News November 2007


November 2007


Major New Legislation and Changes to Securities and Capital Markets Laws


Malaysia has just introduced a major new law on securities and capital markets, the Capital Markets and Services Act 2007. Some important changes have also been made to the Securities Commission Act 1993 in conjunction with this.


Capital Markets and Services Act 2007 comes into force- An overview of changes



The Capital Markets And Services Act 2007 (CMSA) largely consolidates the Securities Industry Act 1983 (SIA), the Futures Industry Act 1993 (FIA) and Part IV of the Securities Commission Act 1993 (SCA), makes some changes to the regulatory structure of stock markets and futures markets, revamps the securities and futures industry licensing framework, adds new provisions to help promote Malaysia’s development as a global Islamic financial hub, improves and modernises the regulatory framework, fund raising activities and investor protection and introduces provisions for self-regulatory organizations.


It mainly came into force as law on 28 September 2007. The provisions on take-overs, mergers and compulsory acquisitions in Division 2 of Part VI of CMSA are however not yet in force. They are not expected to come into force until sometime next year probably in conjunction with a new Malaysian Code on Take-Overs and Mergers.



Consolidation of laws


What it supersedes

The CMSA basically supersedes the SIA, FIA and Part IV of SCA (except for Division 2 of that Part as Division 2 Part VI has yet to come into force).



The SIA had been law for more than 24 years. It had in that time been the principal law regulating stock exchanges, stock brokers, people dealing with securities and others involved in the securities industry, the trading in securities and related matters.



The FIA had been in force for 14 years. It was introduced to regulate futures exchanges and dealings in futures contracts.


Securities issues etc.

The repealed parts of Part IV of the SCA dealt with Issues of Securities including, matters which needed Securities Commission (SC) approval, prospectuses under the SCA, debentures and unit trusts and prescribed investment schemes. Part IV also includes the matters on take-overs, mergers and compulsory acquisitions (see above).



Most of the provisions of SIA and FIA have been consolidated into CMSA. Changes however, include, some modifications to the regulatory structure of stock markets and futures markets. The provisions on the licensing regime for the securities and futures industry under those Acts and exemptions from them have also been substantially restructured.

The provisions of Part IV of the SCA (to the extent they are in or come into force) are largely reproduced in Part VI of CMSA but with some modifications and enhancements including, in relation to Islamic securities specifically.

CMSA also introduces new provisions for Self-Regulatory Organisations and establishes the Capital Market Development Fund.



Modifications to the stock and futures market regulatory structure

The regulatory structure under SIA and FIA established in essence two levels of regulation for stock markets and futures markets. These were the stock or futures market of an approved stock or futures exchange and an exempt stock or futures market. The former were intended to be subject to a higher degree of regulation with the latter not requiring such regulation or degree of regulation under SIA or FIA, for example, perhaps, because it was already regulated in some other way and the nature of its activities did not require further regulation under SIA or FIA or only a degree of that regulation.

Sections 34 and 7(1) and (2) of CMSA introduces an additional level of regulation of stock and futures markets. This is the registered electronic facility under Section 34(1) of CMSA. A registered electronic facility is intended to be for electronic facilities which provide, operate or maintain a stock or futures market that is not systematically important. A registered electronic facility should generally be subject to a relatively minimal degree of regulation. An example of a registered electronic facility is the electronic broking system operated by licensed money brokers under the Banking And Financial Institutions Act 1989 which is an exempt stock market which has been deemed to be a registered electronic facility under Section 383(1) of CMSA.

SC has issued Guidelines On Regulation Of Markets effective 28 September 2007. It provides guidance on registrations and approvals in relation to stock and futures markets.


The new licensing regime



The SIA required licences for carrying on the business of dealing in securities, acting as an investment adviser or as a fund manager or as a dealer’s, investment adviser’s or fund manager’s representative.

