Sunday, May 17, 2009
Events Leading to Regulations of TimeShare industry
*(The following information was extracted from another Malaysian timeshare organization. The information appears relevant to all time share investors.)
Proper legislation on the timeshare industry came into light in 1993 shortly after a company went bust after collecting money from 33,000 members. A couple of years before that, timeshare schemes caught on at such a pace that in June 1992, the then Registrar of Companies (ROC) put a freeze on applications for the setting up of timeshare ventures. The freeze was nevertheless lifted in July the same year.
Section 84 of the Companies Act was amended and came into force in September 1992 so that the sale of shares in timesharing holiday resorts is regarded as a sale of interests to the public. A definition of timesharing was also included. In the same month, the ROC issued two sets of policy guidelines and requirements of timesharing arrangements is that only a public company can make public offerings of interests.
It was regulated that the paid-up capital of the developer must not be less than RM1 million in accordance with the Securities Industry Act 1983. Furthermore, a sinking fund has to be established to cover periodic repairs and replacement. Also, the proposed issue or sale to the public of timeshare interests must be approved by the Capital Issues Committee as they are deemed to be securities.
There has to be a mandatory cooling-off period disclosed in the prospectus where the purchaser can cancel his membership. To safeguard the interests of the purchaser, the number of timesharing holders should correspond to the number of units in the project. The list of facilities and amenities provided must be clearly stated in the prospectus.
Role of Trustee
Under the regulations, each timeshare company must have a trust deed and a trustee to act on the interest of holders, such as ensuring no misappropriation of profit of revenue. Any complaints from holders can also be directed to the trustee. The trustee is a licensed committee made up of timeshare members themselves. Members are appointed on a quarterly basis during an Annual General Meeting.
Role and Objectives of MHTDF (http://www.timesharemalaysia.org.my/)
MHTDF was registered in March 1993 to ensure self regulation among members. The objectives of the federation includes promoting honorable and proper conduct in the business of timesharing. The federation also represents member companies in all dealings with the Government, other trade association, the media and the public. Other roles include assisting the authorities in regulations pertaining to the industry and the dissemination of information on new regulations.
at 9:45 PM