P2P Lending Agreement (Malaysia)

A P2P Lending Agreement in Malaysia records the terms the parties accept and the commitments each makes to the other.

The SC issued its first P2P Financing Framework in 2016 and revised the Guidelines on Recognised Markets (ECF and P2P) in 2021. Malaysian P2P platforms — including Funding Societies (Modalku), B2B Fintech, QuicKash, and ETHIS (for Shariah-compliant P2P) — support the matching of SME issuers with investors seeking fixed-income returns without the intermediation of traditional financial institutions licensed under the Financial Services Act 2013.

For conventional P2P, the investment note constitutes a debt obligation of the issuer to repay the principal and agreed interest (profit rate) to the investor over the tenure of the note. For Islamic P2P financing, instruments are structured on Shariah-compliant principles — typically Murabahah (cost-plus financing), Tawarruq (commodity murabahah), or Wakalah — approved by a Shariah Adviser appointed by the P2P platform and validated by the Shariah Advisory Council of the SC.

Under the SC's P2P Guidelines, issuers are limited to Malaysian-incorporated SMEs (SSM-registered, revenue not exceeding RM 50 million, or fewer than 200 full-time employees) and the maximum aggregate financing per issuer across all P2P platforms is RM 20 million. Retail investors may invest up to RM 50,000 in aggregate across all P2P platforms per calendar year, while sophisticated investors and angel investors are exempt from this cap.

A P2P Lending Agreement differs from a conventional loan agreement governed by the Financial Services Act 2013 in that it is not issued by a BNM-licensed bank or financial institution — it is a capital market product regulated by the SC. The Moneylenders Act 1951 does not apply to P2P financing conducted through SC-registered platforms.

The legal framework governing the P2P Lending Agreement (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 P2P Lending Agreement (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.

A P2P Lending Agreement in Malaysia is required whenever a business issues investment notes through an SC-registered P2P platform and investors subscribe for those notes.

A P2P Lending Agreement is needed when an SME uses a P2P platform to finance working capital requirements — such as purchasing inventory, meeting payroll, or bridging a trade finance gap — without approaching a bank for a conventional business loan.

A P2P Lending Agreement is required when a business lists an invoice financing note on a P2P platform, allowing investors to fund specific invoices owed to the business by creditworthy trade debtors, with the note repaid when the debtor settles the invoice.

A P2P Lending Agreement is needed when a company seeks Shariah-compliant financing through an Islamic P2P platform such as ETHIS. The agreement documents the Murabahah or Wakalah structure approved by the platform's Shariah Adviser under the SC's Guidelines on Islamic Capital Market Products.

A P2P Lending Agreement is required when multiple investors collectively fund a single issuer's note on a P2P platform. Each investor's agreement documents their pro-rata share of the note, their expected return, and the repayment schedule.

A P2P Lending Agreement is needed when an SME refinances existing bank debt through a P2P platform, allowing the company to benefit from potentially lower financing costs while providing investors with a fixed-income return.

Parties in Malaysia should prepare a P2P Lending Agreement (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.

A valid P2P Lending Agreement in Malaysia under the SC's Guidelines on Recognised Markets and the CMSA 2007 must contain the following essential elements.

Issuer Details: Full legal name, SSM registration number under the Companies Act 2016, registered address, nature of business, annual revenue, and confirmation of SME eligibility under the SC's P2P Guidelines (annual revenue not exceeding RM 50 million or fewer than 200 full-time employees).

P2P Platform Reference: Name of the SC-registered P2P platform, its RMO licence number issued by the SC under CMSA 2007, and the note reference number assigned by the platform.

Investor Details: Full name, NRIC/passport number, investor classification (retail, angel, or sophisticated investor), and — for retail investors — confirmation that the aggregate investment across all P2P platforms does not exceed RM 50,000.

Note Terms: Principal amount in RM, interest or profit rate per annum, tenure of the note, repayment schedule (monthly, quarterly, or bullet repayment), and total repayment amount. For Islamic P2P, specify the Shariah structure (Murabahah, Tawarruq, or Wakalah) and the Shariah Adviser's approval reference.

Security and Credit Enhancement: Description of any security provided by the issuer — such as a personal guarantee by directors, assignment of trade receivables, or a charge over assets registered with SSM under the Companies Act 2016. The SC's P2P Guidelines do not mandate security, but platforms typically require credit enhancement for higher-risk issuers.

Default and Recovery: Events of default — including missed repayments, material adverse change in the issuer's business, or insolvency proceedings under the Companies Act 2016 or Insolvency Act 1967 — and the P2P platform's default management and recovery procedures on behalf of investors.

Governing Law: Malaysian law governs the agreement. Disputes between investors and the P2P platform are subject to the SC's investor complaint process under CMSA 2007, with further recourse to the High Court of Malaya.

Additional compliance elements for a P2P Lending Agreement (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.