Amendments to the Capital Markets and Services Act 2007

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Malaysia July 12 2021

The Securities Commission Malaysia (SC) has announced several amendments to the Capital Markets and Services Act 2007 (CMSA), which came into force on 1 July 2021. 1

Enlarged categories of sophisticated investors

A significant change is the amendments made to Schedule 6 and Schedule 7 of the CMSA to widen the categories of a sophisticated investor. We have set out below the entities and individuals considered as accredited investors prior to and after the amendment for comparison:

Prior to amendment

(a) A unit trust scheme, prescribed investment scheme or private retirement scheme

(b) Bank Negara Malaysia (b) Bank Negara Malaysia

Market Services Licence

(d) An exchange holding

company, a stock

exchange, a derivatives

exchange, an approved

clearing house, a

central depository or a

1 The amendments are effected through the Capital Markets and Services (Amendment of Schedules 5, 6 and 7) Order 2021 (Amendment). 2 "Licensed Person" is defined under the CMSA to mean a person holding a Capital Markets Services Licence and includes a person holding a

Capital Markets Services Representative's Licence. "Registered Person" is defined under the CMSA to mean a person registered under s 76 of the CMSA. This includes: (a) those entities

prescribed in Schedule 4 of the CMSA; (b) those registered by the SC for the purpose of regulated activities; (c) those registered with a

recognised self-regulatory organisation under s 323 of the CMSA; or (d) those registered with a body that is approved by the SC.

(e) A corporation that is

licensed, registered or

approved to carry on

any regulated activity or

capital market services

by an authority in

Labuan or outside

corresponding to the

functions of the SC

(d) A bank licensee or (f) A bank licensee or an

insurance licensee as

defined under the Labuan

Financial Services and

Securities Act 2010

(e) Licensed institution as

defined in the Banking

and Financial Institutions

Act 1989 or an Islamic

bank as defined in the Islamic Banking Act 19834

(g) An Islamic bank

licensee or a takaful

licensee as defined

under the Labuan

Services and Securities

(f) Insurance company (h) A chief executive officer

registered under the

or a director of any

Insurance Act 1996 or a

person referred to in

paragraphs (c) to (g)

registered under the Takaful Act 19845

(g) Executive director or a (i) A closed-end fund

chief executive director

approved by the SC

of a holder of a Capital

Market Services Licence

(h) A closed-end fund approved by the SC

High-net-worth entities are expanded to include a corporation that is carrying on the regulated activity of fund management solely for the benefit of its related corporations and has assets under its management exceeding RM10 million or its equivalent in foreign currencies.

A new element is also included in the definition of high-net-worth

4 The Islamic banks and all licensed institutions as defined in the Banking and Financial Institutions Act 1989 (which is now a repealed Act and substituted by the Financial Services Act 2013) fall within the category of registered person. As such, these entities are still considered as accredited investors despite the Amendment and the omission of references to them.

5 They fall within the category of registered person. As such, these entities are still considered as accredited investors despite the Amendment and the omission of references to them.

individuals, being an individual with total net investment exceeding RM1 million or its equivalent in foreign currencies in any capital market products, either on his or her own or through a joint account with the spouse.

The amendments will allow investors to widen their range of investment portfolio and for the issuers to reach out to a wider pool of sophisticated investors.

Bursa Malaysia to undertake registration of ACE Market prospectuses

At present, prospectuses for the ACE Market are subject to review and registration6 by the SC pursuant to ss 232 and 237 of the CMSA.

The amendment made to Schedule 6 and Schedule 7 of the CMSA to include an offer, invitation or initial public offering of shares of corporation on the alternative market of Bursa Malaysia, provided that they are accompanied with a prospectus which is registered by Bursa Malaysia, effectively transfers the registration function for ACE Market prospectuses from the SC to Bursa Malaysia.7

Transfer of the registration function of the ACE Market prospectuses from the SC will enable Bursa Malaysia to become the one-stop centre for all approvals in relation to ACE Market listing.

Increased categories of corporate proposal that do not require SC's approval

Corporate proposal specified under Schedule 5 of the CMSA has also been extended to include the following:

(a) An initial exchange offering of the digital assets (IEO) through a recognised market operator.

(b) An initial public offering or cross-listing of the shares of a public company or listed corporation on a stock exchange outside Malaysia.

Following from the above, approval or authorisation by the SC is no longer required for these proposals.8 Notwithstanding this, please note that the IEO is still subject to the assessment and approval of a market operator which has been registered with the SC.

6 The requirement to review and register the prospectuses by the SC does not apply to an excluded offer or excluded issue under Schedule 6 and Schedule 7 of the CMSA.

7 This amendment will only be effective from 1 January 2022. 8 Section 212(8) of the CMSA states that the requirement of the approval or authorisation of the SC is not applicable to the corporate proposal

specified under Schedule 5 of the CMSA.

Conclusion The amendments made to the CMSA demonstrate the SC's efforts in constantly promoting developments in the capital market and assessing the needs of its participants.

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