Section 187. Application for moneys to be held in trust until allotment

(1) All applications and other moneys paid prior to the allotment by any applicant on account of shares or debentures offered to the public or any securities for which a prospectus is required under the Capital Markets and Services Act 2007 shall be held upon trust for the applicant by the company or in the case of a proposed company by the persons named in the prospectus as proposed directors and by the promoters.

(2) There shall be no obligation or duty imposed on any bank or third person with whom any such moneys have been deposited to inquire into or to see the proper application of the moneys so long as the bank or person acts in good faith.

(3) A company and every officer who, or a proposed company and every person named in the prospectus as a proposed director and every promoter who knowingly and wilfully authorizes or permits the default commit an offence and shall, on conviction, be liable—

(a) in the case of the company or a proposed company, to a fine not exceeding five million ringgit; and

(b) in the case of the person named in the prospectus as a proposed director or the promoter, to imprisonment for a term not exceeding five years or to a fine not exceeding one million ringgit or to both.