On 12 July 2011, the Securities Commission of Malaysia issued the revised Private Debt Securities Guidelines ("PDS Guidelines"), the Islamic Securities Guidelines ("Sukuk Guidelines") and the Trust Deed Guidelines (collectively, the "Revised Guidelines") to replace the existing equivalent guidelines issued in 2004.
The objectives of the Revised Guidelines are intended to –
- enhance the regulatory framework relating to debt capital market and Islamic capital market in Malaysia;
- expedite time-to-market for issuance of corporate bonds and sukuk with the introduction of the deemed approved regime that adopts a truly disclosure based approach and compliance with a set of transaction criteria;
- enhance the level of protection for investors by introducing additional compliance provisions to facilitate a more informed investment decision-making process. Among others, issuers are now required to furnish information to the rating agencies on continuous basis in order to enable timely dissemination of relevant information and rating analysis to be made available to investors.
Concerted effort was put in by the Securities Commission via the Revised Guidelines to address protection of investors' interest with the Securities Commission's reiteration of the duties of the key transaction parties, such as the principal advisers, other professional advisers and credit rating agencies. Bond/sukuk trustees are now also tasked with higher level of role and responsibilities under the Revised Guidelines. For instance, the bond/sukuk trustees are now required to be actively engaged in the documentation process on a timely basis. To ensure bond/sukuk trustees' interests are also addressed, the Revised Guidelines have introduced a requirement to maintain a "Trustee Reimbursement Account for Debenture holder' Actions" whereby a minimum pre-determined balance has to be maintained in the said account to address expenses incurred by the bond/sukuk trustees when carrying out their enforcement duties.
From an Islamic capital market perspective, the revised Sukuk Guidelines seek to provide greater clarity on the application of Shariah rulings and principles endorsed by the Shariah Advisory Council of the Securities Commission in relation to sukuk transactions.
Generally, the issuance of the Revised Guidelines is a positive development for the debt capital market and Islamic capital market and reinforces Malaysia's ambition to be a global/regional leader in this area.