Licences were also required under FIA for trading in futures contracts for someone else, futures broking business, futures fund management business, holding out as a futures fund manager, futures advice business or for holding out as a futures trading adviser or as a future broker’s, futures fund manager’s or futures trading adviser’s representative.


New licence types

A total of twelve types of licences were issuable for such activities under SIA and FIA. CMSA reduces the types of licences to two, a “Capital Markets Services Licence” (CMSL) and a “Capital Markets Services Representative’s Licence” (CMSRL) for regulated activities as prescribed under that Act.


Regulated activities

The regulated activities under CMSA in respect of which a CMSL or CMSRL is required are dealing in securities, trading in futures contracts, fund management, advising on corporate finance, investment advice and financial planning. Schedule 2 of CMSA tells us what they mean.


Scope of new licences and conversion

The activities which can be carried out by a licensee under CMSA are however not necessarily broadened with the reduction in the types of licences. They are still restricted by the conditions attached to their licences to the aspects of regulated activity permitted by their licence.

Accordingly, existing licences granted under SIA and FIA are deemed converted to CMSL and CMSRL under Section 384 of CMSA in respect of the regulated activity which that person was carrying on under the original licence issued under SIA or FIA. As an illustration, if a person held an investment adviser’s licence issued under SIA to carry on the business of advising on corporate finance, he would be deemed to hold a CMSL in respect of the regulated activity of advising on corporate finance. Likewise, a person who held a futures fund manager’s representative licence under FIA, he would be deemed to hold a CMSRL for the regulated activity of fund management in respect of futures contracts.

The advantage though of a reduced number of licence types is that a person who already holds a CMSL or CMSRL does not (assuming that there is no change in the actual type of licence he needs) have to apply for another type of licence in respect of regulated activity if he wishes to expand the scope of regulated activity which he wishes to carry out. He just needs to vary the conditions to his CMSL or CMSRL. The same applies if he wishes to reduce the scope of his regulated activity. He might have had to apply for additional licences or surrender them under the licensing regime in SIA and FIA.

SC has issued a Licensing Handbook effective 28 September 2007 in conjunction with the new licensing regime.


Licence exemptions

As with SIA and FIA and their subsidiary legislation, not everyone needs a licence under CMSA for activities which ordinarily would have needed one. In SIA for example, an “exempt dealer” as prescribed under SIA and subsidiary legislation would not need a dealer’s licence for dealing in securities.

CMSA exempts “registered persons” and “specified persons” from its licensing requirements. Schedule 4 of CMSA sets out “registered persons” while Schedule 3 sets out “specified persons”.


Registered persons

Registered persons are basically people who are already licensed or regulated in some other way. The need for regulation through a licence under CMSA for certain activities by them is presumably unnecessary. They include, licensed financial institutions (both Islamic and conventional), venture capital entities, credit rating agencies and bond pricing agencies registered with or recognised by the SC and certain corporations established by statute or with statutory powers. However, those persons can only carry out the activities allowed to be carried out by them in Schedule 4 of CMSA and not other regulated activity. Otherwise, a licence would be needed.


Specified persons

Specified persons deal mainly with activities of people where the intention is not to carry out certain regulated activities as a core activity. As an illustration, advocates and solicitors, accountants and valuers practicing under their respective legislation in West Malaysia are exempted in relation to their practice in respect of incidental carrying on of the regulated activity of advising on corporate finance and/or financial planning and corporations are exempted in relation to fund management, investment advice and certain advice on corporate finance for the benefit of its related corporations. The activities however, although incidental, might amount to the carrying out of some regulated activity. Licensing might be onerous and impracticable in those circumstances. A licence is not needed by Specified persons so long as they confine their regulated activities to those which Schedule 3 specifies.



Issues of Securities


Part VI as in force

Divisions 1, 3, 4, 5 and 6 of Part VI of CMSA are in force.

