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Section 225. Prohibition of loans to persons connected with directors

(1) Subject to the provisions of this section, a company, other than an exempt private company, shall not—

 \(a\) make a loan to any person connected with a director of the company or of its holding company; or

 \(b\) enter into any guarantee or provide any security in connection with a loan made to such person by  
 any other person.

(2) Subsection (1) shall not apply—

 \(a\) where the loan is made, or the guarantee or security is provided in relation to a loan made to a  
 subsidiary or holding company or a subsidiary of its holding company;

 \(b\) to a company whose ordinary business includes the lending of money or the giving of guarantees in  
 connection with loans made by other persons, or to anything done by the company in the ordinary  
 course of that business, if the activities of that company are regulated by any written law relating to  
 banking, insurance or takaful or are subject to the supervision of the Central Bank of Malaysia; or

 \(c\) to any loan made to a person connected with a director who is engaged in the full-time employment  
 of a company or its related corporation, as the case may be—

      \(i\) for the purpose of meeting the expenditure incurred or to be incurred by him in purchasing or  
      otherwise acquiring a home; or

      \(ii\) in accordance with a scheme for the making of loans to employees approved by the company.

(3) Nothing in this section shall operate to prevent the company or any person from recovering the amount of any loan or the amount for which it becomes liable under any guarantee entered into or in respect of any security provided in contravention of this section.

(4) If a company contravenes this section, any director who authorizes the making of any loan or the entering into any guarantee contrary to this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.