Deed of Assignment of Receivables (Malaysia)
DEED OF ASSIGNMENT OF RECEIVABLES
Contracts Act 1950 (Act 136) | Civil Law Act 1956, Section 4(3) (Act 67) | Companies Act 2016 (Act 777)
THIS DEED OF ASSIGNMENT is made on [Assignment Date]
BETWEEN:
(1) [Assignor Name] of [Assignor Address] (the "Assignor"); AND
(2) [Assignee Name] of [Assignee Address] (the "Assignee").
1. ASSIGNMENT OF RECEIVABLES
1.1 In consideration of [Consideration] paid by the Assignee to the Assignor (receipt of which the Assignor hereby acknowledges), the Assignor hereby absolutely and unconditionally assigns to the Assignee — by way of [Assignment Type] — all of the Assignor's right, title, and interest in and to the following receivables (the "Assigned Receivables"): [Receivables Description], with a total face value of [Total Value].
1.2 This assignment is made as a legal assignment under Section 4(3) of the Civil Law Act 1956 (Act 67). The Assignee shall be entitled to collect the Assigned Receivables directly from the underlying debtors in the Assignee's own name.
2. NOTICE TO DEBTORS
2.1 Notice of this assignment shall be given to the following underlying debtors: [Debtor Names]. Method of notice: [Notice Method].
2.2 Upon receipt of notice, each debtor is directed to pay all amounts due under the Assigned Receivables directly to the Assignee's designated bank account, and the debtor's payment to the Assignee shall constitute a full discharge of the debtor's obligation to pay the Assignor.
3. ASSIGNOR'S WARRANTIES
3.1 The Assignor represents and warrants to the Assignee that: (a) the Assigned Receivables are genuine, subsisting, and not subject to any prior assignment, charge, or encumbrance; (b) the underlying goods or services have been duly supplied; (c) the Assignor is entitled to assign the Assigned Receivables without restriction; (d) the underlying debtors have no right of set-off, counterclaim, or defence that would reduce the amount payable; and (e) no insolvency proceedings have been commenced against any underlying debtor.
4. COLLECTION RIGHTS
4.1 Following execution of this Deed, the Assignee shall have the right to: (a) collect the Assigned Receivables directly from the underlying debtors; (b) issue receipts and give valid discharges; (c) take legal proceedings in the Assignee's own name (or in the Assignor's name as necessary) to recover unpaid Assigned Receivables; and (d) settle or compromise any dispute regarding the Assigned Receivables.
4.2 The Assignor shall promptly remit to the Assignee any payments received from the debtors after the assignment date.
5. GOVERNING LAW
5.1 This Deed is governed by the laws of Malaysia, including the Civil Law Act 1956 (Act 67) and the Contracts Act 1950 (Act 136). The parties submit to the exclusive jurisdiction of the High Court of Malaya.
Assignor (authorised signatory)
________________
Signature
Assignee (authorised signatory)
________________
Signature
What Is a Deed of Assignment of Receivables (Malaysia)?
A Deed of Assignment of Receivables in Malaysia gives legal effect to the arrangement it sets out once signed, sealed, and delivered.
The Deed of Assignment of Receivables is governed by the Contracts Act 1950 (Act 136) and the Civil Law Act 1956 (Act 67). Section 4(3) of the Civil Law Act 1956 provides for the absolute assignment of debts and other legal choses in action — the assignment must be absolute (not by way of charge), in writing, and notice of the assignment must be given to the debtor for the assignment to be effective at law. An equitable assignment — which does not comply with all three requirements — is valid between the assignor and assignee but may not be enforceable directly against the debtor without the assignee joining the assignor in any court proceedings.
In Malaysian trade finance practice, a Deed of Assignment of Receivables is commonly used in invoice financing arrangements — where a company assigns its trade receivables to a bank in return for advance payment of a percentage (typically 70–90%) of the invoice value. Major Malaysian banks including Maybank, CIMB Bank, Public Bank, and RHB Bank offer invoice financing and factoring facilities under this structure. MIDF (Malaysia Industrial Development Finance) also provides invoice financing facilities to SMEs under the SME Assistance Guarantee Scheme.
