THE Dewan Rakyat has passed the Cross-Border Insolvency Bill 2025, which will allow local creditors to recover debts from insolvent companies within the Asean region.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said said the Bill establishes a clear, modern legal framework aligned with international best practices, particularly the UNCITRAL Model Law on Cross-Border Insolvency.
“The Bill aims to enhance investor confidence in Malaysia’s insolvency system,” she said during her winding-up speech.
Azalina added that her ministry has taken several steps to facilitate the enforcement of the Bill, such as amending the Rules of Court 2012 and organising training sessions for stakeholders.
Azalina said the Legal Affairs Division (BHEUU) of the Prime Minister’s Department, in collaboration with the Malaysian Judicial Academy, will conduct special training for High Court judges handling civil and trade cases.
Azalina said the Bill was introduced to create an effective mechanism to handle cross-border insolvency cases.
“This will give investors greater clarity on what to expect during financial distress and boost foreign investment in Malaysia.”
To safeguard national interests, Azalina said sub-clause 5(2) of the Bill allows the High Court to reject any application for recognition or relief from foreign insolvency proceedings if it affects public interest, economic stability, capital markets, national security or consumer confidence.
“The courts retain full discretion to deny recognition based on public policy considerations, as expressly stated in the Bill.”
The law applies to companies with debts to be paid will not only have its local entity be liable, but its foreign branches too.
The law would also apply to foreign companies in debt overseas but with branches in Malaysia.