While there are some changes and enhancements, the provisions of Divisions 1, 3, 4 and 5 of Part VI are generally the same as the provisions of the now repealed Divisions 1, 3, 4 and 5 of Part IV of the SCA. These Divisions deal with proposals which require the approval of the SC, prospectuses which come within the ambit of CMSA or previously, SCA, debentures and unit trust and prescribed investment schemes. Division 6 of Part VI is new. It specifically deals with Islamic securities.


New trust account requirements

New requirements include, Section 215 of CMSA. Previously, only subscription moneys received in relation to an allotment of securities where a prospectus implies that an application for permission to list on a stock exchange had been made had to be held on trust account pending permission being granted by the stock exchange (the now repealed Section 52 of SCA replaced by Section 243 of CMSA). Section 215 of CMSA requires moneys received for shares pursuant to an issue, offer for subscription or purchase or invitation to subscribe for or purchase shares approved by the SC under Section 212(4) of CMSA and in respect of which no prospectus is required now also need to be held on trust account pending the shares being issued or transferred or permission for listing on a stock exchange being granted. It means that if the shares are not issued or transferred or listing permission granted, then the return of the purchase or subscription moneys would have been secured by the trust account. This enhances protection to investors who buy or subscribe for such shares particularly, persons to whom offerings of securities are exempt from prospectus requirements under paragraphs 9, 10 or 11 of Schedules 5 and 6 of CMSA.


Publication of prospectus before registration

The SC is also entitled by the new provision in Section 232(4) of CMSA to publish a registrable prospectus for public information before its registration. This enables the general public to comment on the prospectus before its actual registration and issue. It increases opportunities for material issues to be identified before any offering under the prospectus. The provision enables implementation of a practice already carried out in many major capital markets where for example, prospectuses intended for registration are made available for feedback and comment on websites.


Replacement prospectus

Sections 238 of CMSA now allows a replacement prospectus to be issued instead of just a supplementary prospectus in certain circumstances where a prospectus had been registered and (in a case where it did not involve a unit trust or prescribed investment scheme, before issue of securities). Previously, under Section 47 of SCA (which provision has been repealed), a supplementary prospectus had to be registered if the issuer became aware of a matter which had arisen at the time the prospectus was prepared and this was required to be disclosed in the prospectus by the SCA, guidelines of SC or stock exchange listing requirements, there had been a significant change affecting a matter disclosed in the prospectus, the prospectus contained a material statement or information that was false or misleading or there was a material omission in statements or information in the prospectus. A supplementary prospectus could not completely replace the original prospectus. It could only amend and add to it. Amendments and additions in a document separate from the original might not be easily read and understood especially if changes or additions to the original prospectus were extensive. A replacement prospectus, on the other hand, allows a completely new prospectus to be registered in place of the original prospectus with its corresponding advantages.


New provisions on Islamic Securities

Division 6 of Part VI of CMSA introduces for the first time in primary legislation, specific provisions on Islamic securities in relation to securities offerings. It reflects the priority given in Malaysia to the development of Islamic capital markets and the rapidly growing importance of Islamic securities.

Section 316 of CMSA is the sole section in that Part. It applies to a proposal to make available, offer for subscription or purchase or to make an invitation to subscribe for or purchase, Islamic securities.

Subsection (2) of that Section allows the Minister of Finance to modify the meaning of expressions in securities laws as may be necessary to give effect to the principles of Shariah in respect of Islamic securities prescribed under Section 5 of CMSA. Section 5 of CMSA empowers the Minister on the recommendation of SC to prescribe any instrument or product or class of instruments or products to be securities for the purposes of securities laws despite the definition of “securities” in CMSA. These provisions help resolve uncertainties or difficulties on how provisions of CMSA may apply to in relation to offerings for subscription or purchase of or invitations to subscribe or purchase certain Islamic instruments or products or classes of them.

