“Pool Money” Activities are Prohibited
Malaysia Companies or business entities in this country are prohibited from organizing any schemes or activities involving “pool money”. The Act (Prohibition) of “Pooling Money” of 1971 clearly states that companies which are formed under the Incorporation Act of 2016 (previously known as Incorporation Act of 1965), or any registered businesses under the Business Registration Act of 1956 are prohibited from organizing or promoting such activities.
If convicted, the organizer can be fined no more than RM500,000 or can be jailed no more than 10 years or both. However, the traditional, smaller scale “pool money’ schemes which are practiced by common people in a small community or among neighbors, friends, family members or colleagues for non-profit purposes and for personal needs are not governed under the Act.
This is because these types of traditional schemes are only giving out the same amount according to a pre-set and agreed turn. No profit is involved. Suruhanjaya Syarikat Malaysia (SSM) wants to make it very clear that “pool money” schemes involving outrageous amount of profit with extra benefits compared to the amount put in are prohibited and not excluded under the Act.
The main reason for the introduction of such Act is to ensure that the companies legally involved in such activities completes the rolling of turns so liquidators can get back the outstanding sum owed by participants who have already received their share of the “pool”. This is to guarantee that all the parties involved get their share in full. Besides that, the Act is a measure to protect of all participants and those who are involved in the “pool” which consist of mostly middle- and low-income earners.
There are numerous cases where participants who have got their share (early in the “pool”) failed or refused to continue paying affecting the rest of the “pool” participants. SSM is always on the lookout for companies who are disobeying the law. SSM also encourages the public to be cautious with any offers to join any type of investment especially unregistered ones to avoid losing their money. If the public wish to check on the legitimacy of any investments, they can go to SSM’s website at www.ssm.com.my for further enquiries.