support of the originating summons, and the submission of the duly stamped (or duly exempted from stamp duty) lease\/security documents (including IDERAs) relied on by the lessor\/mortgagee to enforce its rights under the lease\/mortgage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How can a mortgagee (or equivalent security interest holder), lessor under a lease or designee\/beneficiary of an IDERA deregister the aircraft? Please also state any conditions, procedural steps, formality requirements or documentation (for example, original, legalized, translated Lease\/Mortgage\/IDERA etc.) required to effect this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A lessor who is also the owner of an aircraft, has the ultimate right to deregister and export an aircraft in the absence of an aircraft mortgage and IDERA lodged with the CAAM, as the Aircraft Register maintained by the CAAM is an owner-register.<\/p>\n<p>A mortgagee enforcing an IDERA to deregister an aircraft has to ensure that the IDERA has been duly accepted by the CAAM prior to the exercise of the rights under the IDERA.<\/p>\n<p>Deregistration may be effected by submitting to the CAAM a duly completed Application for the Deregistration of Aircraft form.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can the government or the lessee lawfully prevent the repossession or deregistration and if so, in what circumstances<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There exist several legislative provisions in Malaysia that may authorise certain governmental bodies to confiscate, detain or requisition aircraft:<\/p>\n<p><strong>1. Immigration Act 1959\/63 of Malaysia (\u201cImmigration Act\u201d)<\/strong><\/p>\n<p>Section 49A of the Immigration Act makes an aircraft liable to seizure, detention and even forfeiture if there is reasonable cause to suspect that the aircraft has been or is about to be used in the commission of any offence against the Immigration Act. An order for the forfeiture of the aircraft shall be made if it is proved to the satisfaction of the High Court that an offence against the Immigration Act has been committed and that the aircraft was used in the commission of the offence, notwithstanding that no person may have been convicted of the offence.<\/p>\n<p><strong>2. Civil Aviation Act 1969 of Malaysia (\u201cCAA\u201d)<\/strong><\/p>\n<p>Section 22 of the CAA provides that any regulations made under the CAA may provide for the detention of aircraft to secure compliance with the provisions under the CAA or any such regulations, and that such further provisions may also be made as appears to the Minister of Transport to be necessary or expedient for securing such detention.<\/p>\n<p><strong>3. Civil Aviation Regulations 2016 of Malaysia (\u201cCAR\u201d)<\/strong><\/p>\n<p>Regulation 170 of the CAR allows the Director General of Civil Aviation Malaysia (\u201cDirector General\u201d) to:<br \/>\n(a) detain the aircraft where there is default in payment of any fees of charges to the CAAM, whether or not it was due or incurred by the owner or operator of the aircraft; or<br \/>\n(b) detain any other aircraft where the person in default is the owner or operator.<\/p>\n<p>Pursuant to Regulations 171 and 172 of the CAR, an aircraft lien shall be vested in the Director General once the relevant particulars of the detention have been entered into the Aircraft Registry, and the Director General may keep possession of the aircraft until all outstanding amount is paid. Regulation 174 of the CAR provides that if the outstanding amount is unpaid at the end of 1 month after the date on which the aircraft lien is vested in the Director General, the Director General may at any time with the leave of the High Court sell the aircraft.<\/p>\n<p><strong>4. Customs Act 1967 of Malaysia (\u201cCustoms Act\u201d)<\/strong><\/p>\n<p>Section 41 of the Customs Act, which concerns the refusal of port clearance to a vessel, is applicable, by virtue of Section 42 of the Customs Act, in respect of an aircraft arriving at or departing from any customs airport, with such modifications and adaptations as may be necessary. This does not amount to lien, possessory right or right of detention but it may still restrict the ability of the owner\/lessor to repossess or for the lessee to operate the aircraft.