Subsection (3) allows the SC to make statutory guidelines to give full effect to the principles of Shariah in relation to Islamic securities transactions. These guidelines may cover model documents for Islamic securities transactions or arrangements, the duties and responsibilities of the parties to them and other matters the SC deems appropriate. The subsection enables the SC to regulate Islamic transactions or arrangements in the context of offerings or invitations to subscribe or purchase Islamic securities.


New exemptions from SC approval

Section 212(4) of CMSA as with the repealed Section 32(4) of SCA requires the approval of the SC for certain proposals. Exemptions from SC approval were given in the schedules to the legislation (then Schedule 1 of SCA and now Schedule 5 of CMSA). Schedule 5 of CMSA has expanded the scope of exempted matters.


Offshore companies

Paragraphs 2 and 3 of Schedule 5 makes clear that certain issues of securities involving offshore companies (as defined in the Offshore Companies Act 1990 (OCA)) do not need the approval of SC. These are issues to offshore companies by foreign companies and issues by offshore companies exclusively to persons outside Malaysia. The Labuan Offshore Financial Services Authority (and in some cases the Minister of Finance through the Authority) are the principal Malaysian regulators of an offshore company in relation to securities offerings including, under OCA and the Labuan Offshore Securities Industry Act 1998. These exemptions reflect that position.


Foreign rights issues

The new provision in paragraph 19 of Schedule 5 of CMSA provides that a rights issue to existing members or debenture holders by a foreign company with securities listed outside Malaysia recognised under the rules of a stock exchange is also exempt from SC approval. However, as a “stock exchange” means a stock exchange approved by the Minister of Finance under Section 8(2) of CMSA, for all practical intents and purposes, it must be recognised under the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities).


Subdivision and consolidation

SC had previously taken the view that its approval was required under Section 32(4) of SCA for the subdivision and consolidation of shares not exempted under Schedule 1 of SCA.

Paragraph 20 of Schedule 5 of SCA now exempts subdivisions and consolidations of shares so long as it is approved in general meeting (which it would have to be for companies incorporated under the Companies Act 1965 of Malaysia) and (if listed on a stock exchange (as defined above) in accordance with its rules.

It now means that unlisted public companies in Malaysia for example, will no longer need SC approval to subdivide and consolidate its shares. Companies listed on Bursa Securities will now be regulated solely by Bursa Securities if it wishes to subdivide or consolidate shares. Amendments To The Listing Requirements of Bursa Malaysia Securities Berhad And The Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market which came into force on 28 September 2007 changed the provisions of Chapter 13 of those Listing Requirements. The approval of SC is no longer required under those Listing Requirements. Bursa Securities approval is however still needed for subdivisions and consolidations but not if they are a part of a restructuring proposal approved by SC under Section 212 of CMSA. The premise for this exception is presumably that the subdivision or consolidation has effectively been approved by SC.


Issue of additional securities under warrants, options and rights

Paragraph 21 of Schedule 5 allows additional securities to be issued without further SC approval pursuant to an entitlement in respect of a warrant, option or right. The original warrant, option or right must however have been approved by SC under Section 212(4) of CMSA and the issue of additional securities is without consideration.

The exemption under paragraph 21 should also apply to approvals by SC of warrants, options or rights under Section 32(4) of SCA as Sections 381 and 386 of CMSA would deem such approvals as having been given under Section 212(4) of CMSA.

The scope of the exemption is intended to cover for example, additional warrants, options or rights which are required by the terms or conditions of such securities to be issued pursuant to anti-dilution adjustment provisions. There was some uncertainty in relation to the SCA as to whether an approval given by SC under Section 32(4) of SCA for such warrants, options or rights would cover additional securities having to be issued for example, under anti-dilution adjustment provisions. Paragraph 21 makes clear that no further SC approval is needed for the issue of additional securities. However, it does not provide that no further SC approval is required for the subsequent listing of such securities (contrast Paragraph 13 as below).

