Any such investment will likely have to relate to the insurance business of the insurer. However, there is a likelihood than BNM will be issuing a guideline to require an insurer to seek prior approval from BNM if it intends to acquire or hold any direct or indirect material interest in an insurtech start-up if such investment will assist in realizing business synergies.

An insurer may acquire the equity interest or invest by way of a debt instrument in an insurtech start-up. However, in certain instances and based on specific thresholds, such investment may require the prior approval of BNM.

The investment is likely to attract a capital charge under the Risk-Based Capital Framework ("RBC Framework"), and such investment may be approved by BNM subject to specific conditions.

The insurer must obtain the prior approval of BNM to acquire or hold a subsidiary outside Malaysia. In any event, such an investment will attract a capital charge under the RBC Framework.

Also, Malaysia has foreign exchange administration rules that apply to investments abroad. If a resident (that is, a Malaysian insurer) or its group companies do not have domestic Malaysian ringgit borrowings, there is no restriction on the amount that it can invest in an offshore insurtech start-up. If a resident or its group companies have domestic Malaysian ringgit borrowings, there are limits on the amount of such investments, depending on the source of the funds to be invested. The approval above will take between four and six months to obtain, from the time a complete set of documents is submitted.

An insurer is required to obtain the approval of BNM to grant loans to companies that the insurer, among others: (i) has any interests in as a controller, manager or agent; (ii) the insurer's directors have any interests in as director, partner, manager or agent; and (iii) has interest in voting shares of 20% or more. If the insurtech start-up does not fall within these categories, the insurer is permitted to grant loans to it without BNM's approval.

Also, depending on the currency of such loans and whether the insurtech start-up is located within or outside Malaysia, the foreign exchange administration rules may apply.

Depending on the materiality of the investment, the investments will likely require the approval of the board of directors and (if applicable) the investment committee of the insurer. Under the Malaysian Companies Act (MCA), substantial acquisitions falling within prescribed thresholds will require shareholders' approval. Further, if the insurer is a publicly listed company, the listing requirements may similarly require the insurer to obtain shareholders' approval if the investment falls within prescribed thresholds.

There are certain matters subject to statutory protection under the MCA. If a shareholder holds at least 25% of the shares in a Malaysian company, it would have veto rights on important shareholders' resolutions such as resolutions to increase or decrease capital, merge with other companies, amend the constitution of the company or wind up the company. The MCA also provides relief to minority shareholders against oppressive conduct by the directors of the company by entitling any shareholder of the company to apply to the Malaysian Court for an order. Upon such an application, the Malaysian Court may make any order it thinks fit, including directing or prohibiting any act, or cancelling or varying any transaction or resolution.

There are generally no restrictions on the insurer in terms of appointing its own staff or management to join the insurtech start-up's board or management team, save for the appointment of the insurer's CEO to the insurtech start-up. An insurer's CEO is required to devote their entire professional time to the service of the insurer.

1. Generally, there are none, as long as such transactions are bona fide and at arm’s length.
2. Material related-party transactions must be approved by the board of directors of the insurer.

BNM's approval is required if the transaction will result in a material gain for the insurer's directors or if the insurer's director has 20% or more equity interests in the insurtech start-up.

Also, depending on the type of services provided under the service contract, the guidelines issued by BNM regulating outsourcing arrangements may apply, and may be subject to the prior approval of BNM.

An insurer is required to disclose all related-party transactions in its financial statements in accordance with prescribed accounting standards. It is also required to report its related-party transactions to BNM if such transactions are material or involve a consideration exceeding RM 1 million in aggregate.

As set out above, and unless exempted, material outsourcing arrangements must be approved by BNM.

An insurer may be required to seek the approval of BNM to provide such support, as the provision of operational support is not the authorized business of the insurer.

Reasonable arm’s-length service fees payable by the insurer is are permitted. The payment should not be linked to the premiums received by the insurer as it might raise questions on whether the start-up is carrying out an insurance business without a license.

Intellectual property rights are generally transferred through an assignment agreement. If an intellectual property in question is a registered intellectual property, for example, trademarks or patents, an assignment agreement must also be recorded with the competent registrar.

The Malaysian Personal Data Protection Act (PDPA) applies to the collection, usage, storage, disclosure and transfer of personal data between the insurer and the insurtech start-up. Any person processing personal data is required to comply with the seven core principles under the PDPA. In particular, the consent of the data subject (that is, the person whose personal data is being processed) is required and a PDPA-compliant dual-language notice in English and Malay is required to be issued to the data subject.