For property transactions, a Deed of Assignment of Receivables is distinct from a Deed of Assignment of a lease or property interest — the latter is governed by the National Land Code 1965 (Act 56) and requires registration at the Land Office. For assignment of receivables in an Islamic financing context, the concept of Hawalah (debt transfer) provides a Shariah-compliant mechanism recognised under BNM's Shariah standards issued under Section 56 of the Islamic Financial Services Act 2013 (Act 759).
The legal framework governing the Deed of Assignment of Receivables (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Deed of Assignment of Receivables (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Financial Services Act 2013 (Act 758) sets the foundational requirements.
When Do You Need a Deed of Assignment of Receivables (Malaysia)?
A Deed of Assignment of Receivables in Malaysia is used whenever a business transfers its right to collect debts or future income streams to another party.
A Deed of Assignment of Receivables is needed when a Malaysian manufacturer or distributor assigns its trade invoices to a bank under an invoice financing facility, allowing the company to receive immediate cash flow — typically 80% of the invoice value — while the bank collects the full invoice amount from the company's customers at maturity.
A Deed of Assignment of Receivables is required when a property developer assigns the right to receive instalment payments from purchasers under sale and purchase agreements to a bank as security for a bridging loan used to finance the development, with the bank collecting the purchase price instalments directly from buyers.
A Deed of Assignment of Receivables is needed when a Malaysian company sells its entire trade debts book to a factoring company — a transaction known as debt factoring — with the factoring company paying a discounted purchase price and taking over all collection activities and credit risk.
A Deed of Assignment of Receivables is required when a startup or SME assigns its contracted future revenues — for example, subscription income or licensing fees — to an investor or lender as security or consideration for upfront revenue-based financing.
A Deed of Assignment of Receivables is needed in a loan security context, where a company assigns its accounts receivable to a bank as additional collateral alongside a Debenture or fixed charge, giving the bank a direct right to collect from the company's customers if the company defaults on the loan.
Parties in Malaysia should prepare a Deed of Assignment of Receivables (Malaysia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Deed of Assignment of Receivables (Malaysia)
A Malaysia Deed of Assignment of Receivables must include the following essential components.
Parties: Identify the assignor (the company assigning the receivables) with full legal name and SSM registration number, and the assignee (the bank, finance company, or purchaser) with full details.
Description of Assigned Receivables: Precisely describe the receivables being assigned — specific invoices with numbers and amounts, or a class of future receivables (e.g., all trade debts arising from sales to named customers). Attach a schedule of specific invoices if the assignment is of existing debts.
Nature of Assignment: State whether the assignment is absolute (outright sale of receivables) or by way of security (charged to secure a financing facility). For a legal assignment under Section 4(3) of the Civil Law Act 1956 (Act 67), the assignment must be absolute in form.
Consideration: State the consideration paid by the assignee — either the advance payment percentage of the invoice value for invoice financing, or the facility limit for a security assignment.
Notice to Debtors: Include a prescribed form of notice to be sent to the underlying debtors (the assignor's customers) informing them that the debt has been assigned and directing them to pay the assignee instead of the assignor. For a legal assignment, notice is required under Section 4(3) of the Civil Law Act 1956.
Assignor's Warranties: The assignor warrants that the assigned receivables are genuine, not subject to any prior assignment, the underlying goods or services have been supplied, and the debtors are not entitled to set-off.
Collection Rights: Specify the assignee's rights to collect the receivables directly from debtors, including the right to take legal action in the assignor's name where necessary.
Stamp Duty: Acknowledge any applicable stamp duty under the Stamp Act 1949 (Act 378).
Governing Law: Specify Malaysian law and the jurisdiction of the Malaysian courts.