There might be questions as to the difference between Paragraph 21 and Paragraph 13 of Schedule 5 of CMSA. They are rather different. Paragraph 13 reproduces Paragraph 11 of Schedule 1 of SCA and is not new. Paragraph 13 makes clear that securities may be issued and subsequently listed without further SC approval on exercise of a warrant, convertible note, option or transferable subscription right if these instruments had originally been approved by SC under Section 212(4) of CMSA. It does not cater for situations like the issue of additional securities on an adjustment as Paragraph 21 is intended to cover.


Issue of debentures by a corporation to its related corporation

Paragraph 22 of Schedule 5 now exempts from SC approval the issue of debentures by a corporation to its related corporations. This means that debentures can be issued to subsidiary companies, holding companies and subsidiaries of holding companies within the meaning of Section 6 of the Companies Act 1965.

The debenture must however contain a term which prohibits the transfer of such debentures to any other person. It is unclear whether this prohibition means that the debenture is not transferable at all or that it cannot be transferred beyond the related corporations.

The exemption in Paragraph 22 in any event relieves many companies from an uncertainty in relation to loan documentation for advances given between related corporations. The definition of a “debenture” in CMSA as with the SCA implied that a loan agreement signed by both lender and borrower would not be a debenture only if the lending of money was in the ordinary course of business of the lender. A loan agreement signed for such advances could possibly be regarded as a debenture and there had been instances where the approval of SC had been sought under Section 32(4) of SCA to address that uncertainty. Such approval is now clearly unnecessary.


New exemptions from prospectus requirements

Section 232(1) of the CMSA as with the repealed Section 42 of the SCA requires a prospectus to be registered with the SC where there is an issue, offer for subscription or purchase or invitation to subscribe for or purchase securities or (in the case of an initial listing of securities) an application for the quotation of the securities on a stock market of a stock exchange.

Exemptions from the requirements of prospectus registration and certain other provisions of Division 3 of Part VI of CMSA are however given in Schedules 6 and 7 of CMSA (previously Schedules 2 and 3 of SCA in relation to similar provisions in that legislation). Schedules 6 and 7 have expanded the scope of exempted matters.


Rights issue of foreign corporations

Paragraphs 28 of Schedule 7 and Paragraph 33 of Schedule 8 of CMSA provide exemptions for offer, invitations or issues in respect of certain rights issues of securities of a foreign corporation. The securities of that corporation in order to qualify, must be listed outside Malaysia and recognised under the rules of a stock exchange (see above under Foreign Rights issues). The rights issue must also be made to existing members or debenture holders and must be accompanied by a prospectus or disclosure document approved by the foreign supervisory authority of that corporation. So, a document does not have to be registered as a prospectus in Malaysia if a foreign prospectus or similar document is already available in such circumstances.

Paragraph 32 of Schedule 8 of CMSA also relates to rights issues by foreign corporations. It does not however require that there must be a prospectus or disclosure document approved by the foreign supervisory authority. It is in similar terms to the exemption from SC approval in Paragraph 19 of Schedule 5 of CMSA. Paragraph 32 is inconsistent with Paragraph 33 of Schedule 5. As Paragraph 33 contains additional qualifications, the provisions of that exemption should prevail over the terms of exemption in Paragraph 32.


Some transitional provisions in relation to Part VI as in force

Part  XIII of CMSA deals with what happens to things already done, licences granted, subsidiary legislation made, guidelines issued and similar acts carried out or effected under repealed statutory provisions.

The provisions dealt with include, approvals given by SC under Part IV of SCA and where a prospectus is issued before the date CMSA (other than Division 2 of Part VI) came into force (the Effective Date)..

In relation to an approval of SC given under Section 32(4) of SCA, it will be deemed given under Section 212(4) of CMSA If a prospectus is issued before the Effective Date, a supplementary or replacement prospectus and other steps would have to be taken to ensure the issue, offer or invitation under the prospectus complies with CMSA. SC may however, grant exemptions.


Division 2 of Part VI (Take-overs, mergers and compulsory acquisitions) which is yet to be in force

Section 217 of CMSA enables the Minister of Finance, on the recommendation of SC to prescribe a Malaysian Code on Take-Overs and Mergers.