<\/p>\n<p><strong>5. Income Tax Act 1967 of Malaysia<\/strong><\/p>\n<p>Section 105(1) of the Income Tax Act 1967 states that where taxes have remained unpaid for more than 3 months by a person who carries on the business of transporting passengers or cargo by air, the Director General of Inland Revenue may with the approval of the Minister of Finance, cause the customs authority to refuse clearance from any aerodrome or airport in Malaysia to any aircraft wholly or partly owned or chartered by that person until the tax is paid. This does not amount to lien, possessory right or right of detention but it may still restrict the ability of the owner\/lessor to repossess or the lessee to operate the aircraft.<\/p>\n<p><strong>6. Dangerous Drugs (Forfeiture of Property) Act 1988 of Malaysia (\u201cDDA\u201d)<\/strong><\/p>\n<p>Section 25 of the DDA provides that an aircraft which a senior police officer reasonably suspects to be the subject matter of an offence under the DDA, or which has been used for the commission of that offence, or illegal property, shall be liable to seizure. This is provided that the prosecution for an offence under the DDA is to be instituted or proceedings under Part III (Forfeiture of Property of Liable Persons) of the DDA are to be taken against the owner of the aircraft.<\/p>\n<p>Pursuant to Section 6 of the DDA, where it is proved to the satisfaction of the court that an offence has been committed under the DDA, the court shall make an order for the forfeiture of all property which is the subject matter of that offence (such as the aircraft) or which has been used for the commission of that offence, notwithstanding that no person may have been convicted of the offence. This is provided the offence was committed by a person other than the owner or person in charge of the conveyance and it is proved to the court that the use of such conveyance for the commission of the offence was without the consent of the owner or person in charge of the conveyance and was not due to any neglect, default, or lack of reasonable care by the owner or the person in charge of the conveyance.<\/p>\n<p><strong>7. Public Order (Preservation) Act 1958 of Malaysia (\u201cPOPA\u201d)<\/strong><\/p>\n<p>Section 11(2) of the POPA allows the Commissioner of Police and any police officer authorised by the Commissioner of Police to require any aircraft in any place in Malaysia to be placed at his disposal during any period in which a proclamation of state of danger to public order is in force, and may give such directions as appear to him to be necessary or expedient in connection with the requirement. However, pursuant to Section 11(4), prior approval of the minister is required before the requisition of the aircraft.<\/p>\n<p><strong>8. Civil Law Act 1956 of Malaysia (\u201cCLA\u201d)<\/strong><\/p>\n<p>Section 5 of the CLA provides that, English law with respect to, inter alia, the law of carriers by air and mercantile law generally, shall be administered in the like manner as would be administered in England on the date the CLA came into force i.e. 7 April 1956 with respect to Peninsular Malaysia, and 1 April 1972 with respect to Sabah and Sarawak. Hence, by interpreting Section 22(1) of the Courts of Judicature Act 1964 with the aid of Section 20(2) of the Supreme Court Act1981 of United Kingdom, an aircraft may be arrested under Malaysian law as a result of claims for pilotage, towage and salvage.<\/p>\n<p>Further, the repossession or deregistration of aircraft may be delayed or withheld if there are preferred creditors ranking in priority to the interests of the mortgagee\/lessor, which include:<\/p>\n<ol>\n<li>airline employees\u2019 unpaid wages;<\/li>\n<li>liens or other rights of an authority of Malaysia relating to taxes or other unpaid charges arising from or related to the use of that aircraft; and<\/li>\n<li>liens in favour of repairers of that aircraft, to the extent of service or services performed on and value added to that aircraft.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If judicial intervention is required, please describe the process? Please also state any procedural steps, length of time to complete and advise as to documentation required<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Court proceedings in Malaysia to enforce the rights of a lessor\/mortgagee may be commenced by the filing of an originating summons in court by the lessor\/mortgagee, affidavits in support of the originating summons, and the submission of the duly stamped (or duly exempted from stamp duty) lease\/security documents (including IDERAs) relied on by the lessor\/mortgagee, to enforce its rights under the lease\/mortgage.