Additional compliance elements for a Deed of Assignment of Receivables (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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author = {{Forms Legal}},
title = {Deed of Assignment of Receivables (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/financial/loans/deed-of-assignment-receivables-malaysia}},
note = {Free legal document template. Based on Financial Services Act 2013 (Act 758)}
}Frequently Asked Questions
A Deed of Assignment of Receivables is legally effective in Malaysia under Section 4(3) of the Civil Law Act 1956 (Act 67), which provides for the absolute legal assignment of debts and other choses in action. For the assignment to take effect as a legal assignment — enforceable by the assignee directly against the underlying debtors — three requirements must be met: (1) the assignment must be absolute, meaning it transfers the whole of the debt without conditions or a right of redemption; (2) the assignment must be in writing and signed by the assignor; and (3) express written notice of the assignment must be given to the debtor. An equitable assignment (which does not comply with all three requirements) is valid between the assignor and assignee but can only be enforced against the debtor by joining the assignor in legal proceedings. A Deed of Assignment provides the strongest form of assignment protection in Malaysia.
Once a debtor in Malaysia receives valid written notice of a legal assignment of the debt owed by them, the debtor must pay the assignee — not the original creditor (assignor). If the debtor continues to pay the assignor after receiving notice, the debtor remains liable to pay the assignee as well, and the debtor's payment to the assignor does not discharge the debt to the assignee. The debtor may, however, raise any defences or set-offs against the assignee that arose from the original transaction before the notice of assignment was given — for example, claims for defective goods supplied by the assignor. The principle 'assignee takes subject to equities' means the assignee's rights are no better than the assignor's rights against the debtor at the time of notice. This principle is recognised under Malaysian common law as applied by the Civil Law Act 1956 (Act 67).
Factoring and invoice financing are two forms of receivables financing in Malaysia, both commonly documented using a Deed of Assignment of Receivables, but they differ in structure and risk. In invoice financing (also called invoice discounting), the assignor (company) assigns specific invoices to the financier (bank or finance company) and receives an advance of 70–90% of the invoice value. The assignor retains responsibility for collecting from its customers, and the arrangement may be confidential (debtors do not know about the assignment). In factoring, the assignor transfers the entire receivables management function to the factor — the factor takes over collection, credit control, and often credit risk (in non-recourse factoring). Factoring is typically disclosed to the debtors, who pay the factor directly. Malaysian banks including RHB Bank, Maybank, and Public Bank offer both products under their trade finance divisions, with MIDF providing factoring facilities specifically targeted at SMEs under Bank Negara Malaysia approved financing programmes.
Future receivables — debts or income streams not yet due or not yet in existence — can be validly assigned in Malaysia by way of equitable assignment, subject to conditions. Under Malaysian common law as applied by the Civil Law Act 1956 (Act 67), an assignment of future receivables does not take effect as a legal assignment under Section 4(3) until the receivables come into existence, because you cannot legally assign something that does not yet exist. However, an agreement to assign future receivables takes effect as an equitable assignment once those receivables come into existence — the assignee obtains an equitable interest in the receivables when they arise. In practice, Malaysian banks offering invoice financing and factoring facilities document the assignment of future receivables in a facility agreement, with a Deed of Assignment executed as security. The bank perfects its interest when specific invoices are drawn down under the facility.
A Deed of Assignment of Receivables over trade debts and contractual receivables does not generally require registration with SSM or the courts in Malaysia. However, if the Deed of Assignment is structured as a charge over the company's book debts — rather than an outright sale of receivables — it constitutes a floating charge over the company's assets and must be registered with SSM within 30 days of creation under Section 352 of the Companies Act 2016 (Act 777). An unregistered floating charge is void against the company's liquidator and creditors on winding up. In practice, Malaysian banks taking a security assignment of receivables under an invoice financing facility often register the security as a debenture (comprising a fixed and floating charge) with SSM as part of the overall security package, to ensure the bank's priority over other creditors in the event of the company's insolvency.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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