The current provision in Section 33A of SCA (which is in Division 2 of Part IV and remains in force) gives similar power to the Minister. The Minister had prescribed the Malaysian Code on Take-Overs And Mergers 1998 (1998 Code) under that provision.

It is expected that Division 2 of Part VI of CMSA will only come into force when the Minister prescribes a new Malaysian Code on Take-Overs and Mergers. This is more likely to occur sometime next year.

The new Code will probably contain a number of new features. Some changes in Division 2 of Part VI of CMSA when compared to the current Division 2 of Part IV of SCA already indicate some of the potential areas for change in the Code.


Companies which come under the Code

Currently, take-overs of a company defined in Section 33(1) of SCA are regulated by Division 2 of Part IV of SCA and the 1998 Code.

Such a company is a public company (whether listed or not) and certain private companies determined by SC (being public or private companies incorporated under the Malaysian Companies Act 1965 or corresponding preceding legislation). Private companies are regulated in circumstances set out in Practice Note 1.2 issued by SC under Section 33A(4) of SCA.

The definition of “company” in Section 216(1) of CMSA continues to include a public company (whether listed or not). However, other bodies which may come within that definition are not restricted to private companies. They can be any entity prescribed by the Code. This means that the new Malaysian Code on Take-Overs and Mergers or any amendment to the current Code may extend the regulation of Division 2 of Part VI of CMSA and the Code to entities like foreign companies and Real Estate Investment Trusts (REITs). The extension of the Code to these entities (subject to perhaps certain conditions) seems likely with foreign companies being now allowed to be listed on Bursa Securities and the growing importance of REITs.

It should also be noted that the discretion to extend the ambit of the Code beyond public companies now lies with the Code itself (which has to be approved by the Minister of Finance on the recommendation of SC) and not the SC itself.

Section 216(1) of CMSA also introduces in relation to the new provisions allowing the Code to be extended to a wider range of entities, new definitions of “share” and “shareholder” for purposes of Division 2 of Part VI of CMSA. These definitions are not in the current Section 33 of SCA.

The new definition of “share” includes “a unit in an entity that is prescribed in the Code”. “Shareholder” is a consequential new definition and includes, “a unit holder in an entity that is prescribed in the Code”. These changes allow the Code to be extended to cover entities like REITs.


New mandatory offer threshold

The 1998 Code provides (among others) for a mandatory offer to acquire shares not held by the offeror and persons acting in concert with him if he and/or such persons acquire “control”. “Control” means “in relation to an acquisition of shares, …. The acquisition or holding of, or entitlement to exercise or control the exercise of, voting shares of more than thirty-three per centum in a company”. A mandatory offer may also be triggered where there is an increase of more than 2% of voting shares where more than 33% and less than 50% of voting shares is already held (the Creeping Rule).

Section 216(1) of CMSA changes the threshold for “control” from more than 33% to 30% or more. The new Code is expected to change the threshold for a mandatory offer to 30% or more to reflect the changed definition of “control”. The Creeping Rule would presumably be modified to apply from 30% rather than the more than 33% in the current provision.


Changes to compulsory acquisition thresholds

The offeror has the right under Section 34 of SCA to compulsorily acquire shares not sold under an offer made under the 1998 Code if within 4 months of the offer, it has been accepted by “the holders of 90% of the shares or shares of the class concerned. Shares already held at the date of the offer by the offeror or by a nominee for or a related corporation of the offeror are however not included when computing the 90%. The SC also views that shares held by persons acting in concert with the offeror should also not be included when computing the 90%. This means that the more shares the offeror and persons acting in concert already hold or acquire at the time the offer is made, the more difficult it would be for the 90% to be achieved to enable a compulsory acquisition to be effected.