<\/p>\n<p>The declarations made by Malaysia under the Cape Town Convention and the Aircraft Protocol oblige Malaysian courts to provide timely relief, for example:<\/p>\n<ol>\n<li>10 working days in respect of the remedies specified in Article 13(1)(a), (b) and (c) of the Cape Town Convention (respectively, preservation of aircraft objects and their value; possession, control or custody of aircraft objects; and, immobilisation of aircraft objects); and,<\/li>\n<li>30 working days in respect of the remedies specified in Article 13(1)(d) and (e) of the Cape Town Convention (respectively, lease or management of aircraft objects and the income thereof; and, sale and application of proceeds from aircraft objects).<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is legal title transferred under the laws of your jurisdiction? Please also state any conditions, procedural steps, formality requirements or documentation (for example, corporates etc.) required to effect this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Legal title of a movable property (such as aircraft and\/or engine) may be transferred by:<\/p>\n<ol>\n<li>physical delivery of the aircraft; or<\/li>\n<li>pursuant to a Bill of Sale.<\/li>\n<\/ol>\n<p>Under Malaysian law, a Bill of Sale would attract ad valorem stamp duty of up to 4% of the consideration sum of the asset or its market value, whichever is greater, within 30 days from the date of the Bill of Sale.<\/p>\n<p>Pursuant to Section 4A of the Stamp Act 1949 of Malaysia, if the asset intended to be transferred is situated in Malaysia despite the instrument of transfer being executed outside Malaysia, the transfer of the asset shall not take effect unless proper stamp duty has been paid on the instrument of transfer or a copy thereof as if the original instrument of transfer had been executed in Malaysia.<\/p>\n<p>Please refer to our response under item 10 above in where the following issues shall also apply to a Bill of Sale, mutatis mutandis:<\/p>\n<ul>\n<li>late stamping penalty<\/li>\n<li>stamp duty exemption<\/li>\n<li>admissibility as evidence<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on the sale of an aircraft following enforcement (for example, the requirement to obtain a court order or conduct a public auction or other action in order to sell the aircraft upon enforcement)<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>An aircraft may be sold by way of private treaty. There is no legal requirement to obtain a court order for sale or conduct a public auction following an enforcement. However, it is usual practice in Malaysia for court orders to be obtained for ease of enforcement purposes. A sale by way of public auction would also reduce the risks of allegations against the chargee of the sale being at under value or prejudicing the interests of the chargor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would lease rentals be subject to tax (for example, withholding or income tax)? Please also state if there are any conditions for such tax to be imposed and any steps usually taken to mitigate this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Payments by a Malaysian lessee to a foreign lessor may be subject to withholding tax. Many aircraft leases in Malaysia are structured with a lessor or intermediate lessor which is a Labuan leasing company. Rentals, interests, royalties, fees and other payments paid to a Labuan lessor by a Malaysian lessee would not attract withholding tax, and such payments by a Labuan lessee to a foreign lessor would also not attract withholding tax as Labuan entities are deemed as foreign entities from a Malaysian foreign exchange perspective.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would a sale of an aircraft in your jurisdiction incur sales tax? Please also provide details of amount or calculation and any steps usually taken to mitigate this<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Pursuant to the Sales Tax (Goods Exempted From Sales Tax) Order 2025, as of 1 July 2025, aircrafts are generally subject to a 10% sales tax.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on the import or export of aircraft in your jurisdiction and would such importation or exportation incur any liability as to customs or taxes? Please also state if any consents or approvals are required and the procedural steps taken to obtain these, and any procedural steps or formality requirements to mitigate any taxes<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The import or export of aircraft are subject to specific regulatory approvals from the CAAM and customs procedures under the Royal Malaysian Customs Department (RMCD).