On 18 August 2026, the Prime Minister’s Department (Law and Institutional Reforms) issued a notification appointing 28 August 2026 as the date on which the Cross-Border Insolvency Act, 2026 came into operation.
Key Points:
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The Minister, Dato’ Sri Azalina Binti Othman, has appointed 28 August 2026 as the date on which the Cross-Border Insolvency Act 2026 came into force.
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The Act received Royal Assent on 20 January 2026 and established a comprehensive legal framework for cross-border insolvency matters.
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The Act is based on the UNCITRAL Model Law on Cross-Border Insolvency (1997) and provides a statutory framework for recognition of foreign insolvency proceedings, court cooperation and coordination of cross-border insolvency cases.
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The legislation aims to promote cooperation between Malaysian and foreign courts, provide greater legal certainty for trade and investment, protect creditors’ interests, maximise the value of debtor’s assets and facilitate the rescue of financially distressed businesses.
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Under Sections 15 to 17, the foreign representatives may apply to Malaysian courts for recognition of foreign main proceedings and foreign non-main proceedings, recognised foreign insolvency proceedings to obtain legal effect in Malaysia.
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Foreign creditors are granted access to Malaysian insolvency proceedings and cannot be ranked lower than general unsecured creditors solely because they are foreign creditors.
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The Act authorises Malaysian courts and insolvency office-holders to cooperate and communicate directly with foreign courts and foreign representatives in cross-border insolvency matters.
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Upon recognition of foreign main proceedings, an automatic stay applies to the commencement or continuation of individual actions or proceedings concerning the debtor’s property, rights, obligations or liabilities, as well as to execution against the debtor’s property. The right to transfer, encumber or otherwise dispose of the debtor’s property is also suspended. The Court may additionally grant other relief to protect and preserve the value of the debtor’s property in Malaysia.
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The Act establishes mechanisms for coordinating concurrent insolvency proceedings taking place in Malaysia and other jurisdictions involving the same debtor.
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Under Section 7, the Court may refuse to take action or grant an order or relief under the Act where doing so would be contrary to the public policy of Malaysia. In addition, Section 5(2), read with Part II of the Schedule, restricts recognition, relief and cooperation where these would interfere with specified financial-sector regulatory frameworks, including payment and netting arrangements and certain measures involving Bank Negara Malaysia, the Securities Commission Malaysia and the Labuan Financial Services Authority.
[Cross-Border Insolvency Act 2026: Enforcement Date, dated 18-8-2026]
[Cross-Border Insolvency Act 2026, 30-1-2026]
