The Securities Commission of Malaysia (SC) recently issued a technical note to clarify the requirements for authorization or recognition of foreign securities prior to its offering in Malaysia, and the corollary obligation of registering a disclosure document.
- Definition of unlisted capital market products
Section 212 of the Capital Markets and Services Act (CMSA) governs the offering of unlisted “capital markets products”, which is defined to include securities. Unlisted capital market products would therefore include unlisted securities (rather than listed securities).
The SC has recently issued a technical note clarifying that unlisted capital market products are any capital market products (i.e., any securities) offered in Malaysia, but not offered pursuant to a listing or otherwise tradeable on Bursa Malaysia Securities Berhad, the Malaysian stock exchange.
Read together with Section 212, the technical note clarifies that any foreign issued securities, whether listed or unlisted, are unlisted capital market products.
- Requirement to register a disclosure document
Under Section 212, offerings of unlisted foreign capital market products must seek recognition from the SC and comply with the requirement to register a disclosure document with the SC. Section 212 further provides that offerings under Schedule 5 are exempted from both of these requirements. This is however, inconsistent with Schedule 5 itself, which states that the proposals within Schedule 5 are exempt from the recognition requirement only.
In addition, the SC has issued its Guidelines on Disclosure Documents, which provide that the disclosure document requirement does not apply to offerings exempted under Schedule 5, except in three instances. The disclosure document requirement must be observed when, for example, there is an offering of securities listed outside Malaysia to sophisticated investors or high net worth individuals or entities where such an offering is made through holders of Malaysian capital markets and services licenses.
These offerings would be exempted from the recognition requirement, but not the disclosure document requirement. As such, the offeror of such securities would still need to register a disclosure document with the SC. The disclosure document must comply with the requirements set out under the CMSA and the SC’s guidelines.