<\/p>\n<p>Generally, there are no absolute prohibitions on the import or export of aircraft. However, specific approvals are required for the import and export of aircraft. For example, an aircraft imported into Malaysia must be registered with CAAM. The aircraft cannot be operated until a Certificate of Registration is issued by the CAAM. When an aircraft is exported, a Certificate of Airworthiness for Export would be issued by the CAAM to facilitate the transfer of the aircraft to another jurisdiction and the Malaysian Certificate of Registration must be returned to CAAM. Further, pursuant to RMCD requirements, the aircraft must be categorized using the Malaysian customs tariff numbers. A Customs Export or Import Declaration must also be submitted for the relevant purpose.<\/p>\n<p>In relation to taxes, the Ministry of Finance of Malaysia has the authority to grant specific duty and tax exemptions on a case-by-case basis. The application for such exemptions would involve discussions and submission of records and documents as may be required by the said Ministry in order to process the application.<\/p>\n<p>Notwithstanding that, Labuan entities are generally exempted from payment of stamp duty on transaction documents entered into by such Labuan entities in connection with a Labuan leasing license by virtue of the Stamp Duty (Exemption)(No. 3) Order 2012, provided that such Labuan entities also meet the minimum economic substance requirements under the Labuan Business Activity Tax Act 1990. The minimum economic substance requirements include having a physical office in Labuan, an adequate annual operating expenditure in Labuan, and a minimum number of full time employees in Labuan.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any foreign exchange restrictions on transfers of funds<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Pursuant to Section 214(2) of the Financial Services Act 2013 (\u201cFSA\u201d), a person is restricted from undertaking or engaging in certain transactions unless the approval of Bank Negara Malaysia (\u201cBNM Approval\u201d) has been obtained. The Foreign Exchange Policy Notices (\u201cFEP Notices\u201d) issued by Bank Negara Malaysia (\u201cBNM\u201d) sets out the transactions which are allowed or requires the approval of BNM.<\/p>\n<p>Labuan entities are deemed foreign entities or non-residents under the FEP.<\/p>\n<p><strong>Payment in Foreign Currency Between Residents<\/strong><br \/>\nA resident is free to pay or receive foreign currency (\u201cFC\u201d) to or from another resident for the following:<\/p>\n<ol>\n<li>Any purpose between immediate family members;<\/li>\n<li>Education, employment or migration outside Malaysia;<\/li>\n<li>A transaction between the resident and a licensed onshore bank, a licensed international takaful operator or an international currency business unit of a licensed takaful operator, in the conduct of the latter\u2019s business involving FC;<\/li>\n<li>Settlement of \u2013<br \/>\n(a) a FC-denominated derivative, excluding exchange rate derivatives, transacted on a Specified Exchange under the Capital Markets and Services Act 2007 between the resident and a resident futures broker;<br \/>\n(b) a commodity murabahah transaction between residents undertaken through a resident commodity or a non-resident trading service provider;<br \/>\n(c) a domestic trade in goods or services between a resident exporter and resident entities involved in Global Supply Chain operations in Malaysia, subject to specified conditions; or<br \/>\n(d) a miscellaneous expense incurred outside Malaysia between a resident individual residing in Malaysia and a resident individual residing outside Malaysia.<\/li>\n<\/ol>\n<p><strong>Payment in foreign currency between resident and non-resident<\/strong><\/p>\n<p>A resident is free to make or receive FC payment to or from non-resident for any purpose, except for \u2013<\/p>\n<ol>\n<li>FC-denominated derivatives offered by the resident unless it is approved by BNM or allowed under Part B of Notice 5 of the FEP Notices;<\/li>\n<li>ringgit derivatives unless it is approved by BNM or allowed under Part B of Notice 5 of the FEP Notices; or<\/li>\n<li>exchange rate derivatives offered by a non-resident unless it is approved by BNM or allowed under Notice 1 of the FEP Notices.