Third Schedule SRO 2023: Charges, Financing, and Security Document Fees in Malaysia

A bank grants a loan of RM150,000 to a borrower, secured by a debenture as the principal instrument and a charge over Property A as a subsidiary instrument. That was in 2000.

Now, in 2026, the bank instructs a solicitor to prepare a charge over Property B to secure the same loan — stamped as a subsidiary instrument. How should the solicitor charge?

The answer depends on whether the solicitor had conduct of the original 2000 documentation — and it lives in one of the most important changes SRO 2023 introduced: the new Rule 5 of the Third Schedule.

For the broader SRO 2023 framework, read the overview of all six schedules.

What the Third Schedule Covers

Order 2(c) of SRO 2023: remuneration for charges or mortgages, agreements for charges or mortgages, agreements for financing under Islamic banking business, debentures by way of a fixed or floating charge, and other instruments executed by way of security shall be in accordance with the Third Schedule.

The key phrase is “executed by way of security” — documents that create a proprietary security interest, giving the holder priority over the borrower’s assets in the event of insolvency. This distinction matters because documents that do not create true security — loan agreements, corporate guarantees, negative pledges, deeds of subordination, powers of attorney — fall under the Sixth Schedule instead.

Where no title was issued when the financing transaction was first completed, remuneration for the subsequent charge after title issuance is governed by Rules 2 and 3 of the Sixth Schedule.

Table A — The Scale Fees

Amount secured or financed	Scale fee
First RM500,000	1.25% (minimum RM500)
Next RM7,000,000	1%
Exceeding RM7,500,000	Subject to negotiation but shall not exceed 1%

Principal instrument: Full scale fee.

Each subsidiary instrument (for the purpose of subsection 4(3) of the Stamp Act): 10% of the full scale fee (minimum RM500, maximum RM2,000).

Discount: Up to 25% on Table A fees only (Order 5). No discount on Table B. Same as the First Schedule.

Rules 1–4

Rule 1 — One party, amount-based. The solicitor shall only act for one party, and remuneration is based on the amount secured or financed.

Rule 2 — SPA solicitor may act for financier. A solicitor acting for the purchaser in the SPA transaction may also act for the financier or chargor in the financing transaction. This is the standard Malaysian practice — the purchaser’s solicitor handles both sides.

Rule 3 — Additional facilities. Where additional facilities are granted and the existing principal instrument is stamped additionally, remuneration is based on the amount of the additional facilities — not the total facility. This prevents double-charging when a borrower tops up an existing loan.

Rule 4 — Islamic banking. For Syariah-compliant financing:

• Scale fees for the principal instrument are based on the principal amount provided or financed
• Each subsidiary instrument is 10% of the full scale fee (subject to minimum/maximum)
• Special proviso: for Syariah-compliant home purchase financing not exceeding RM500,000 where only the principal instrument is charged with ad valorem duty, any other instruments shall be regarded as part of the principal instrument. This avoids the multiplied documentation costs that Islamic banking structures can generate for lower-value residential purchases.

The New Rule 5 — Principal and Subsidiary Instruments

Rule 5 is SRO 2023’s most significant change to the Third Schedule. It addresses the timing and authorship of instruments — questions the old SRO left ambiguous.

Rule 5(a) — Same-time rule. The reference to full scale fee for the principal instrument and 10% for each subsidiary instrument only applies where the solicitor prepares and completes both instruments at the same time. If they are prepared at different times, different rules apply.

Rule 5(b) — Letter of offer as principal. If the principal instrument is the bank’s letter of offer (which the solicitor did not prepare), and the solicitor is instructed to prepare one or more security documents as subsidiary instruments, the solicitor charges:

• Full scale fee on one of the subsidiary instruments as if it were the principal instrument
• 10% on the remaining subsidiary instruments (subject to minimum RM500 and maximum RM2,000)

This is the practical reality of most bank panel work: the bank issues the letter of offer; the solicitor prepares the charge and any other security documents. Rule 5(b) ensures the solicitor is remunerated at the full rate on at least one instrument, rather than receiving only 10% across the board because the bank retained the “principal” instrument.

Rule 5(c) — Subsequent subsidiary, same solicitor. Where the solicitor had conduct of the financing transaction and is then later instructed to prepare an additional subsidiary instrument, the fee shall not exceed 25% of the applicable scale fee for the principal instrument.

Rule 5(d) — Subsequent subsidiary, different solicitor. Where the solicitor is instructed to prepare an additional subsidiary instrument but did not have conduct of the original financing transaction, the fee shall not exceed 50% of the applicable scale fee for the principal instrument.

Worked Examples

Decode 20 from the CPD talk: Bank instructs a solicitor to treat the bank’s letter of offer for a RM100,000 loan as the principal instrument and to prepare a charge over Property A as a subsidiary instrument.

If the solicitor applies the basic rule (full scale on principal, 10% on subsidiary), the fee for the charge would be only 10%. But Rule 5(b) applies: the principal instrument is a letter of offer not prepared by the solicitor. The solicitor charges full scale fee on the charge as if it were the principal instrument.

Decode 21 from the CPD talk: The 2000 loan scenario from the opening. The bank now instructs a solicitor to prepare a charge over Property B — a subsidiary instrument — 26 years after the original transaction.

Rule 5(a) says the full/10% split only applies where both instruments are prepared at the same time. They were not. So:

• If the solicitor had conduct of the 2000 documentation → 25% of scale fees (Rule 5(c))
• If the solicitor did not have conduct → 50% of scale fees (Rule 5(d))

The difference between 25% and 50% turns entirely on whether it is the same solicitor who handled the original transaction. This is why firms need to maintain records of historical instructions — the question can arise decades later.

What Is NOT a Security Document

Decode 22 was one of the most discussed scenarios at the talk. A bank grants a RM1,000,000 loan and instructs the solicitor to prepare:

• (a) Loan agreement
• (b) Corporate guarantee
• (c) Negative pledge
• (d) Deed of subordination
• (e) Power of attorney

How should the solicitor charge for each?

None of these are documents executed by way of security. The Third Schedule only applies to documents which create true security — instruments that give the holder a right of priority over the assets of the provider in the event of insolvency.

• A loan agreement records the terms of the loan — it does not create a proprietary interest
• A corporate guarantee is a personal obligation
• A negative pledge is a contractual restriction, not a security interest
• A deed of subordination ranks priorities between existing securities but does not create a new one
• A power of attorney is an authority to act

All five are governed by Rule 1 of the Sixth Schedule — the seven-factor “fair and reasonable” test, using the First Schedule fees as guidance (per BC Circular 73/2006).

This is the boundary that separates the Third Schedule from the Sixth. If the document does not create true security, it does not belong in the Third Schedule — regardless of how closely it is associated with a financing transaction.

The Rules Referenced in This Article

• Solicitors Remuneration Order 2023 — full text (PDF)
• SRO 2023 hub page — Malaysian Bar
• BC Circular 73/2006 — meaning of “completion of transaction” and Sixth Schedule guidance