Section 222 of CMSA (which is the CMSA counterpart of Section 34 of SCA) makes a significant change to the way in which the 90% is calculated. The 90% includes shares already held by the offeror and persons acting in concert with him at the date of the offer. That provision when it comes into force would make it considerably easier for an offeror to effect a compulsory acquisition where he and persons acting in concert already hold or have acquired existing shares.

It would be particularly helpful in cases of share acquisitions under a sale and purchase agreement which lead to a mandatory offer. An agreement allows an offeror to require warranties and other special terms from the seller of a controlling stake. Warranties and special terms would not be possible where there is a voluntary offer coupled with an undertaking to accept in respect of the controlling stake. The sale and purchase approach however makes a compulsory acquisition under Section 34 of SCA more difficult as the shares acquired under that agreement would be excluded from the 90% threshold required. This is not the case under Section 222 of CMSA where those shares will be included in computing the 90% threshold so long as completion has already taken place by the time of the offer and the offeror then holds those shares.



Self-Regulatory Organisations

Part VIII of CMSA introduces provisions for Self-Regulatory Organisations.

SC under the repealed SIA and FIA and normally under the provisions of CMSA would exercise direct regulation over licensees and persons regulated under CMSA.

Part VIII of CMSA allows recognised self-regulatory organisations to exercise regulatory functions over some of these people (being principally its members) without SC having to exercise them directly. These organisations are required to exercise their powers and functions in the public interest and for the protection of investors. Their functions include ensuring compliance by members of securities laws, regulations and guidelines issued by SC, where relevant, rules of the stock exchange, futures exchange, approved clearing house or central depository and taking disciplinary action and sanctions against members who do not comply with those laws, regulations, guidelines or rules.

A person who wishes to be such an organisation must be declared a recognised self-regulatory organization by SC with the concurrence of the Minister of Finance under Section 323 of CMSA. There are currently no recognised self-regulatory organisations. As considerable preparatory work is involved, it may be some time before any recognised self-regulatory organisations emerge. The bodies targeted as potential recognised self-regulatory organisations are professional associations and market bodies (see, Section 334 of CMSA in relation to the Capital Market Development Fund).


Capital Market Development Fund

Part IX of CMSA establishes a new fund called the Capital Market Development Fund.

The Fund is intended to promote efficiency, innovation and international competitiveness of the capital market in Malaysia, develop and upgrade skills and expertise required for the Malaysian capital market, develop self-regulation by professional associations and market bodies in the securities and futures industries and develop and support high quality research and development programmes and projects related to the Malaysian capital market.


Amendments to the Securities Commission Act 1993

The Securities Commission (Amendment) Act 2007 (SCAA) came into force on 28 September 2007 at the same time as most provisions of CMSA.

CMSA has already repealed the provisions of Part IV of SCA other than Division 2. The SCAA makes further changes to the SCA.

The SCA after the changes made by CMSA and SCAA all come into force is basically legislation which deals with the corporate personality, functions and powers of SC. The provisions on securities issues have been repealed. The provisions on take-overs and mergers and compulsory acquisitions continue in force for the time being pending their repeal when Division 2 of Part VI of CMSA comes into force.

SCAA enhances some of the investigative and enforcement tools of the SC. It also makes clear the right of the SC under a new Section 152A of SCA to publish information which relates to approvals, licences or exemptions granted under securities laws, rulings in connection with take-overs under Section 217(4) of CMSA and certain actions taken under securities laws including, by stock or futures exchanges and the Minister of Finance apart from SC itself.




The contents of this Paper are of necessity not exhaustive and do not attempt to address every issue relevant to any particular situation. Laws and regulations may also change from time to time and their compliance will depend on particular circumstances.

In any event, this Paper is not to be taken as provision of legal advice by Wong Beh & Toh or as creating a business or professional relationship and should not be relied upon as doing so. Any reliance by a person on the contents of this Paper or any of it would be solely at that person’s risk. A person who requires professional advice on a matter should formerly obtain the services of a professional adviser.

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