<\/li>\n<\/ol>\n<p><strong>Payment in Ringgit between Non-Resident and Resident or Non-Resident<\/strong><\/p>\n<p>A non-resident is allowed to make or receive payment in Ringgit, in Malaysia, to or from another Resident or Non-Resident for the following:<\/p>\n<ol>\n<li>any purpose between immediate family members;<\/li>\n<li>income earned or expense incurred in Malaysia; or<\/li>\n<li>settlement of:<br \/>\n(a) trade in goods or services, excluding payment between non-residents for settlement of goods or services outside Malaysia<br \/>\n(b) a Ringgit Asset, including any income and profit due from the Ringgit Asset; or<br \/>\n(c) a commodity murabahah transaction undertaken through a commodity trading service provider, excluding payment between Non-Residents for settlement of a commodity murabahah transaction undertaken through a Non-resident commodity trading service provider.<\/li>\n<\/ol>\n<p>The failure to obtain a BNM Approval (if the transaction requires) or failure to comply with any requirement, restriction or condition of approval or with any direction of BNM would be a contravention of Section 214(9) of the FSA, causing the person on conviction, be liable to imprisonment for a term not exceeding 10 years or to a fine not exceeding RM50 million or both.<\/p>\n<p>However, such contravention would not affect the legality and validity of the underlying transaction. The possible practical effect of any breach of the FEP Notices are that the repatriation of lease rental, principal, interest or other proceeds or payments due to the lender or lessor under the transaction documents may be withheld or delayed, pending the grant of the BNM Approval.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How successful have foreign creditors and lessors been in enforcing their security and lessor rights over and successfully repossessing aircraft in a timely manner?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no case laws reported on foreign creditors or lessors repossessing aircraft in Malaysia in a contested repossession scenario. However, there have been news reports on the seizure of aircrafts in Malaysia.<\/p>\n<p>In 2021, a Pakistan International Airlines (\u201cPIA\u201d) Boeing 777 aircraft was held back at the Kuala Lumpur International Airport by the Malaysian authorities. The lessor of this aircraft, Peregrine Aviation Charlie Limited (\u201cPeregrine\u201d), had initially filed a case against PIA in the London High Court due to the non-payment of lease amounting to USD14 million. Afterwards, Peregrine applied to the High Court of Kuala Lumpur for the seizure of the aircraft in Malaysia, in which an interim injunction order was granted. The aircraft was however only impounded for 2 weeks and was afterwards released by the High Court of Kuala Lumpur after both parties have reached a settlement.<\/p>\n<p>However in 2023, the same aircraft was again seized in Malaysia by the Malaysian authorities following a court order from the High Court of Kuala Lumpur. The reason for such seizure was due to non-payment of lease amounting to USD 4 million.<\/p>\n<p>These incidents demonstrate the cooperation extended by the Malaysian courts and authorities in facilitating the repossession of aircraft by a foreign lessor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What government led reforms affecting creditor and lessor rights are currently underway in the aviation sector in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no government led reforms affecting creditor or lessor rights currently underway in the aviation sector that we are aware of.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please describe any interesting legal development in your jurisdiction (for instance, decided court cases or arbitral awards) which affect creditor and lessor rights?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Malaysian Aviation Commission (\u201cMAVCOM\u201d), the former economic regulator for civil aviation in Malaysia, was dissolved on 1 August 2025 pursuant to the Malaysian Aviation Commission (Dissolution) Act 2024. Following this, MAVCOM\u2019s existing functions and responsibilities have been devolved to CAAM including but not limited to licensing and permit applications such as the Air Service Licence (ASL), Air Service Permit (ASP), and the Aerodrome Operator Licence (AOL).<\/p>\n<p>Although the merger of CAAM and MAVCOM does not directly affect creditor and lessor rights, it is anticipated that having a sole regulator in the Malaysian civil aviation industry will streamline processes and benefit all stakeholders in this industry.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please discuss any relevant governmental regulations implemented in your country to help alleviate the financial and other difficulties faced by airlines in your jurisdiction caused by CoVid 19 and whether that will impact rights of lessors (who lease aircraft to the airlines) and lenders (who finance such aircraft which are mortgaged in favour of the lenders)? Are such governmental regulations expected to be in place until the difficulties faced by airlines caused by the CoVid 19 subside or are they more long term?