Section 177. Duties of trustee

(1) A trustee for debenture holders shall—

(a) exercise reasonable diligence to ascertain whether or not the assets of the borrowing corporation and of each of its guarantor corporations which are or may be available whether by way of security or otherwise are sufficient or are likely to be or become sufficient to discharge the principal debt as and when it becomes due;

(b) satisfy itself that each prospectus relating to the debentures does not contain any matter which is inconsistent with the terms of the debentures or with the relevant trust deed;

(c) ensure that the borrowing corporation complies with Subdivision 1 of Division 7 of Part III so far as the Subdivision relates to the debentures and is applicable;

(d) exercise reasonable diligence to ascertain whether or not the borrowing corporation and each of its guarantor corporations have committed any breach of the covenants, terms and provisions of the debentures or the trust deed;

(e) take all steps and do all such things as the trustee for debenture holders is empowered to do to cause the borrowing corporation and any of its guarantor corporations to remedy any breach of those covenants, terms and provisions, except where it is satisfied that the breach will not materially prejudice the security, if any, for the debentures or the interests of the debenture holders;

(f) where the borrowing corporation or any of its guarantor corporations fails to remedy any breach of the covenants, terms and provisions of the debentures or the trust deed if so required by the trustee, the trustee may place the matter before the metting of debenture holders, submit such proposals for the protection of the debenture holders’ investment as the trustee considers necessary or appropriate and obtain the directions of the debenture holders in relation to the investment; and

(g) where the borrowing corporation submits to the debenture holders a compromise or an arrangement, give to the debenture holders a statement explaining the effect of the compromise or arrangement and, if the trustee thinks fit, recommend to the debenture holders an appropriate course of action to be taken by the debenture holders in relation to the compromise or arrangement.

(2) Where, after due inquiry, the trustee is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are available whether by way of security or otherwise are insufficient or likely to become insufficient to discharge the principal debt as and when the principal debt becomes due, the trustee may apply to the Minister for an order under this subsection.

(3) On an application referred to in subsection (2), after giving the borrowing corporation an opportunity of making representations in relation to such application, the Minister, by order in writing—

(a) may serve on the corporation at its registered office in Malaysia and impose such restrictions on the activities of the corporation, including restrictions on advertising for deposits or loans and on borrowing by the corporation as the Minister thinks necessary for the protection of the interests of the debenture holders; or

(b) may direct the trustee to apply to the Court for an order under subsection (4) and if the borrowing corporation requires the trustee to do so, the Minister shall direct the trustee to apply accordingly.

(4) Where—

(a) after due inquiry, the trustee at any time is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available whether by way of security or otherwise are insufficient or likely to become insufficient to discharge the principal debt as and when the principal debt becomes due; or

(b) the corporation contravenes or fails to comply with an order made by the Minister under subsection (3),

the trustee may, and if the borrowing corporation requires the trustee to do so, the trustee shall apply to the Court for an order under subsection (5).

(5) Where an application is made to the Court under subsection (3) or (4), the Court may, by order, after giving the borrowing corporation an opportunity to be heard, do all or any of the following:

(a) direct the trustee—

(i) to convene a meeting of the debenture holders for the purpose of placing the information before the debenture holders relating to the interests and proposals for the protection of the debenture holders as the trustee considers necessary or appropriate;

(ii) to obtain directions of the debenture holders in relation to the interests and proposals for the protection of the debenture holders; and

(iii) to give any direction in relation to the conduct of the meeting as the Court thinks fit;

(b) stay all or any actions or proceedings before any Court by or against the borrowing corporation;

(c) restrain the payment of any moneys by the borrowing corporation to the debenture holders of the corporation or to any class of debenture holders;

(d) appoint a receiver or receiver and manager of such property which constitutes the security, if any, for the debentures; and

(e) give further directions to the members of the borrowing corporation or any of its guarantor corporations or the public as may be necessary to protect the interests of the debenture holders.

(6) The Court shall consider the rights of all creditors of the borrowing corporation upon making the order and may vary or rescind any order made under subsection (5) as the Court thinks fit.

(7) Upon making an application to the Minister under subsection (2) or (3) or to the Court under subsection (4), a trustee shall—

(a) consider the nature and kind of the security given when the debentures are offered to the public; and

(b) if no security is given, consider the position of the debenture holders as unsecured creditors of the borrowing corporation.

(8) A trustee may rely upon any certificate or report given or statement made by any advocate, auditor or officer of the borrowing corporation or guarantor corporation if the trustee has reasonable grounds for believing that the advocate, auditor or officer is competent to give or make the certificate, report or statement.