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no governmental regulations implemented in Malaysia specifically to help alleviate financial and other difficulties faced by airlines due to CoVID 19.<\/p>\n<p>However, in 2024, the Companies (Amendment) Act 2024 (\u201cCA Amendment 2024\u201d) was introduced <em>inter alia<\/em> to strengthen the legal framework for corporate rehabilitation by aiding companies in navigating financial challenges. Although this is a general law applicable to all companies, these amendments are expected to also benefit Malaysian airline companies.<\/p>\n<p>Among the amendments introduced under the CA Amendment 2024 are as follows:<\/p>\n<p>1. Section 366 of the Companies Act 2016 (\u201cCA 2016\u201d) \u2013 the court may order a meeting in a summary way to be summoned upon an application to the court for the approval of a compromise or arrangement by:<br \/>\n(a) a company;<br \/>\n(b) a creditor or class of creditors of a company;<br \/>\n(c) a member or class of members of a company;<br \/>\n(d) a liquidator, if a company is being wound up; or<br \/>\n(e) a judicial manager, if a company is under judicial management.<\/p>\n<p>2. Section 368(1) and 368(2) of the CA 2016 \u2013 where a compromise or arrangement has been proposed between the company and its creditors\/ any class of those creditors, and no order has been made\/ resolution has been passed for the winding up of the company, the court may, on an application by the company (\u201cSubject Company\u201d)\/ any member\/ creditor of the company, grant a restraining order for not more than 3 months, and a further extension of 9 months.<\/p>\n<p>3. Section 368(1a) of the CA 2016 \u2013 Upon the filing of the restraining order and until the application is decided by court\/the lapse of 2 months from date of filing of application (whichever earlier):<br \/>\n(a) no order may be made, and no resolution may be passed, for the winding up of the company;<br \/>\n(b) no receiver or receiver and manager may be appointed over any undertaking or property of the company;<br \/>\n(c) no proceedings may be commenced or continued against the company other than the proceedings under section 366, 368C, 368D, 369A or 370 of the Companies Act 2016 except with the leave of the court and subject to any terms as the court may impose;<br \/>\n(d) no execution, distress or other legal process may be commenced, continued or levied against any property of the company except with the leave of the court and subject to any terms as the court may impose;<br \/>\n(e) no steps may be taken to enforce any security over any property of the company, or to repossess any goods held by the company under any chattels leasing agreement, hire purchase agreement or retention of title agreement, except with the leave of the court and subject to any terms as the court may impose; and<br \/>\n(f) no right of re-entry or forfeiture under any lease in respect of any premises occupied by the company may be enforced except with the leave of the Court and subject to any terms as the court may impose.<\/p>\n<p>4. Section 368A of the CA 2016 \u2013 the court may also grant a restraining order to Subject Company\u2019s related company (its subsidiary, holding company or ultimate holding company). This order may be granted if the court is satisfied, inter alia, that the related company plays a necessary role in the compromise or arrangement of the subject company.<\/p>\n<p>5. Section 368B of the CA 2016 \u2013 the court may order priority for debt repayment to rescue financiers.<\/p>\n<p>6. Section 368D of the CA 2016 \u2013 the court may approve the compromise or arrangement and order that the company and all classes of creditors concerned be bound by the compromise or arrangement subject that:<br \/>\n(a) A majority of 75% of the total value of creditors \/ class of creditors \/ members \/ class of members who were present and voting have agreed to the compromise or arrangement<br \/>\n(b) Court is satisfied that the compromise or arrangement does not discriminate unfairly between 2 or more classes of creditors, and is fair and equitable to each dissenting class.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">9115<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/123098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=123098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}